Air NZ keeps losses at bay as global industry reels
August 27th, 2009
Air NZ is following rival Qantas in managing to squeeze a profit out of one of the worst downturns faced by the global airline industry. Qantas last week posted an 87% slump in annual earnings and announced a three-year plan to slash costs by $A1.5bn. Air NZ’s profit probably tumbled at least 48% to $113m, with a drop in demand and increased rivalry squeezing margins. Still, the trans-Tasman rivals are standouts in a global industry the International Air Transport Association has forecast will post combined losses of US$9bn this year.
The national carrier has had to be fleet of foot to cope with the downturn, especially on long-haul flights, where passenger volumes have been plunging like a stone. Passenger numbers on long-haul tumbled 16.9% last month as fear of swine flu deterred visitors from Japan, adding to the general reduction in demand. The carrier cut capacity by 9.7%, trimming its passenger load factor by 6.1 points to 81.6%. Air NZ’s performance has been underpinned by a resilient kiwi dollar, which has softened the impact of its US dollar fuel costs. It stands to benefit from some $500m of fuel and foreign exchange hedges and is currently about 60% covered on fuel hedging. Qantas last week declined to give an earnings forecast, citing the “high level of uncertainty.” But it did note improvement in passenger volumes while yields had stabilised.
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