Air New Zealand release HY15 Interim Results

Air New Zealand have today announced their Interim Financial Results for the HY to December-2014.

Air New Zealand had a mixed result with its normalised profit up 20% to $216m, however its after tax profit slipped 6% to $133m.

Air New Zealand expect the full year profit to grow with fuel prices and hedge pricing in the second half year much lower due to weaker global oil prices.

The announcement also looks forward to the launch of AKL-EZE, new fleet arrivals, and the continues alliance with Singapore Airlines.

The airlines share price is currently up on the back of todays announcement.

Read more via stuff.co.nz HERE, The New Zealand Herald HERE or view the financial announcements and presentations via the New Zealand Stock Exchange HERE

REX buck the Australian trend

Bucking the trend of fellow Australian operators and joining Air New Zealand in announcing a profit was Rex with a full year profit before tax of $10.7m($AUD) with a net profit of $7.725m ($AUD) this was down 44.9% on the FY13 net profit.

Despite posting a profit REX has warned that the Australian Aviation market is in deep crisis pointing to the losses made by Qantas and Virgin and listing the 16 different regional carriers who have collapsed and ceased operations since 9/11

Rex executive chairman Lim Kim Hai said the carbon tax, an increased fuel levy to fund the Civil Aviation Safety Authority and record fuel prices were all negative factors in 2013/14.

There were a few announcements of note in the release, FY14 saw REX take full ownership of its 51 frame SF340B+ fleet purchasing the remaining 18 frames that came off lease at the end of March 2014.

Its subsidiary Pel-Air has secured contract extensions for some of its SA based mining charter operations and has tendered for the dedicated search and reduce service for the Australian Maritime Safety Authority which will be announced later this year.  In FY14 the Pel-Air contract for fast jet support to the Australian Defence Force was also renewed by the Federal Government.  Pel-Air has also launched a number of SF340B+ flights in Queensland in support of resource sector FIFO operations.

Subsidiary Air Link began a Sydney - Cobar charter service in October 2013 and has also re-commenced RPT services this month, with a twice weekly SYD-DBO 1900D service.

REX is awaiting the outcome of its tenders to the Queensland Government to operate regulated regional Queensland routes which will be announced in October.  REX currently services the TSV-WIN-LRE* and TSV-HGD-RCM-JCK-ISA^ routes with a current contract end of 31 December 2014.  REX also launched a 3x daily SYD-ARM service on 28 March 2014 after an expression of interest period from local councils within a 600km radius of SYD, brought about by a network review and the recruitment of 11 former pilots of recently collapse competitor Brindabella Airlines.  

Read the media release, investor briefing and annual report as released to the ASX HERE


* Townsville - Winton - Longreach
^ Townsville - Hughenden - Richmond - Julia Creek - Mt Isa

NZ announce strong profit

Its finical reporting season for Australasian aviation, and first out of the blocks was Air New Zealand reporting their third straight year of profit with a net profit of $262M(NZD).  This net profit represents a 45% increase on FY13.

Chairman Tony Carter said that the result represented the third consecutive year of strong earnings growth for the airline.  “This is a result Air New Zealand can be proud of. Our employees, our customers and our shareholders can be confident that Air New Zealand continues to be a world leading airline both in terms of customer experience and financial performance,” Mr Carter said.

Air New Zealand reported an 84.1% Load Factor for FY14 with 13,719,000 passengers carried.  This is mainly thanks to domestic passengers, with domestic capacity up 5.4% on the back of the replacement of the Boeing 737-300 fleet with Airbus A320s, and the introduction of new ATR 72-600s.  Domestic saw 8,920,000 passengers with a load factor of 81.1%.

FY15 will see the biggest increase in fleet numbers with a total of 10 aircraft entering the NZ fleet. 2x Boeing 787-9, 4x Airbus A320, 3x ATR 72-600 & 1x Boeing 777-300.  In the same period the remaining Boeing 747-400 will retire and the Boeing 737-300 fleet will dwindle to just 2 frames.

Read more on the Air New Zealand result via their releases to the New Zealand Stock Exchange 
- each section includes a downloadable pdf document
 - Media Announcement
 - Shareholder Review and Financial Report
 - Annual Results Fact Sheet
 - Results Analyst Presentation

VA Half Year result in the middle ground

After the highs of alliance partner Air New Zealand and the lows of opponent Qantas, Virgin Australia have today announced a "middle ground" position with their Half Year financial results.

While still announcing a statutory after tax loss of $83.7M AUD in comparison with Qantas, Virgin are in no way a loser with this result.

Virgin Australia has progressed with the integration of Skywest, continuing to align resources, systems and processes, and has worked closely with joint venture partner Tiger Airways Holdings Limited (Tigerair) to improve the performance of Tiger Airways Australia Pty Limited (Tigerair Australia). 

The integration of Skywest into the Virgin Australia Regional brand continues with this entity able to charter Virgin Australia jets to operate FIFO and other charter work especially in the WA mining areas.  VA Regional will also take delivery of at least 6 new ATR 72-600 aircraft by the end of the 2015 Calendar year. 

In the six months of the VA/TigerAir venture TigerAir has had an increase in passenger numbers of 3.5%, with a 4.5% increase in Load Factor and aircraft utilisation has increased by 12.7%

Read the Virgin Australia release to the ASX HERE

Half Year Interim Results The Winners and the Losers

The Winner

Air New Zealand are the big winners today announcing a half year interim normalised earnings of $180M NZD and an increase in passenger revenue, as well as a pre tax Statutory earnings of $197M NZD

The Loser

Qantas have today announced their underlying half year loss of $252M AUD before tax, with an action plan that will see job losses, fleet changes, and sale of terminal leases.

The Qantas changes
Qantas have announced that they have entered an agreement which will see the Brisbane Airport Corporation regain the lease of the Qantas Domestic terminal at Brisbane and related assets for $112M AUD.

Over the next three years Qantas will reduce their workforce by 5000 full-time positions which will include a reduction of 1500 management and non-operational roles, a restructure of line maintenance, as well as the already announced closure of the Avalon maintenance base and Adelaide catering base.  There will also be a reduction of operational roles relating to fleet and network changes, and the CNS flight crew base will close.

Qantas will make a change in timing to their MEL-DXB-LHR services from November 2014 to reduce on ground timing of the A380 in LHR.

Qantas will also end their PER-SIN services in first quarter FY15, while making all BNE-SIN and SYD-SIN services A330 replacing current B744 services.

Fleet Changes

Qantas will look to make savings up selling and differing up to 50 jets, this is broken up as follows;

• Boeing 767-300s - these will all be retired by Q3 FY15, following on from the retirement of the Boeing 737-400 fleet (see previous post)
• This will help Qantas standardise their domestic fleet to mostly 737-800 aircraft with Airbus A330 aircraft flying the East-West flights (SYD/MEL/BNE-PER) as well as peak services on the golden triangle (BNE/MEL/SYD) allowing the A332 fleet to operate International routes replacing B744s
• The 6 non-reconfigured Boeing 747-400 aircraft will be retired by the 2nd half of FY16 leaving just the 9 B744s with the A380 interior product.
• Deferral of the 8 remaining A380 orders (again)
• Deferral of the last 3 JQ B787-8 orders
• Restructring of the JQ A320 order book

Air New Zealand however will be adding aircraft;

• The A320 fleet will grow by 4 in FY14, 3 in FY15 and 2 in FY16 with the B733 retirements continuting with only 7 remaining in FY14, 2 in FY15 and all gone by FY16
• The B787-9s will arrive as follows FY15 3, FY16 3, FY17 2, FY18 2 this allows 3 of the B763 fleet to be retired by FY16 with the remaining 2 leaving in FY 17, while the last 2 744s will depart in FY15
• Two additional B773's will be delivered in FY15, 1 in 2014 and 1 in 2015
• 1 ATR76 will arrive in FY14, 3 in FY15 and the final one in FY16

The Releases

You can read the Qantas release to the ASX HERE and the Air New Zealand release to the NZX HERE, this story is also covered in almost every newspaper and website around.

NZ set to record profit increase of up to 20%

While Qantas has warned of a severe loss, Air New Zealand are forecasting a full year earnings boost of up to 20%.

The New Zealand National carrier has notified the New Zealand stock exchange that they look likely to record a profit of over $307M NZD in the 2014 full financial year.

Short Haul passenger numbers were up 1.6% on the same period last year. Demand
(RPKs) increased in the Domestic market by 2.4%, while capacity increased 3.7%.
Domestic load factor was down 1.0 percentage point to 80.2%.

Tasman/Pacific demand (RPKs) increased 1.2%, with capacity (ASKs) increasing 0.4%.
Load factor for Tasman/Pacific was up 0.7 of a percentage point to 85.1%.  

Air New Zealand have flagged they expect their Before Tax earnings for the 6 months to December 31st to be up 20%, compared to Qantas who expect to loose up to $300M AUD

Read more fro the nzherald.co.nz HERE or read the full Air New Zealand release to the NZX, including full RPK, ASK & LF data and upcoming changes to the Airpoints program HERE

QF warns of losses and job cuts

Qantas group CEO Alan Joyce has announced Qantas is facing a loss of up to $300M AUD in the 6 months from July to December this year.  As a result the group will cut at least 1000 positions in the next 12 months while all executives will have their salaries frozen at current levels and will not receive bonuses in this financial year.

It has also signaled that it will consider selling parts of its business. It has not named potential units which could be sold but there has been speculation that it could consider a part sale of its frequent flyer business.

As expected Mr Joyce has laid blame fairly and squarely on the "unprecedented distortion of the Australian domestic market" ramping up his recent attacks on Virgin Australia being allowed to undertake their equity raising including foreign ownership.  However like many others around the internet I believe Qantas are a victim of their own pigheadedness by trying to retain their 65% line in the sand, by increasing their own capacity on routes to maintain their 65% domestic market share.

Read more on the upcoming Qanta losses and cuts via
Brisbane Times (Fairfax) Business Day HERE or
Australian Business Traveller HERE

Rex profits drops sharply on back of Carbon Tax

In a week of ups and downs for Australasian airlines, Regional Express Holdings have announced a profit slump of 45% with a before tax profit of $19.2m (AUD)

An outspoken critic of government policy, executive chairman Lim Kim Hai said: “This would ordinarily be grounds for much jubilation but instead we at Rex are all too painfully aware that this pole position is an aberration arising from one of the most toxic environments ever to face aviation in Australia.”
Rex ended the year with profits down 45 per cent and passenger numbers down 6.8 per cent.

Rex have fairly and squarely set the loss at the feet of the government's controversial carbon tax, and blasted the government for its implementation, despite the fact Rex recorded a profit more than twice as large as the Qantas group.

Read more on the Rex profit and Chairman Lim Kim Hai's attack on the government at Australian Aviation HERE

Mixed profit/earning news for QF & JQ

Qantas has returned from their record loss last year to eek out a $6m (AUD) net profit this year.

Despite tough competition on international and domestic routes, and high fuel prices, Qantas more than doubled its underlying earnings to $192 million....
Revenue inched up 1.1 per cent to $15.9 billion. The airline again said it would not pay an interim dividend, continuing a policy in place since 2009.....
The domestic premium operations, Jetstar and the frequent flyer division all made a profit, while the international operations halved its underlying losses to $246 million.

Qantas have also flagged more asset sales, namely their Richmond based Defense Division which will be sold to Northrop Grumman for $80m

Read more on the Qantas result at brisbanetimes.com.au HERE

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Jetstar have reported a 32% fall in underlying profit thanks mostly to the launch of offshoots Jetstar Japan and Jetstar Hong Kong, the latter of which is still yet to get off the ground.

The result for Jetstar included a $29 million hit from the federal carbon tax and $50 million in start-up losses in Japan and Hong Kong. The start-up losses rose by $31 million from a year earlier.

It is believed Jetstar's domestic profitability has halved in the last financial year but the international and Jetstar Asia arms have turned a profit.  Jetstar are also looking towards increased competition from Tigerair Australia with the Airline set to double in size by 2018 now that Virgin Australia owns the controlling stake.

Read more on Jetstar's fortunes also at BT HERE 

NZ Profit Jumps

Air New Zealand have announced a full year net profit of $182m (NZD) for the year ended June 30 2013.  This represents a jump of 156% on the previous year with a record operating cashflow of $750m (NZD)

The airline is paying a final dividend of 5 cents a share, taking its total dividend for the year to 8 cents a share - a 45 per cent jump from last year's shareholder payout. The profit lift was largely anticipated by analysts.
Chairman John Palmer said this morning's result placed Air New Zealand amongst the best performing airlines globally.
"We are focused on further improving on this result in the 2014 financial year. Based on the airline's forecast of market demand and fuel prices at current levels, early results and forward bookings are encouraging." he said.

The airline has also announced they will spend $1.8b on new aircraft over the next 3 years, made up of 9 additional Airbus A320 aircraft for their Domestic fleet renewal, 2 additional Boeing 777-319ERs and 9 new Boeing 787-9s for their international fleet.

Read more about the Air New Zealand profit from stuff.co.nz HERE or the New Zealand Herald HERE or check out the full Air New Zealand results presentation pdf HERE

Virgin earnings downgrade

On Wednesday evening after the ASX had closed Virgin Australia announced an earnings downgrade expecting its full year result to be lower than last year although still positive.

The Virgin Australia share price fell eight cents to 38 cents on the news, wiping more than 17 per cent, or more than $200 million from its market capitalisation.

The price and capacity war being waged between Virgin and Qantas in the domestic market has been the catalyst for the downgrade and has also impacted the profit forecast of Qantas.

Read more on the news from Business Speculator writer Stephen Bartholomeusz HERE

NZ in the money + fleet news

Profit News
Air New Zealand have reported a strong half year interim profit with normalised earnings to 31-December-2012 up 300% on the previous year.

Earnings pre-tax were $139M NZD up from $33M NZD in the previous year, with normalised after tax profit of $100M NZD up $62M on the previous year.

Air New Zealand's media release lists the following

Key points:

• Normalised earnings¹ before taxation of $139 million, up more than 300 percent

• Statutory net profit after taxation of $100 million, up $62 million

• Operating revenue of $2.4 billion, up 3.4 percent

• Operating cash flow more than doubles to $343 million

• Gearing improves by 4.3 percentage points to 41.8 percent

• Fully imputed interim dividend of 3.0 cps, a 50 percent increase

Air New Zealand have credited the strong program of change they have been implementing in the past year or two as the reason for the strong profit result.  This includes the Seats to Suit fare structure on trans-Tasman and Pacific Island routes, as well as the alliance with Virgin Australia on trans-Tasman and domestic Australian and New Zealand routes.  Air New Zealand's cargo business has also grown and seen a 9% boost to revenue during the period. Air New Zealand have also seamlessly changed CEO's at the end of 2012

“We have a new leadership team with deep industry experience fused with fresh perspectives from world class leaders who have joined us from other sectors. The focus and energy within Air New Zealand is quite remarkable.  We are stepping it up in all areas of the business to drive improved operational and financial performance while further enhancing our award-winning customer experience,” Mr Luxon says.

Fleet News
Air New Zealand are confidant of the future and one thing this allows Air New Zealand to do is to grow, with the company announcing it will introduce two new leased Boeing 777-319ER aircraft to the fleet before the end of 2014.  These aircraft will be for expansion with the Boeing 787-9 still expected to begin entering the fleet from 2014.

Although when looking at the aircraft capital commitments slide from the Air New Zealand 2013 Interim Result Analyst Presentation you can see the B773ER deliveries will occur one before 30-June-2014 and one after 1-July-2014, while it appears the B789 deliveries wont happen until after 1-July-2014, despite Boeing confirming EIS is currently on track to happen in mid 2014.  You will also notice the A320 deliveries ramp up with 4 delivered in FY14 & 3 in FY15, while the AT76 deliveries continue to plod along at 1 per year

Air New Zealand 2013 Interim Result Analyst Presentation © Air New Zealand 2013

You can read the full press release from Air New Zealand HERE or read any of the documents that Air New Zealand supplied to the New Zealand Stock Exchange (including the above mentioned presentation) HERE

Virgin profit sees "game on"

Virgin Australia have announced a full year profit of $23M and according to our friends at ausbt.com.au have also announced its 'game on' in the next phase of the game change strategy that Virgin launched a year ago.

The profit comes after $67.8M loss in the previous year, and could've been more had Virgin & Qantas not embarked on a war for business travelers in the second half of the year.

While not elaborating on what the 'game on' call would entail, CEO John Borghetti did recap the airlines plan to order 23 Boeing 737 Max aircraft planned to enter service from 2019 as well as not ruling out either the Airbus A350 or the Boeing 787 from plans for the future of the international fleet.

Read more from the ausbt article HERE or from brisbanetimes.com.au HERE