Air NZ's return from revenue falls in first half

Passenger revenue in the first six months of Air New Zealand's financial year has fallen sharply, even when the impact of foreign exchange fluctuations is eliminated.

In an update to the NZX, the country's national airline said for the financial year to date, short-haul passenger revenue through its preferred metric had fallen 6.3%, while long-haul passenger revenue had slumped 14.3%.

Air New Zealand's preferred metric is passenger revenue divided by the total capacity for the period, what it terms RASK.

When foreign exchange is eliminated, group-wide RASK fell 9.3%, while yields, which represent passenger revenue per passenger kilometre flown fell 7.9%.

For the month of December, Air New Zealand flew 1.59 million people, an increase of 5.4% on the year earlier, although its aircraft weren't as full as a year earlier, with 83.5% of all seats sold, down 1.5% on December 2015.

This was mainly due to a fall in sales on flights to Asia, Japan and Singapore. 86.3% of seats were sold on these services, down 5.6% on a year ago. The airline had increased services in this region by 10.8%, reflecting a new seasonal service between Japan and Osaka.

The percentage of seats sold on flights across the Tasman and the Pacific fell 2.7% to 78.4%. This was due to capacity rising faster than demand, with some routes switching to a larger aircraft and growth on the Perth and some Pacific Island routes.

Air New Zealand reported its best full year earnings in its 76-year history in August for the financial year which ended on June 30, 2016. Earnings before significant items and tax rose 70% to $806 million. Staff were paid a bonus to reflect the record results, while shareholders got a special one-off dividend.

At the time, the airline warned the outlook ahead was less rosy due to increased competition and rising fuel prices. It said it expected operating earnings for the 2017 financial year in the range of $400 million to $600 million.

The details are contained in the airline's monthly update to investors, which details December's market conditions. Air New Zealand's financial year runs from the beginning of July to the end of June. It's full half-year financial results are due to be released on February 23.

Air New Zealand declined to comment.

Shares of Air New Zealand rose 0.2% or half a cent to $2.195. They have fallen 0.2% since the start of the year.

(BusinessDesk)