You are here
Air New Zealand annual profit hit by weak tourism, engine problems
[BENGALURU] Air New Zealand said on Thursday that its annual profit fell 31 per cent, weighed down by higher fuel costs, weakness in travel demand and problems with its Rolls-Royce engines.
The national carrier also forecast a dip in fiscal 2020 earnings to a range of NZ$350 million (S$310.3 million) to NZ$450 million.
Airlines have struggled to maintain margins in the face of slowing travel demand and higher fuel prices, but the pressure is likely to ease given that oil prices have fallen from their peak in October.
Air New Zealand has been plagued by maintenance issues with Rolls-Royce Trent 1000 engines used in its Boeing planes that has hit 2,500 flights and led to 150 cancellations, affecting its financial performance.
The company on Thursday said it expects the engines to be back in service in the coming months.
The carrier reported a profit before tax, the most closely watched measure of its performance, of NZ$374 million for the 12 months ended June 30, compared with NZ$540 million a year earlier.
"While we are disappointed that we did not meet the expectations we first set for ourselves at the start of the financial year, the fact is we are operating in a different demand environment than we were 12 months ago," chairman Tony Carter said.
Revenue from continuing operations rose 5.4 per cent to NZ$5.83 billion, the company said.
In March, the airline launched a two-year cost reduction programme and deferred aircraft capital expenditures of about NZ$750 million as part of a business review to tackle slowing growth.
The company also announced the resignation of chief executive officer Christopher Luxon in June and named finance head as acting CEO in August, while continuing its search for a replacement.