Air New Zealand fuel costs jump 38% in H1FY2018/2019

    Air New Zealand outlined (28-Feb-2019) the following expenditure details for H1FY2018/2019:

    • Operating expenditure increased 14.1% year-on-year to NZD2318 million (USD1588.2 million) primarily due to higher fuel prices, up 38.1% to NZD649 million (USD444.7 million). Higher fuel prices were partially offset by increased hedging benefits of NZD15 million (USD10.3 million);
    • A weaker NZD resulted in a NZD40 million (USD27.4 million) unfavourable movement from foreign exchange;
    • Excluding additional NZD131 million (USD89.8 million) related to increased fuel prices, the impact of unfavourable foreign exchange movements and third party maintenance costs, operating expenditure increased 6.4% on a 4.3% increase in capacity;
    • CASK increased 9.5% including fuel price increases, foreign exchange and increased costs related to third party maintenance contracts;
    • Labour costs increased 5.8% to NZD672 million (USD460.4 million), driven by rate and activity increases as well as crew inefficiencies due to ongoing Boeing 787-9 engine issues;
    • Volume growth resulted in a 1.7% increase in additional costs, reflecting capacity growth offset by new aircraft efficiencies;
    • Sales and marketing and other expenses increased 8.6% to NZD178 million (USD122.0 million), due to promotional activity for the new international routes of Taiwan and Chicago, additional digital spend and higher commission activity.