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In keeping with the guidance given to the market in June, Air New Zealand reported Thursday (25 August) that the airline posted a loss before other major factors and taxation of NZ$725 million for the 2022 financial year. $810 million was the statutory loss before taxes.
Although the airline’s operating revenue of $2.7 billion was considerably hampered by travel restrictions connected to the epidemic, the financial year finished strongly following the gradual reopening of New Zealand’s borders in March. Domestic and cargo revenue helped boost overall revenue by 9%, but high fuel prices and restricted flying for most of the year led to a deficit for the quarter.
Greg Foran, the chief executive officer of Air New Zealand, said the company remained focused on doing what was right for its stakeholders while being guided by a clear strategy.
“For customers, we’ve been focused on restoring services, maintaining a choice of fares, and launching innovations to improve their journey with us. For our amazing staff, we have provided one-off awards to acknowledge their continued extra mahi, and for our communities, we’ve been obsessed with operational performance, which drives the reliable services they depend on. For our shareholders, whose support has refueled the business for future growth, we’ve completed a successful recapitalization that was structured to be fair to our shareholders, including those that didn’t take up the rights offer.”
Foran noted that cargo revenue, which increased 32% to $1.0 billion, continued to play a significant role in the company’s performance. Of that revenue, $403 million came from additional flights made under the airfreight programs of the governments of Australia and New Zealand. The Australian program is over, and the New Zealand program is winding down and will conclude by the end of March 2023 given that borders have mostly been reopened.
Bookings and income for the company experienced a very robust comeback after the travel restrictions started to loosen in March. With high booking levels during July and August, this pattern is still present. Corporate reservations are tracking closely toward pre-COVID levels, which is very promising.
Foran cited another instance of the airline acting in the best interests of stakeholders when it changed its schedule in the middle of August, reducing the number of seats by 1.5 percent to the end of March 2023.
“As we’ve been seeing overseas, travel demand is much stronger than anyone anticipated. But we’re operating in a very tight labor market with high fuel prices, tough economic conditions, and the highest levels of employee sickness in more than a decade. Our rehiring efforts and training capability have been excellent, as has work to get our Boeing 777-300ER aircraft back flying again, but the experience for some of our customers and the impact on our front-line staff this winter has been unacceptable, so we’ve adapted yet again. Having adjusted our schedule to provide customers with increased surety over their travel plans for the coming spring and summer, I am hugely appreciative of the work the Air New Zealand whānau has done to deliver more than 25,000 flights across June and July alone.”
Additionally, the airline made investment choices in support of its Kia Mau plan. These include the decision to shut its Gas Turbines business segment by the middle of the 2023 calendar year and the strategy to relocate the Auckland staff to its airport facility.
As of August 23, 2022, the airline had $2.3 billion in liquid assets available, which were made up of about $1.9 billion in cash and $400 million in money under the unsecured standby lending facility with the Crown.
The airline expects to redeem $200 million of issued redeemable shares from the cash balance once our recovery has advanced further. Before the airline’s profitability substantially improve and in the context of positive and lasting recovery in the larger economy, the Board does not anticipate considering dividend payments.
Air New Zealand anticipates that the 2023 fiscal year will mark the first full year of uninterrupted passenger flying since the start of the epidemic, with borders now open to the majority of the airline’s markets.
For the fiscal year 2023, total flying capacity is anticipated to be between 75% and 80% of pre-COVID levels. Accordingly, the airline expects its financial performance to significantly improve from the financial year 2022.
No earnings guidance will be given at this time due to the level of uncertainty surrounding the volatility of jet fuel prices, the possibility of a worldwide recession, and other macroeconomic concerns such as inflationary pressures on expenses.