Air New Zealand says it is confident of coping with higher fuel prices if tension over a possible attack on Syria forces oil prices even higher.
The airline announced its highest net profit in five years which saw its shares bounce by 4.4 per cent to $1.43 in early trading.
While the $182 million profit proved the business was in good shape and it was forecasting an even better result in the current year, chairman John Palmer said the outlook came with conditions.
"That of course is caveated by the global situation both on market demand and fuel prices and of course as we see today the world is not immune from continuing crises."
Chief executive Christopher Luxon said the airline had substantial hedging in place for fuel in the current year.
"Fuel will be what fuel will be but we've learned to run our business around that. Our hedging policies allow us time to change to changing circumstances," he said.
Prospects of an American led air strike on Syria have pushed oil prices to a six month high.
Luxon said Air New Zealand had already learned to build a profitable business around fuel prices that have been close to record highs over the past year.
He said the airline was exploring new international routes and although not prepared to discuss destinations today, announcements would be made in the coming 12 months.
'There's a lot of aggressive work going on in that space. We'll end up with 25 wide body aircraft, a mix of 777s and 787s and that's going to enable us to deepen existing markets and access new markets."
Luxon said the airline had got off to a very good start in the current financial year.
"It's still early days but we're very encouraged by the first month of this year and importantly as we look forward in our bookings they remain very, very strong. We are very focussed on ensuring we do better in this coming year than we have in the past year," said Luxon who took over as chief executive in January.
The $182 million net profit after tax for the full year to June 30 was 156 per cent from the year before.
The airline - which is about 74 per cent owned by the government on behalf of the taxpayer - is paying a final dividend of 5 cents a share, taking its total dividend for the year to 8 cents a share - a 45 per cent jump from last year's payout.
Matthew Goodson, managing director at Salt Funds Management, said the result was a good one and the market had reacted.
"I suspect it would be somewhat higher again if there were not a general expectation that there will be a lot of stock on the market in the not-too-distant future," Goodson said.
"Whether it paves the way for the government to sell down its holding to just over 50 per cent - which would be a far easier prospect than the sell down of Meridian - will be interesting," he said.
The Government intends to partially privatise state owned power generator Meridian in November.
Air New Zealand says it will spend around $1.8 billion on new planes over the next three years including six new Boeing 787-9 'Dreamliners' and two new Boeing 777-300ERs. It is also buying nine shorter- range Airbus A320s.
Air New Zealand has said the first of its 787s will replace replace older aircraft flying to Asia, Western Australia and holiday destinations in the Pacific.
Boeing is about to test fly the first of the 787-9s which will join Air New Zealand's fleet around the middle of next year.
The 787-9 can carry between 250 and 290 passengers but Luxon said the airline was not yet ready to announce final configuration of the cabin.
Earnings before taxation of $256 million, an increase of 172 per cent
Net profit after taxation of $182 million, an increase of 156 per cent
Operating revenue $4.6 billion, up three per cent
Operating cash flow of $750 million, a record for the Group
Gearing improved seven percentage points to 39.1 per cent, a record low
Fully imputed final dividend of 5.0 cents per share, taking total dividend to 8.0 cents per share