The Press TUESDAY, OCTOBER 1, 1974. A sound performance by Air New Zealand

Press, Volume CXIV, Issue 33653, 1 October 1974, Page 16

The Press TUESDAY, OCTOBER 1, 1974. A sound performance by Air New Zealand

Air New Zealand’s profit of more than $4 million for the year ended March 31 is commendable because it is against the world trend: international airlines, including some of the largest, are showing serious financial losses. By some commercial standards, Air New Zealand’s achievement is modest enough for an enterprise which has more than $lOO million invested in aircraft and plant, an operating revenue of nearly $9O million, and loans of nearly $6O million to service. During the year the airline won substantial increases in the number of passengers and in the quantity of freight carried, and this success vindicates the policy to re-equip with wide-bodied DCIO aircraft, three of which are now in service. Three more of the new jets are on order and these will increase the airline’s indebtedness to $9O million by 1976. Against this considerable outlay of foreign exchange and against other overseas expenses must be set the airline’s capacity to earn foreign exchange and its assistance in moving New Zealand exports to new markets. After interest and loan repayments last year, and after other costs abroad had been met, the airline earned $45.4 million in foreign exchange. In the long run the increase in air freight is probably more beneficial for the airline, and for New Zealand, than the increase in the number of passengers. Last year the carriage of air freight, measured in ton-miles, almost doubled the previous year’s performance. The larger aircraft made an important contribution to this improvement. In 10 years the volume of freight carried by the airline has increased twenty-fold.

Air New Zealand enjoys the advantages of operating on routes for which the competition is less intense than is the airline business in many parts of the world. Pacific basin air fares are significantly higher than those in Western Europe and across the Atlantic, and the airline has been able to work out a sensible and well-integrated pattern of routes. In spite of fare increases, its performance this year may not be as satisfactory. Higher fue] prices afflicted the airline only for the last three months of its last financial year. In those months the price of its fuel at all but Australian airports more than doubled. The airline spent $8.3 million on fuel last year, compared with $5.8 million the year before. This year its fuel bill is likely to be more than $l7 million. Like the airlines of other countries Air New Zealand so far has sought fare increases which do little more than keep pace with rising fuel costs; other cost increases, including higher wages and the general effects of inflation, have had to be absorbed by the airline. This process cannot continue and substantial fare increases may be necessary at the risk of a decline in the rate of expansion of traffic just as the next DC 10s come into service. Pan American Airways is losing about $8 million a month; British Airways, formed from the amalgamation of 8.0.A.C. and 8.E.A., expects to lose more than $3O million this year in spite of considerable economies as a result of the merger. Other national airlines, including Air France and Japan Air Lines, also expect to show losses this year. Even if it does no more than break even, Air New Zealand will be doing well.