Air NZ Half Year Profit Jumps 58 Percent

The company said on Friday its net profit for the six months ended December 31 was NZD$115 million (USD$93.5 million).

The largely state-owned airline said it carried more passengers on both domestic and international services, while cargo and engineering revenue was also higher.

"Despite high fuel prices, tight labour markets and a currency that is making New Zealand less competitive as an international tourist destination in some markets, we have produced a solid result and have proven our ability to do well against competition," Deputy Chairman Roger France told a briefing.

Last month Air New Zealand moved to cut domestic fares by up to 30 percent to increase passenger numbers. It has also introduced bigger planes that are cheaper to operate.

Air NZ is facing increased competition in the domestic market, which it dominates, from Australian carriers Qantas and Virgin Blue.

Operating revenue rose 9.6 percent to NZD$2.3 billion as an increase in capacity saw its load factor rise 5.3 percentage points to 79.4 percent.

The airline said it paid a net NZD$81 million more for fuel, which reflected a 13 percent rise in world prices and also higher consumption from flying new routes.

It said it was 80 percent hedged for the rest of the financial year but, at current prices, would still have a substantially higher fuel bill.

France said the airline expected full-year earnings before tax one-offs to top last year's level, although fuel price volatility had reduced the certainty of any forecast.