The Air New Zealand Limited (ASX: AIZ) share price is in the red in early trade as the Kiwi airline reported a 48% drop in full-year operating revenue.
Air New Zealand share price slips on weak operating revenue
Shares in the Kiwi airline are on the move after the company reported its results for the year ended 30 June 2021 (FY21). Some of the key takeaways include:
- Operating revenue down 48% on the prior corresponding period (pcp) to $2.5 billion
- Net loss after tax of $411 million, a decrease of 34.6% from FY20's $628 million loss
- Operating cash flow up 40.4% to $323 million
- No interim dividend.
The Air New Zealand share price has fallen more than 1% at the open following this morning's result.
What happened in FY21 for Air New Zealand?
Unsurprisingly, COVID-19 was the name of the game in 2021. Ongoing border restrictions impacted on revenues with Air New Zealand reporting that international revenues reduced by 55% compared to FY20.
Cargo flying revenue jumped by 71% thanks to airfreight support schemes in an otherwise disrupted year. The financial result included $450 million of government assistance throughout the year as well further one-off subsidies and initiatives.
The Air New Zealand share price has managed to climb 16.1% higher in the past 12 months despite a year of significantly disrupted operations. That includes an inability to fly two-thirds of the airline's passenger network due to restrictions.
What did management say?
Air New Zealand chair Dame Therese Walsh had the following to say about the result:
In a severely, constrained environment, Air New Zealand maintained cost discipline, focusing on delivering with excellence in areas in its control.
The return of a strong domestic business and growth in the cargo services that underpin our key export markets was a reminder of the airline's crucial role in New Zealand's infrastructure.
Air New Zealand CEO Greg Foran added:
Our people developed new capabilities and dexterity, adapting quickly when conditions changed. Although the return of long-haul travel seems some time away, the changes the team made this year will serve us well when it returns.
We have reimagined our domestic business, increasing the choice of flight times and introducing greater price differentiation for peak and off-peak flying. This allows us to offer more lower priced fares, which will unlock new demand for domestic tourism.
What's next for Air New Zealand and its share price?
Air New Zealand has deferred its planned capital raise from 30 September until the first quarter of calendar year 2022. The Kiwi airline also suspended 2022 earnings guidance citing the ongoing uncertainty with travel restrictions.
The Air New Zealand share price has slumped 12.7% lower in 2021 amid persistent headwinds for the Trans-Tasman travel industry.