Air NZ profit grounded by fuel/quakes, sees rebound

John Leahy (3rdR), Airbus CEO,Customers, Rob McDonald (C), Air New Zealand Chief Financial Officer, Steven F. Udvar-Hazy (3rdL), ALC's Chairman and CEO, and Ian Aitken (2ndL), IAE's Chairman and CEO, pose in front of the first ALC Airbus A320, painted black in tribute to the New Zealand rugby team, during a delivery ceremony in Colomiers near Toulouse January 28,2011.

WELLINGTON (Reuters) - National carrier Air New Zealand Ltd AIR.NZ reported a second half loss on Thursday because of disasters and high fuel prices, but said it was looking to bounce back in the coming year.

The airline has fared better than many of its competitors during tough times, but its second half earnings fell into the red through sky high fuel prices and the impact of the earthquakes in Christchurch and Japan.

"In the absence of further deterioration in global economic conditions and an escalation in fuel prices we expect a better financial performance in the 2012 financial year," the company said in a statement.

Net profit of NZ$81 million for the year ended June 30, compared with NZ$82 million last year. Normalised profit, which excludes movements in fuel hedges, was NZ$75 million compared with NZ$90 million last year.

A survey of analysts by Thomson Reuters I/B/E/S had forecast a profit of around NZ$74.5 million.

It said it had lost NZ$37 million in the second half of the year, which knocked a NZ$70 million hole in earnings, and dented the first half's NZ$112 million profit.

"These natural disasters and sustained high fuel prices dramatically altered what was shaping up to be a very positive full year result," chairman John Palmer said in a statement.

The company declared a final dividend of 2.5 cents per share, compared with 4 cents a share last year.

Air New Zealand shares, around 73 percent owned by the government, closed on Wednesday at NZ$1.11. So far this year the company has fallen nearly 10 percent against a flat showing for the benchmark NZX-50 index .NZ50

The airline said it had gained market share and increased load factors on the highly competitive routes between New Zealand and Australia, while it continues to dominate the domestic market.

However, long haul international travel was difficult and a loss maker.

"This has seen long haul routes in our network lose more than NZ$1 million a week in the first six months of this calendar year," said chief executive Rob Fyfe, adding the carrier would look at routes and aircraft being used to cut costs.

The carrier has taken a 15 percent stake in Australian carrier Virgin Australia VBA.AX, with whom it has a commercial alliance, to combat aggressive competition from Australian carrier Qantas (QAN.AX) and its low cost offshoot Jetstar on routes between the two countries.

It has also set up code sharing deals with Virgin Atlantic and Etihad.

The New Zealand government has indicated that if it is re-elected at this year's election it plans to sell down its stake in the airline, but will retain majority control.

(Gyles Beckford)