Air New Zealand launches strategic review

SYDNEY: Air New Zealand Ltd said on Thursday its new chief executive had launched a comprehensive strategic review of its business after the airline announced its fourth consecutive fall in first-half earnings.

It said capacity would rise by 1.5%-2.5% for the full year ending June 30, down from an earlier plan of 4%-5% as it slashes domestic and international flights due to weaker demand as a result of the coronavirus, which it on Monday estimated would hit earnings by NZ$35mil to NZ$75mil.

Shares surged more than 5% in early trade on Thursday due to confidence in management actions even though Air New Zealand’s adjusted pre-tax profit, its most closely watched measure, was down 8.8% to NZ$198mil (US$125mil) in the six months ended Dec 31 due to higher maintenance and airport costs and a weaker New Zealand dollar.

The interim results were the first presented by new CEO Greg Foran.

He said the comprehensive strategic review would cover the airline’s route network, sustainability agenda, customer service, loyalty division, digital investments, capital returns, profitability and culture.

“It will involve reviewing our strategic opportunities and risks not only to assess where we can play but where we can win,” Foran told investors on a conference call.

The airline maintained its interim dividend at 11 New Zealand cents per share fully imputed, which Foran said reflected a business that remained in good shape despite uncertainties associated with the coronavirus. Air New Zealand has said it will cut capacity in Asia by 17%. “You could speculate some people are choosing the US as a destination,” said Foran. — Reuters
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