Air New Zealand has announced pre tax earnings of $374 million, down 31 per cent from $540 million as fuel cost pressures and weaker demand in the domestic leisure segment continue to impact the airline's profitability.
Net profit after tax also fell 31 per cent from $390m to $270m.
In late May, Air New Zealand said it was targeting 2019 earnings before taxation to exceed $340 million versus prior guidance given in March of between $340 million and $400 million.
Last year about 8500 staff were paid bonuses of up to $1800. This year they will receive a bonus of just $100, reflecting the company's overall performance.
Chairman Tony Carter said the result was driven by operating revenue growth of 5.3 per cent which was offset by a $191 million increase in the price of fuel, as well as a temporary increase in operating costs as the airline sought to improve network resiliency for its customers in the face of the global Rolls-Royce engine issues.
Carter said the result represented the relentless focus and hard work of more than 12,500 Air New Zealand staff, who have risen to the challenges this financial year has presented.
"While we are disappointed that we did not meet the expectations we first set for ourselves at the start of the financial year, the fact is we are operating in a different demand environment than we were 12 months ago.
"To have achieved a solid result despite these headwinds speaks volumes about the extraordinary dedication and commitment of our people.
"When we first saw signs that demand was slowing, we took immediate steps to review our network, fleet and cost base, to position the airline for success in a lower growth environment. While we have made progress, this work is still ongoing.
"I am very confident in our strategy and our experienced, world-class executive team who are focused on driving our business back to earnings growth, while ensuring that we maintain the airline's strong customer-centric culture."
Out-going chief executive Christopher Luxon noted that as the airline navigates a more challenging demand environment, delivering competitive fares and a superior customer experience remained a top priority.
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"While the New Zealand market has seen foreign competitors reduce capacity or withdraw completely this year, we have continued to grow both domestically and internationally and to adjust our domestic fare structure to keep New Zealanders connected to each other and the world.
"In a society with rapidly changing customer expectations, we know we need to continue to lift our game. We invest a huge amount of time understanding what our customers value and how we can improve their experience, which is why we introduced free Wi-Fi onboard our long-haul flights earlier this year and announced changes to our economy product offering."
Luxon said that while the outcomes of the business review announced in March would provide some clear benefits to the airline in the coming year, there were still further cost efficiencies that needed to be made following the conclusion of operational and overhead cost reviews.
"We are focused on ensuring that Air New Zealand is fit for the new lower growth environment and part of that involves identifying ways that we can deliver meaningful, sustainable reductions in our cost base. We know we already run a tight ship and that any further cost savings will require exponential effort. "
Luxon said it had selected an external consultancy to help with the process.
"They can provide us with an outside perspective and are able to benchmark us to provide a clear understanding of how our processes compare with global peers."
Luxon said the airline also remained committed to delivering on its sustainability strategy and initiatives.
"We know that sustainability is a critical global issue and we risk losing our social license to operate if we do not genuinely address climate change. That is why you will see us continue to invest, whether that be further reducing single use plastic items on board our aircraft or making it easier for our customers to voluntarily offset their emissions with our FlyNeutral tool."
Air New Zealand will pay a final dividend of 11 cents per share taking the total dividend for the year to 22 cents per share in line with the prior year.
The airline forecast earnings before taxation to be in the range of $350m to $450m for its 2020 financial year based on current market conditions and assuming an average jet fuel price of US$75 per barrel.