Air New Zealand Unveils Business Initiatives To Ramp Up The Company’s Growth

  • Mar 28, 2019 AEDT
  • Team Kalkine
Air New Zealand Unveils Business Initiatives To Ramp Up The Company’s Growth

Air New Zealand Limited (ASX: AIZ) today revealed the outcome of business review following a revised outlook for the 2019 financial year prompted by the slower revenue growth expectations in the second half of the year.

The Group now expects its 2019 earnings before taxation to be in the range of $340 million to $400 million. It was announced on the market on 30 January 2019 based on an average jet fuel price of US$75 per barrel for the second half of the FY2019.

Christopher Luxon, Chief Executive Officer of AIZ, stated that the outcome of the review would have a favourable impact on the revenue growth, capital efficiency, operating costs and travellers experience into 2020 and beyond.

The management advised that the company’s two-year initiatives are focused on bringing its business in line to ensure a return to earnings growth in the subdued market environment. Its first initiative is to focus on optimising network to maximise and diversify revenue. The Group is, therefore, tapping for network growth within the range of 3% to 5%, on average, by catering to the demand in the new market with the launch of additional destinations and increased frequencies across the network.

The Group has further planned to introduce new direct services between Seoul and Auckland by late November 2019 as well as increase frequency on Auckland-Taipei services from November 2019 and Auckland-Chicago services from December 2019.

In order to increase capital efficiency, the company stated that aircraft capital expenditures of circa $750 million would be deferred. Further, the company’s new widebody fleet replacement programme is focused on accelerating growth and enhance fleet flexibility.

As per the company’s information, there would be several product innovations taking place in addition to providing modern aircraft and a new destination for customers. It is expected that product innovation will further enhance the customer travel experience in-flight and on-the-ground.

Mr Luxon said that the Group will start fitting an advanced version of its current seat in Business Premier fleet of its widebody airlines. The enhancement is scheduled to commence by the end of the calendar year 2019 with the rollout expected to be completed by December 2020.

Air New Zealand further remains committed to uplifting the travel experience of its customers with a number of improvements planned for over the next two years. It underscores the company’s plan to offer free Wi-Fi on all enabled international aircraft, the upgrade of 9 lounges across the network for approximately $50 million and a new, more spacious, ‘Economy’ product offering.

AIZ stock price surged by 3.478% to last trade at $2.380 on 28 March 2019. The stock closed at a price to earnings multiple of 8.900 x with a market capitalisation of $2.58 billion.

Over the past 12 months, the stock has witnessed a negative performance change of 26.98% including the plunge of 22.82% in the past three months.


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