Watch live: Air New Zealand posts annual profit of $412m, resumes dividend payments

Air New Zealand returned to profit after three years of losses and resumed dividend payments as it benefits from strong demand for travel following the Covid-19 pandemic.

The national carrier posted a profit of $412 million in the year to June 30, a turnaround from a loss of $591m the previous year. Revenue lifted 135% to $6.45 billion.

Air New Zealand was hard hit during the pandemic when international borders were closed to travellers, and it needed the Government’s help to keep it afloat. However a surge in travel demand when borders re-opened and a lack of airline capacity has seen it roar back to profitability and enabled it to resume dividend payments.

“After several volatile years it’s great to be back in the black and standing on our own two feet especially given we have more than $3.5 billion in aircraft investment coming over the next five years,” said chief executive Greg Foran.

The airline announced an order for two new ATR turboprop aircraft for regional routes, as well as two new Airbus A321neos for its international short-haul network. That’s on top of its existing domestic Airbus A321neo orders, eight new Boeing 787 Dreamliners to replace its Boeing 777-300s, and the interior retrofit of 14 existing Boeing 787 aircraft.

The financial year began as borders were still reopening and aircraft were stored in the desert, and ended with domestic capacity at 94% of pre-Covid levels and international capacity at 71%. Having restored its international network, the airline carried out the biggest recruitment drive in its history and returned all aircraft to the skies.

Air New Zealand aircraft and crew will be returning to its Auckland-Perth route on October 29 after a period of operation in partnership with Spanish airline, Wamos Air. The airline will continue operating daily services to Perth, with more than 2,000 seats a week available.

The business benefited from robust demand for travel and constrained supply coming out of the pandemic.

The company reported profit before tax and one-time items of $585m, the second highest earnings in its history, in line with its June forecast for at least $580m and a turnaround from a pre-tax loss of $725m last year.

“We know increased costs and high demand have made flying more expensive,” Foran said.

“In the past year we put more aircraft and seats in the air, so there are more choices for customers which helps alleviate the cost of flying. At the same time, our own costs continue to rise and the reality is that airfares are unlikely to return to pre-pandemic levels.”

Foran said customer demand remained strong across its markets.

Still, he said the airline was mindful of the uncertain economic environment and that a number of factors may impact future customer demand and profitability.

That included increased international competition, volatile fuel prices, a weaker New Zealand dollar, ongoing wage inflation and increased airport charges.

Given the uncertainty and volatility of some of these macroeconomic factors, the airline did not provide guidance for future earnings.

The company is returning about $200m to shareholders through the payment of a 6 cent special dividend, having not paid a dividend since 2019, prior to the pandemic.