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Air NZ lands with record result

NZ NewswireNZ Newswire 25/08/2016 Fiona Rotherham

Air New Zealand has ridden the tourism boom and staved off increased competition to deliver the best full-year earnings in its 76-year history.

Earnings before other significant items and tax was up 70 per cent to $806 million in the 12 months ended June 30 while pre-tax profit of $663m increased 40 per cent, the airline said on Friday.

Significant items of $143m included a $83m writedown on the carrying value of its shareholding in Virgin Australia after it retained just 2.5 per cent of its stake during the financial year, and $57m relating to legal costs and settlement of a US class action compensation claim over anti-competitive conduct in the air cargo business.

Shareholders are being rewarded with a one-off special dividend of 25 cents per share on the top of a final dividend of 10 cents per share, taking total ordinary dividends to 20 cents for the year.

Chairman Tony Carter says the airline's staff are critical to its success and around 8500 employees will next week be paid a company performance bonus of up to $2500 for those not covered by other incentive programmes.

Chief executive Christopher Luxon says the airline ended the year with customer satisfaction at record highs, staff culture continuing to improve, and the best financial results in its history.

Air NZ would pay the government around $260m in total dividends, he said.

But the outlook is less rosy with increased competition from a growing number of international carriers adding capacity in response to New Zealand's tourism boom and the threat of rising fuel prices.

Due to those factors, the airline has forecast operating earnings for the 2017 financial year in the range of $400m to $600m.

Aircraft capital expenditure is expected to be $2.1 billion over the next five years.

The airline paid down debt during this financial year with gearing at 48.6 per cent, an improvement of 3.8 per centage points and net debt reduced to $702m from $826m the previous year.

Net debt reduced to $1.99b from $2.15b.

Air New Zealand shares last traded at $2.23.

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