Air NZ sees return to profit next financial year

AUCKLAND - Air New Zealand (Air NZ), the national carrier being rescued by its government, expects to return to profit in 2003 after incurring a NZ$63.4 million (S$49 million) pre-tax loss in the current financial year.

The airline forecasts revenue will decline 8 per cent to NZ$3.46 billion in the year ending June 30, 2002, in a five-year plan which was included in an assessment of the government's NZ$1.04 billion rescue by merchant bank Grant Samuel & Associates.

Grant Samuel said in the report that the sale of shares to the government is fair. 'Grant Samuel has reviewed the key assumptions underlying the plan and considers these to be reasonable in the context of the current operating environment.'

Airlines are struggling to cut costs and services after international air travel slumped following the Sept 11 terrorist attacks on the United States.

Air NZ was hampered further by the NZ$1.43 billion loss it reported for the year ended June 30 after it failed to find a buyer for its unprofitable Ansett Holdings unit in Australia. It was forced to write off its NZ$1.3 billion investment in the business.

Air NZ expects a pre-tax profit of NZ$88.6 million in fiscal 2003, rising to NZ$392 million by fiscal 2006.

--Bloomberg News