The Air New Zealand Limited (ASX: AIZ) share price could be on the move on Thursday after the release of its half year results this morning.
How did Air New Zealand perform in the first half?
For the six months ended December 31, Air New Zealand reported operating revenue of NZ$3 billion and earnings before other significant items and taxation of NZ$198 million. This is a 3% increase and a 8.7% reduction, respectively, compared to the prior corresponding period.
Management advised that this reflects a slower demand growth environment, weakness in the global cargo market, and the ongoing unrest in Hong Kong.
Earnings before taxation were NZ$139 million and net profit after taxation was NZ$101 million. The latter was down 33% on the prior corresponding period.
This softer profit result didn't stop the Air New Zealand board from maintaining its dividend. It declared an interim dividend of 11 NZ cents per share, consistent with the prior period.
Coronavirus update.
Chief executive officer, Greg Foran, reiterated the company's plan to cut its capacity in response to the coronavirus outbreak.
Mr Foran said: "By proactively reducing these services we are better able to manage the cost implications of making late changes to our network and can redirect our most efficient aircraft, the Boeing 787 Dreamliner, to other parts of the network."
"Air New Zealanders from across the business have been working around the clock to manage the impact of the Covid-19 outbreak on our operations. Our business is resilient, and we have demonstrated the ability time and again to respond quickly to changing market conditions. We have a highly capable and experienced senior leadership team who have dealt with challenges such as this before and I am confident that we will effectively navigate our way through this," he added.
Whilst management acknowledges that the situation remains uncertain, it currently expects a net negative impact to earnings in the range of NZ$35 million to NZ$75 million as a result of the coronavirus.
Outlook.
Based on the midpoint of the estimated range above, the company is targeting earnings before other significant items and taxation in the range of NZ$300 million to NZ$350 million in FY 2020.
Though, the airline will provide an update to this guidance should the current assumptions change materially.
