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Air New Zealand isn't resting on its profitable laurels as it braces for the challenges that could affect performance amid the expected strong customer demand in the next fiscal year.

Air New Zealand on Thursday signaled robust customer demand for financial year 2024, after posting a large annual profit helped by a rebound in travel and lower jet fuel prices, sending its shares up more than 3% in early trade.

New Zealand flagship carrier also declared a special dividend of 6 New Zealand cents per share, its first dividend since February 2020.

Shares of the company were up as much as 3.3%, posting their biggest intra-day jump since Dec. 8. The broader market was down 0.1%.

While the airline said it expected strong demand across markets next fiscal, there would also be international competition, volatile fuel prices, ongoing wage inflation and increased airport charges to impact future customer demand and profitability.

The airline revised its capital management framework from fiscal 2024 and aims for an ordinary dividend payout ratio of 40% to 70% of net profit after taxation.

“Having restored its international network, the airline carried out the biggest recruitment drive in its history and returned all aircraft to the skies,” it said in a statement.

It also said it would return excess capital via special dividends or share buybacks, while targeting a liquidity range of $716.64 million to $895.80 million (NZ$1.2 billion to NZ$1.5 billion ) in financial year 2024.

Demand for air travel has boomed since the removal of pandemic-related restrictions and border closures. A shortage of aircraft, parts and labour has also contributed to higher air fares globally.

For the year ended June, Air New Zealand posted earnings of $350 million (NZ$585 million) before tax and other significant items, compared with its forecast of no less than $345 million (NZ$580 million).

It posted a loss of $423 million (NZ$725 million) a year earlier.

($1 = 1.6745 New Zealand dollars)

(Reporting by Nausheen Thusoo and Harish Sridharan in Bengaluru; Editing by Shailesh Kuber and Rashmi Aich)

This article was from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to [email protected].

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Tags: air new zealand, earnings, new zealand, share buybacks

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