Air New Zealand's better balance in international markets drives earnings growth, with more to come

A record first half (six months to 31-Dec-2013) result of NZD180 million (USD151 million) before taxation, representing a 7.7% margin, was Air New Zealand's reward for finding better balance: exiting from loss-making routes, higher trans-Tasman load factors than competitors, and a more streamlined fleet. Air NZ increased profitability on flat revenue despite decreased capacity.

CEO Christopher Luxon is not resting on his laurels and is committed to growth in capacity and revenue while decreasing costs, although cost targets are for now opaque.

The domestic and Pacific Island networks are stable while trans-Tasman shows the wear from the weakening Australian dollar. But Air NZ has the advantage of efficiency with the highest load factors in the market. International has shown a strong improvement following exits from loss-making routes. Further gains will come from growth, creating scale and reducing unit costs, and partnerships, such as with Singapore Airlines.