Air New Zealand yesterday put a positive spin on its profit for the year ended June 30, despite its slipping 26% to $145 million compared with the $197 million reported last year.
The profit was normalised in compliance with New Zealand international financial reporting standards.
Operating earnings fell 27% to $688 million and the after-tax profit slid 90% to $21 million.
Chairman John Palmer said that despite deteriorating economic conditions, Air NZ's financial performance in the second half of the year improved dramatically from the first six months.
Operating revenue for the year was $4.6 billion, down $58 million, or 1.2%, on the previous corresponding period. Passenger revenue was down $74 million on a 7.6% fall in demand as measured in revenue-passenger kilometres.
"This result positions Air NZ as one of the top airline performers globally, but it falls short of delivering shareholders an appropriate commercial return," Mr Palmer said.
Air NZ is majority-owned by the Government after former finance minister Michael Cullen stepped in to save the then-ailing airline.
Air NZ paid a fully imputed 3.5c-per-share dividend, meaning the Government will receive $28.14 million for its shareholding.
Mr Palmer said the national carrier's profitability against the backdrop of a global economic meltdown was underpinned by management's decision to move rapidly ahead of competitors to reduce capacity at the first signs of waning demand, and an ability to continue to invest and innovate with confidence.
The decision to pay the dividend reflected the 2009 operating performance while acknowledging that economic conditions remained challenging throughout the next financial year, he said.
ABN Amro Craigs broker Chris Timms said Air New Zealand had about $1.6 billion of cash on its balance sheet and its gearing remained comfortable at 52.9%.
"Interestingly, capital expenditure has again been pushed out.
Expectations for the next couple of years are $350 million, so the balance-sheet position for Air NZ remains very strong."
Chief executive Rob Fyfe said the slump in travel demand might be showing signs of having reached the bottom.
"It would be naive to think that there won't be bumps on the road to economic recovery.
"Nevertheless, Air NZ is well positioned to move quickly to increase its share of the travel dollar in all markets we choose to operate in."
The operating environment was likely to remain turbulent, a fact supported by the International Air Transport Association's prediction global airline losses would total $US9 billion in the 2009 calendar year, he said.
Those losses were underpinned by weakened demand and significant global overcapacity.
The transtasman market was not immune and until supply was aligned with demand, the airline sector would not achieve a satisfactory commercial performance.
Demand was stabilising but yield remained under pressure, fuel prices had resumed an upward trend and Air NZ was unlikely to achieve the same level of net hedging gains.
