Air New Zealand is on course for a bumper profit of around $600 million for the past year after riding the travel boom that's feeding high passenger loads on to its growing domestic and international network.
Lower fuel prices and holding costs throughout the business are also helping the airline but the threat of rising oil prices and growing competition are expected to bite into the airline's performance this year.
Result for the financial year to the end of June are expected on Friday and analysts at Credit Suisse are forecasting a profit spike of around 80 per cent to a record of up to $601m.
Goldman Sachs estimates net profit will be $592.3m.
Pre-tax estimates range from $835m to $858m but both firms warn that growing competition will affect the airline in the current financial year, especially on Chinese and United States routes.
Harbour Asset Management portfolio manager Shane Solly said Air New Zealand's business had been remodelled to take out profit fluctuations that were a characteristic of the airline industry.
"That's part of the issue that markets are dealing with. Is it normal, is it the new normal or a cyclical peak?"
The airline's performance had alerted its rivals which were also benefiting from low oil prices and high demand.
"What we're seeing is that they're performing so well they're attracting intense competition from the US and Middle East and Asia," he said.
Qantas partner American Airlines started flying directly across the Pacific at the end of June; Emirates is increasing long-haul capacity to New Zealand; Qatar Airways is scheduled to start services early next year. Other new competitors include AirAsia X which started services to the Gold Coast and Malaysia and China Eastern flying to Shanghai.
Analysts at Goldman say Air New Zealand's Pacific Rim strategy had delivered profitable capacity growth in what had been a relatively benign competitive environment to date .
"While New Zealand international inbounds continue to improve, competition for these tourists is set to intensify with various international carriers adding capacity."
Fuel prices were expected to rise also.
Credit Suisse estimates the Air New Zealand paid US$47 per barrel of jet fuel for the second half of the 2016 financial year but this was forecast to increase to US$55 per barrel.
The two firms forecast Air NZ's profit will fall to slightly more than $400m.
Towards the end of the financial year Air NZ sold 19.98 per cent of its stake in Virgin Australia for $276m after spending $480m building it up.
Solly said the Virgin stake had allowed Air New Zealand to gain more of a foothold in Australia - which it has retained through a continued alliance - and a better understanding of that market.
"As a board and a management team you sometimes have to undertake explorations that don't pan out."
Benje Patterson, a senior economist with Infometrics said the Air New Zealand's forecast "supernormal" wasn't surprising given the growth in passenger numbers across the fleet.
"That's evidence that focussing on the Pacific rim and picking up new markets is paying dividends for them," Patterson said.
New Zealand passengers were also benefiting from growing airline capacity and competition, he said.
Consumer price index data showed airfares had fallen 14 per on domestic routes, where Air NZ now faces competition on some regional routes from Jetstar.
Jetstar's owner, Qantas, reports its full-year result on Wednesday and is forecast to make a bottom line profit of around A$1 billion ($1.05b), a marked turnaround from its A$2.8b loss two years ago.