Air New Zealand has reported that net profit fell 31 per cent to NZ$270 million in the 2019 financial year.
The carrier’s earnings before taxation for period was $374 million, compared to $540 million in the prior period.
Operating revenue grew by 5.3 per cent to $5.8 billion, which was offset by a $191 million increase in the price of fuel.
Air New Zealand also said it was impacted by a temporary increase in operating costs, as the airline sought to improve network resiliency for its customers in the face of the global Rolls-Royce engine issues.
Chairman Tony Carter said: “While we are disappointed that we did not meet the expectations we first set for ourselves at the start of the financial year, the fact is we are operating in a different demand environment than we were 12 months ago.
“To have achieved a solid result despite these headwinds speaks volumes about the extraordinary dedication and commitment of our people.
“When we first saw signs that demand was slowing, we took immediate steps to review our network, fleet and cost base, to position the airline for success in a lower growth environment. While we have made progress, this work is still ongoing.”
Air New Zealand CEO, Christopher Luxon, who will leave next month, said that as the airline looks to the coming year, it is in a fundamentally strong position and will target further growth that taps into new pools of demand.
“We were very excited earlier in the year to announce that we would begin flying to Seoul in November 2019. A new seasonal service from Christchurch to Singapore will begin in December 2019, which will provide greater choice for visitors and locals alike. We will also launch additional frequency into both Chicago and Taipei, as these routes continue to outperform our expectations,” he said.
“Another important milestone will be the return of our remaining Rolls-Royce engines back into service, which we are expecting to happen in the coming months. This will enable us to bring further reliability back to our flying schedule and to utilise our most efficient aircraft in the optimum way.”
The airline will take delivery of six ATR aircraft and three Airbus A320/321neo aircraft in the 2020 financial year, to be used on the Tasman and Pacific Islands network. An additional Boeing 787-9 Dreamliner will also join the fleet this year.
Based upon current market conditions and assuming an average jet fuel price of US$75 per barrel, the airline is targeting earnings before taxation to be in the range of $350 million to $450 million.