Air New Zealand has confirmed earlier guidance this week that its first-half profit slumped sharply from a year ago.
In revealing capacity cuts to Asia, Australia and on NZ domestic routes, Air New Zealand said its results would be down from the same period of 2018-19.
Yesterday it reported a net profit after tax of $NZ101 million ($97 million) for the six months to December 31, down 33% from the prior period by slower demand, a weak cargo market, one-off costs and civil unrest in Hong Kong.
On an underlying basis, pre-tax basis profit was down 8.8% to $198 million which was the airline’s weakest first-half result in five years.
Air New Zealand’s new CEO Greg Foran said he would spend his first 100 days in the job conducting a review of operations.
“The diagnostic of the airline will look at how we can drive long-term sustainable outcomes for our customers, our staff, the broader community, and our shareholders,” said
The carrier – which is dual-listed on the Australian and New Zealand stock exchanges – has been rattled by the coronavirus outbreak, and earlier this week said it expected a financial hit of up to $75 million from the health crisis for the year to June 30, meaning a very weak second half is expected.
“While the situation is uncertain, based on current assumptions of lower demand as well as the benefit of the announced capacity reductions and lower jet fuel prices, the airline currently expects a net negative impact to earnings in the range of $NZ35 million to $NZ75 million as a result of Covid-19,” the airline said yesterday.
“At the midpoint of the estimated range above, which is approximately $NZ55 million, the airline is targeting earnings before other significant items and taxation to be in a range of approximately $NZ300 million to $NZ350 million.
The airline reported earnings before tax of $NZ374 for 2018-19 and had forecast a range for 2019-20 of $NZ350 to $NZ450 million. That clearly won’t be achieved, especially with the full hit from the COVID-10 virus to be felt.
Despite the weak result and the expected second-half crunch, the airline has maintained dividend at 11 cents a share.
