Air New Zealand anticipates strong demand in 2024

Air New Zealand announced on Thursday that it expects strong customer demand in the financial year 2024, after reporting a significant annual profit due to a resurgence in travel and lower jet fuel prices. The airline's shares rose over 3% in early trading, and it also declared its first dividend since February 2020, a special dividend of 6 New Zealand cents per share. 

The broader market was down 0.1%, but Air New Zealand's shares posted their biggest intra-day jump since Dec. 8. While the airline anticipates strong demand across markets next fiscal year, it also acknowledges international competition, volatile fuel prices, ongoing wage inflation, and increased airport charges may impact future customer demand and profitability. 

The airline has revised its capital management framework from fiscal 2024 and is aiming 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," the company said in a statement. 

It also aims to return excess capital through special dividends or share buybacks while targeting a liquidity range of NZ$1.2 billion to NZ$1.5 billion ($716.64 million to $895.80 million) in the financial year 2024. Air travel demand has surged since the lifting of pandemic-related restrictions and border closures, while a shortage of aircraft, parts, and labor has led to higher airfares globally. For the year ended June, Air New Zealand reported earnings of NZ$585 million before tax and other significant items, surpassing its forecast of no less than NZ$580 million. The airline had posted a loss of NZ$725 million a year earlier.