Air New Zealand has said that its earnings before taxation for the 2019 financial year of NZ$374 million ($239 million), compared to $540 million in the prior period - marking a 31% dip.
Net profit after taxation was $270 million and operating cash flow was $986 million.
The result was driven by operating revenue growth of 5.3%, which was offset by a $191 million increase in the price of fuel, as well as 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.
Operating revenue for the full year rose 5.3% to $5.8 billion as RASK was up 1.6% on capacity growth of 4%.
ASKs for the year rose 4%, while RPKs were up 5.2%, resulting in load factor strengthening one point to 83.8%.
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.
“I am very confident in our strategy and our experienced, world-class executive team who are focused on driving our business back to earnings growth, while ensuring that we maintain the airline’s strong customer-centric culture.”
Christopher Luxon, chief executive officer, added: “While the New Zealand market has seen foreign competitors reduce capacity or withdraw completely this year, we have continued to grow both domestically and internationally and to adjust our domestic fare structure to keep New Zealanders connected to each other and the world.
“In a society with rapidly changing customer expectations, we know we need to continue to lift our game. We invest a huge amount of time understanding what our customers value and how we can improve their experience, which is why we introduced free Wi-Fi onboard our long-haul flights earlier this year and announced changes to our Economy product offering. We can’t wait to share some further exciting product developments and enhancements in the coming months, which we think our customers are going to love.”
The airline will also take delivery of six ATR aircraft and three Airbus A320/321 NEO aircraft in the 2020 financial year, which will provide continued growth, fuel efficiency and cost benefits on the Tasman and Pacific Islands network. An additional Boeing 787-9 Dreamliner will also join the fleet this year.
Air New Zealand’s investment-grade credit rating and strong operating cash flow have enabled it to continue to invest in the most innovative, efficient and comfortable aircraft on the market to deliver on its commitment to grow sustainably.
Earlier this year the airline announced that it would replace its fleet of Boeing 777-200 aircraft with the Boeing 787-10 Dreamliner, subject to shareholder approval in September. These aircraft will start to be delivered from the 2023 financial year and will be a game-changer for the airline, offering a 25% improvement in fuel efficiency.