Air New Zealand sees fall in 2014-15 fuel costs

OREANDA-NEWS. August 26, 2015. Air New Zealand reported reduced fuel costs of NZ\\$1.09bn (\\$706mn) for the 2014-15 fiscal year ending 30 June against NZ\\$1.12bn for the same period a year earlier. But this was not enough to stem the rise in total operating expenses to NZ\\$3.76bn from NZ\\$3.65bn for the same period.

This is the third successive year of falling fuel costs, which are the second-largest source of expenses for Air New Zealand behind labour costs.

Its average jet fuel price per barrel, including hedging, was down by 14pc in 2014-15. Lower fuel prices have strengthened the airline's outlook, Air New Zealand chairman Tom Carter said. Based on a \\$60/bl Singapore jet fuel price, the impact of the reduction in jet fuel prices for 2015-16 is NZ\\$293mn lower than 2014-15.

Air New Zealand's revenues rose to NZ\\$4.11bn for 2014-15 from NZ\\$3.85bn during 2013-14, while its profit rose to NZ\\$327mn from NZ\\$263mn over the same period. The result was driven by a 4.2pc rise in the number of passengers carried, as well as boosting capacity in response to higher demand.

The airline plans new routes to Houston in the US and Buenos Aires in Argentina and is looking at new opportunities in Australia, Asia and the Americas. Air New Zealand plans investment of NZ\\$2.6bn in aircraft and associated assets with an 11pc expansion in aircraft capacity for 2015-16. It also plans to invest in more fuel-efficient aircraft. The company expects improved profitability for 2015-16 because of the increase in capacity and improved operating efficiency.