Air NZ to cut jobs as earnings slump 71%
Air New Zealand says its started on a recovery plan to clawback profits after a disappointing half-year result today.
That includes eliminating 441 jobs -- 175 of those will be made redundant.
The airline has just revealed pre-tax earnings fell 71% to $33 million for the six months to December 31.
Net profit was $38 million, down $60 million or 61% from the same time last year. However, operating revenue was 2.5% higher at $2.3 million.
In its presentation to analysts the airline noted passenger numbers fell 0.6% from 6.8 million to 6.75 million and fuel accounted for -$173 million in the airline's changes in profitability.
Outgoing chief executive Rob Fyfe says the price of jet fuel has doubled over the last three years and the weak global economy has made it difficult to pass on the higher costs to passengers.
The airline was moving quickly to address the earnings slump and plans were underway to improve profits by more than $195 million a year by 2015.
That includes job cuts. The airline will remove 441 jobs from the airline over the next six months.
About 175 positions would be made redundant and consultation with affected staff was to begin this morning, Mr Fyfe said.
The balance of the positions would be exited through non- replacement of roles or non renewal of contracts, of which 193 have already been achieved.
While trading conditions remain uncertain and fuel prices stay high, the airline says matching last year's full-year result (net profit of $81 million), will be difficult.
“The airline has enjoyed a solid performance from the domestic network including benefits from the Rugby World Cup and improved market share on the Tasman, but the international long- haul network continues to face a challenging time in the European and Japanese travel markets.
“The balance sheet remains strong and is reflected in the board’s decision to declare an interim dividend of two cents per share,” says Mr Palmer.
More news is expected from Air New Zealand in the weeks ahead as a review of its international network is wrapped up. Mr Fyfe said the review's focus had been strengthening the Pacific Rim network.
Air New Zealand shares (AIR) closed down 2.25% at 87c today.
Mr Fyfe resigned from the airline in January, after seven years in the job. He has not yet revealed what he plans to do next.