Record profit announced by Air N.Z.

Press, 10 July 1985, Page 3

Record profit announced by Air N.Z.

From

LES BLOXHAM,

in Auckland Air New Zealand has climbed full power to a record profit. The company announced yesterday a net after-tax profit of $133.6 million. Its working profit of $153.6 million is almost double the previous year’s result. Total revenue was $ll6O million, up from $899 million. Income tax of $24 million was paid for the first time since 1972. The net profit represents an increase of 30 per cent on last year’s figure of $102.5 million. An obviously pleased chief executive, Mr Norman Geary, told journalists at an Auckland press conference that the company had been able to transform in three Sears the biggest loss in few Zealand commercial history, $9O million in 198182, into one of the highest profits achieved. This represented a “phenomenal” turnaround of $243 million, he said. “This is an exceptional achievement, of which, I am sure, the staff will be very proud. The latest figure is more than double that achieved in 1980-81,” he said. “Most significantly, our traffic growth remains well ahead of most I.A.T.A. airlines.” Revenue passenger kilometres on domestic routes rose 15.5 per cent after growth of 11.5 per cent the year before. International traffic growth in the last three years totalled 41 per cent, more than three times the I.A.T.A. scheduled carriers cumulative total of 10.5 per cent for the same period, he said. Mr Geary said it was unlikely that the company would achieve as good a result in 1985-86, because of cost pressures outside of the airline’s control, a highly competitive Pacific marketplace, and the impact of new aircraft on order on the airline’s cost structure.

The 10 aircraft will cost about $BOO million.

“The company has probably reached a peak of

profitability for the time being,” he said. The new aircraft would, however, provide an essential platform for further growth of Air New Zealand and inbound tourism, he said.

Mr Geary emphasised that much instability existed in the aviation industry internationally as carriers continued to fight to protect their commercial interests and grapple with competitive pressures. “The instability is likely to persist for some time and individual airline financial results will fluctuate widely while the industry adjusts. Eventually, and after a painful process, stronger and fewer carriers are likely to emerge,” he said. Provided a logical relationship between aircraft capacity and demand was retained, the company could remain confident, said Mr Geary. Several hundred more employees would be needed with the introduction of the Boeing 767, he said. Staff increases over the last 12 months had been limited to 156. Most of whom were school-leavers.

Record passenger numbers were carried on both domestic and international routes, with domestic traffic up 15.1 per cent on last year. International passengers increased 10.3 per cent.

“This is most encouraging because for a number of years the domestic traffic in particular was quite flat,” he said. “It is pleasing to note that international growth over the last three years has , totalled 41 per cent.”

Mr Geary said that the company in the last year had paid the Government $35 million in airways dues, $6 million in landing charges, $7.5 million in fuel tax, $11.7 million in passenger tax, and $24 million in income tax. The directors have recommended a dividend of $65 million. This is 54 per cent on the paid-up capital of the company and represents 49 per cent of the net profit after tax.