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Air New Zealand earnings plunge after disasters
by Staff Writers
Wellington (AFP) Aug 25, 2011

Air New Zealand announced a 45 percent slump in annual earnings on Thursday as natural disasters in Christchurch and Japan contributed to conditions it described as the most difficult in a decade.

The carrier, which is 76 percent government-owned, said normalised earnings before tax in the year to June 30 were NZ$75 million ($62.2 million), down from NZ$137 million in the previous 12 months.

It said normalised earnings stripped out the impact of fuel hedging from the annual result. When left unadjusted, the airline's net profit after tax slipped 1.0 percent to NZ$81 million.

Chairman John Palmer said the Christchurch earthquake in February and the Japanese quake and tsunami disaster a month later resulted in a significant drop in demand.

"These natural disasters and sustained high fuel prices dramatically altered what was shaping up to be a very positive full year result," he said.

"Nevertheless, this backdrop of adversity has again highlighted the resilience of Air New Zealand in the most challenging of times."

He said the airline recorded a net profit of NZ$112 million in the first half of the financial year but booked losses of NZ$37 million in the second half.

Chief executive Rob Fyfe said the disasters cost Air New Zealand NZ$70 million in the second half of the year.

He said the airline's long-haul network had been hit particularly hard, losing NZ$1.0 million a week in the second half of the financial year as New Zealand's dollar gained strength and fuel prices rose.

"The operating conditions of the past six months were cumulatively the most difficult Air New Zealand has faced in the past decade," he said.

However, there was some good news for the airline, with operating revenue rising 7.0 percent to NZ$4.34 billion and passenger loads up 1.6 points to 83.4 percent.

While warning that international markets remained volatile, it predicted an improved performance in the current financial year "in the absence of further deterioration in global economic conditions and an escalation in fuel prices".

Fyfe said the Rugby World Cup, which will be held in New Zealand from September 9-October 23, would help boost the company's revenue by about NZ$30 million.

Air New Zealand shares were flat at NZ$1.11 in late trading on the NZX 50.

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