The message came as the airline’s profit fell on the back of soft demand and continuing engine maintenance and plane supply problems.
Air New Zealand has reported a profit of $126m for the year ended June compared with $146m a year earlier.
Key numbers for the 12 months ended June compared with a year ago:
- Net profit $126m vs $146m
- Underlying profit $189m vs $222m
- Revenue $6.8b vs $6.75b
- Final dividend 1.25 cents per share
It said it’s had to cope with fewer people flying, at times more than 10 planes grounded to get their engines maintained, and rising costs for fuel and regulatory charges.
The airline’s chairperson Dame Therese Walsh said the result had shown its resilience in the face of operational and economic changes.
Foran said it had had up to six narrowbody and five widebody aircraft out of service at times mainly for engine maintenance issues, and that had considerably affected the result.
“While the airline received $129 million in compensation from engine manufacturers, it estimates earnings before taxation of $189 million could have been approximately $165 million higher had the fleet operated as intended.
“We acted early and decisively, securing additional engines and aircraft, and optimising our schedule to keep customers moving. While this came at a significant cost, it was the right decision to deliver for our customers and maintain network stability.”
More turbulence ahead
Foran warned the coming year would likely be every bit as tough as the past one, with a forecast of underlying pre-tax earnings matching or being less than the $34m recorded in the second half of the financial year just ended.
The airline noted its fuel bill fell 12% because of lower world prices and fewer flights, but that had been offset by a rise in equipment, labour, and landing charges, which were rising faster than inflation and were expected to keep doing so.
Its cost cutting programme delivered about $100m in savings.
“The airline is well-positioned for recovery when the engine challenges and economic conditions start to alleviate, but these issues continue to have a significant impact on current financial performance,” Foran said.
Foran said corporate and government spending was subdued.
He said there were 5%t less corporate travellers than this time last year and government spending was down 10%.
He said Auckland was suffering tough times and he supported a bed tax.
The airline hoped to start selling flights to London, Gatwick by the middle of next year for travel in 2027.
Foran warned that passengers should expect airfares to increase by 5% to meet increasing costs.
He steps down in October after nearly six years in the job and will be replaced by the airline’s chief digital officer Nikhil Ravishankar.
