Air New Zealand CEO Forecasts Accelerating Revenue Growth

Air New Zealand Ltd. (AIR), the nation’s biggest carrier, expects revenue growth will surge as it adds seats and flights while making inroads into new Asian markets.

“In the coming year, we’ll grow our capacity 6 percent so we should be able to do much better than we have,” Chief Executive Officer Christopher Luxon told Bloomberg Television. “We’re about to drive into a period of accelerated growth.”

Air New Zealand is buying new, fuel-efficient aircraft such as Boeing Co.’s 787-9 as well as forming alliances with rivals such as Singapore Airlines Ltd. to reduce costs and boost earnings. Net income surged 45 percent on revenue growth of 1 percent in the year ended June 30, the airline said today.

“We’re very comfortable with the revenue growth that we’ve had and how we’re doing it,” Luxon said. “Our underlying revenues are very strong.”

Full-year revenue from passengers gained 4.6 percent, offset by declines in cargo and contracting income, the Auckland-based carrier said. The company generated NZ$730 million ($610 million) of operating cash flow and was able to pay shareholders a 10 cents-a-share special dividend.

The stock rose 1.9 percent to NZ$2.19 at 2:21 p.m. in Wellington. It’s climbed 34 percent this year, the second-best performer on the nation’s benchmark NZX 50 index.

The carrier’s revenue gains came on capacity growth of less than 1 percent after it exited some routes such as Hong Kong-to-London to refocus on more profitable services.

The alliance with Singapore Air, which includes more services between the island city and Auckland, presents Air New Zealand with the opportunity to enter new markets such as Indonesia and India, Luxon said.

“What it’s really about is being able to access Southeast Asia, India and also European markets,” Luxon said. “The question is how do we turn markets like India and Indonesia on,” and the Singapore Air tie-up is a good solution, he said.

Air New Zealand took delivery of its first 787-9 jetliner last month. The company has nine of the aircraft on order over the next four years.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net

To contact the editors responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net Chris Bourke, John McCluskey

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