Air New Zealand sees strong customer demand in 2024; swings to annual profit

The logo for Air New Zealand is displayed at their office located at Sydney International Airport, Australia

(Reuters) -Air New Zealand on Thursday signalled robust customer demand for financial year 2024, after posting a large annual profit helped by a rebound in travel and lower jet fuel prices, sending its shares up more than 3% in early trade.

New Zealand flagship carrier also declared a special dividend of 6 New Zealand cents per share, its first dividend since February 2020.

Shares of the company were up as much as 3.3%, posting their biggest intra-day jump since Dec. 8. The broader market was down 0.1%.

While the airline said it expected strong demand across markets next fiscal, there would also be international competition, volatile fuel prices, ongoing wage inflation and increased airport charges to impact future customer demand and profitability.

The airline revised its capital management framework from fiscal 2024 and aims for an ordinary dividend payout ratio of 40% to 70% of net profit after taxation.

“Having restored its international network, the airline carried out the biggest recruitment drive in its history and returned all aircraft to the skies,” it said in a statement.

It also said it would return excess capital via special dividends or share buybacks, while targeting a liquidity range of NZ$1.2 billion to NZ$1.5 billion ($716.64 million to $895.80 million) in financial year 2024.

Demand for air travel has boomed since the removal of pandemic-related restrictions and border closures. A shortage of aircraft, parts and labour has also contributed to higher air fares globally.

For the year ended June, Air New Zealand posted earnings of NZ$585 million before tax and other significant items, compared with its forecast of no less than NZ$580 million.

It posted a loss of NZ$725 million a year earlier.

($1 = 1.6745 New Zealand dollars)

(Reporting by Nausheen Thusoo and Harish Sridharan in Bengaluru; Editing by Shailesh Kuber and Rashmi Aich)