Air New Zealand Forecasts 20% Jump in Profits

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By Esther Tanquintic-Misa | December 11, 2013 2:23 PM EST

Air New Zealand has announced it is on target to experience a 20 per cent jump in profits in the six months ending December 31.

The airline company said it expects earnings before tax to hit $166.8 million this year, compared from the $141 million in the same period last year.

"The company has made good progress year to date and remains on target to exceed last year's earnings for the full year," the airline said in a notice to the NZX.

Air New Zealand shares jumped 0.9 per cent to $1.645 on Tuesday on the good news.

Rob Mercer, an analyst with Forsyth Barr, told Radio New Zealand the outlook was favourable for the airline firm despite being in a high-risk environment.

"We see good value and we expect it to perform but it is an airline so things could change. External things can impact on it fairly quickly," Mr Mercer said.

Mr Mercer predicted Air New Zealand could hit a $225 million full-year pre-tax profit in 2013.

In 2012, the airline company achieved an annual profit of $182 million spurred by growing passenger volume as well as favourable foreign exchange movements.

The company reported in November 2013 that it flew 1.1 per cent more passengers versus a year ago.

Also in November 2013, the federal government divested its 20 per cent controlling hold in the company at $1.65 per share, to the tune of NZ$365 million ($324 million). New Zealand government's current stake in the airline is only 53 per cent.

On Tuesday, Air New Zealand announced it will be extending its flight services to Australia's Sunshine Coast for a third consecutive year, effective 2014. Between June 27 and October 26 in 2014, Air New Zealand will make two return flights a week. During designated peak periods of the 2014 season, these will become three flights weekly.

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