Paul Phelan/CAIRNSKevin O'Toole/LONDON
Air New Zealand (ANZ)is looking for benefits from its alliance strategy, including closer ties with newly acquired Ansett Australia, to help lift profits this year after posting a major slump in its results for 1996/7.
Over the next year, the airline plans to "-see a refinement and fine-tuning" of alliances, says ANZ chief executive James McCrea. Top of the list is an "urgent" acceleration of the integration with Ansett Australia, in which ANZ acquired a 50% stake a year ago.
McCrea says that both carriers will also work to achieve "major" benefits from the three-way tie-up signed in June with Singapore Airlines (SIA) and to strengthen codesharing ties with Air Canada and United Airlines. Such moves have prompted speculation that the ANZ/Ansett/SIA grouping may emerge as the focus for the United/Lufthansa-led Star alliance in the region.
The otherwise lacklustre annual results for ANZ's 1996/7 financial year to the end of June show that with its alliance strategy coming into place, the carrier is now earning just over half of its sales from markets outside New Zealand.
The poor results, which had been predicted by ANZ, were in part blamed on the impact of a strong New Zealand dollar on foreign earnings, wiping around NZ$70 million ($45 million) off sales. Overall, the group's net profits were down by one-third at NZ$150 million, while sales edged down to NZ$2.9 billion.
ANZ also notes the impact of competition on trans-Tasman routes to Australia, which kept fares at uneconomic levels for much of the year. McCrea points to the demise of new entrant Kiwi International. Fares have now stabilised, he adds.
Returns from domestic and Asian routes were down over the year, including a fall in traffic from Japan, although ANZ expects this to ease when Japan Airlines drops its New Zealand service from November. ANZ itself cut capacity to Taiwan and South Korea by 30-40%in April, helping the routes to edge back into profitability.
With the alliance benefits and ANZ's continuing cost-cutting programme, McCrea expects to see net profits for the coming 1997/8 financial year to return to the NZ$200 million mark.
McCrea also believes that Ansett, which is in the middle of a cost-cutting drive, will "-progress this year". The parent Ansett Holding Group managed to turn around losses to show a modest pre-tax profit of A$7.7 million ($5.7 million) for the year, although a mixture of restructuring charges and tax write-offs left the carrier posting a net loss of A$35 million after tax.
Chairman Rod Eddington reports that the domestic Ansett Australia operation contributed profits of A$14 million, helped by a 2%rised in yields. Ansett International, in which the holding company owns a 49% stake, suffered worse than expected losses of A$46 million, however, as it continued its rapid expansion into Asia.
Eddington confirms the potential for savings from the ANZ link, now being studied by a series of project task forces.
Source: Flight International
