Now here is a challenge for Qantas (QAN) as we prepare for its big profit announcement tomorrow morning – will it join Air New Zealand (AIZ) in paying a dividend to shareholders – or rather will the Qantas board have the sense to reward the tens of thousands of loyal shareholders who have sat suffering for years waiting to again received a crumb or two on their investments.
If the government-controlled Air New Zealand has been able to pay a dividend, why not Qantas, goes the refrain from some shareholders?
That’s a good question, judging by the 44% lift in interim dividend announced this morning by Air New Zealand to NZ6.5 cents a share.
Qantas has argued that problems in its international and domestic businesses needed a suspension of dividend to conserve cash, but many analysts say poor management, weak cost cutting, and a silly, profit-draining capacity war with Virgin Australia in the local market has been the real culprit.
Qantas is expected to reveal interim profits of close to half a billion dollars (probably on an underlying basis with the airline no doubt taking the opportunity of the slide in fuel costs to loan more cost cuts onto the result).
Air New Zealand this morning reported a 20% rise in half-year underlying earnings before tax to $NZ216 million thanks to solid revenue growth, increased capacity, higher fares and lower fuel prices.
The airline’s statutory net profit after tax fell 6% to $NZ133 million, in part because it had to recognise $NZ14 million for its share of losses from its 25.9% stake in Virgin Australia Holdings.
This is the first time Air NZ has consolidated Virgin’s results into its own, as Air NZ CEO Christopher Luxon gained a board seat in July.
While Virgin Australia reported a strong recovery in its December half year performance, it also isn’t paying a dividend, making Air NZ the standout performer in this part of the world (being majority-owned by the NZ government does help maintain certainty though).
Air NZ’s Australian-listed shares have risen by 55% since late October, Qantas shares are up 81% (from a much lower base). That underperformance relative to Qantas shows the higher starting price for the Kiwi airline because of the superior operating performance/
Air NZ shares closed 1 cent higher at $2.48 on Tuesday.
AIZ vs QAN 5Y – Flying Air New Zealand leaves Qantas landbound
