Reuters New Zealand
Air NZ: well placed to cope with soaring fuel bill
Friday July 25, 12:36 PM
WELLINGTON, July 25 (Reuters) - Air New Zealand (NZX: AIR.nz) is well positioned to weather the storm from soaring fuel prices, its chief executive said on Friday, with the largely state-owned carrier also likely to avoid inevitable industry consolidation.
The airline had good cash reserves and a strong brand to get it through an industry downturn which could last two to three years, chief executive Rob Fyfe told Radio New Zealand.
"We see ourselves as an airline that will not only be a survivor through this phase of the economic cycle, but we believe we're going to come out the other side of this far stronger than our competitors," Fyfe said. Shares in Air New Zealand, 77 percent owned by the New Zealand government, last traded down 4.7 percent at NZ$1.22.
Fyfe declined to give a specific profit forecast.
Air New Zealand has said it expects profit before tax and unusuals for the year to June 30, 2008 to be between NZ$200-220 million ($149-$164 million), as much as 25 percent lower than last year. It is due to report its annual results on Aug. 26.
Australian national carrier Qantas (ASX: QAN.ax) last week announced it would slash 1,500 jobs, and chief executive Geoff Dixon has predicted a wave of consolidation as the industry shrinks to a few large players.
Fyfe agreed the aviation industry would see larger players sweeping up smaller struggling airlines, but one reason Air New Zealand would not be involved is that government ownership is set to remain.
Opinion polls show the centre-left coalition government, led by the Labour Party, is facing defeat to the right leaning National Party, with a general election to be held by mid-November at the latest. The National Party has ruled out asset sales in its first term if it wins the election, and Fyfe has said he believed neither major party would be willing to sell the government's stake, as maintenance of domestic and international air links to the country is vital to economic prosperity.
Fyfe said the company would look at reducing capacity on some routes to save costs, but he said no routes would be axed. ($1=NZ$1.34) (Reporting by Adrian Bathgate; Editing by James Thornhill)
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