Air New Zealand's passenger revenue falls

By Edwin Mitson

Tails of Air New Zealand A320s. Air New Zealand passenger revenue fell sharply in the first six months of the financial year. Photo / File
Tails of Air New Zealand A320s. Air New Zealand passenger revenue fell sharply in the first six months of the financial year. Photo / File

Passenger revenue in the first six months of Air New Zealand's financial year has fallen sharply, even when the impact of foreign exchange fluctuations are eliminated.

In an update to the NZX, the country's national airline said for the financial year to date, short haul passenger revenue through its preferred metric had fallen 6.3 per cent, while long-haul passenger revenue had slumped 14.3 per cent.

Air New Zealand's preferred metric is passenger revenue divided by the total capacity for the period, what it terms RASK.

When foreign exchange is eliminated, group-wide RASK fell 9.3 per cent, while yields, which represent passenger revenue per passenger kilometre flown fell 7.9 per cent.

For the month of December, Air New Zealand flew 1.59 million people, an increase of 5.4 per cent on the year earlier, although its aircraft weren't as full as a year earlier, with 83.5 per cent of all seats sold, down 1.5 per cent on December 2015.

This was mainly due to a fall in sales on flights to Asia, Japan and Singapore. 86.3 per cent of seats were sold on these services, down 5.6 per cent on a year ago. The airline had increased services in this region by 10.8 per cent, reflecting a new seasonal service between Japan and Osaka.

The percentage of seats sold on flights across the Tasman and the Pacific fell 2.7 per cent to 78.4 per cent. This was due to capacity rising faster than demand, with some routes switching to a larger aircraft and growth on the Perth and some Pacific Island routes.

Air New Zealand reported its best full year earnings in its 76-year history in August for the financial year which ended on June 30, 2016. Earnings before significant items and tax rose 70 per cent to $806m. Staff were paid a bonus to reflect the record results, while shareholders got a special one-off dividend.

At the time, the airline warned the outlook ahead was less rosy due to increased competition and rising fuel prices. It said it expected operating earnings for the 2017 financial year in the range of $400m to $600m.

The details are contained in the airline's monthly update to investors, which details December's market conditions. Air New Zealand's financial year runs from the beginning of July to the end of June. It's full half-year financial results are due to be released on February 23.

Air New Zealand declined to comment.

Shares of Air New Zealand rose 0.2 per cent or half a cent to $2.195. They've fallen 0.2 per cent since the start of the year.

- BusinessDesk

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