Air New Zealand today reported a full-year underlying profit of $585 million on operating revenue of $6.3 billion, up 9 per cent on pre-Covid levels. The result is a staggering turnaround on pre-tax losses of $725m last year.

The airline said the profit would help fund aircraft, digital investments and facilities but warned fares wouldn’t return to pre-pandemic levels.

Staff on collective agreements - the majority of the airline’s 11,500 staff - and who were employed before the end of December 2022, will get a $1950 bonus before tax. Employees who joined the company between 1 January 2023 and 31 March 2023, will receive $975 before tax.

The financial year began as borders were still reopening and aircraft were stored in the desert, and ended with the airline at 94 per cent of pre-Covid domestic capacity.

In line with market guidance provided in June 2023, Air New Zealand’s earnings before other significant items and taxation were $585 million.

Statutory earnings before taxation were $574 million, compared with a previous year loss of $810 million.

Air NZ said an "extraordinary" 2023 operating environment featured strong pent-up levels of demand combined with industry-wide capacity constraints.

The underlying earnings were slightly below analyst expectations.

After suspending dividends in 2020, the airline will provide shareholders with a one-off, fully imputed special dividend of 6 cents per share.

 “The special nature of this dividend reflects the extraordinary 2023 operating environment, with strong pent-up levels of demand combined with industry-wide capacity constraints,” the airline said today.

The board has also reviewed capital management settings and announced a revised capital management framework, effective from the 2024 financial year.

Air New Zealand chair Dame Therese Walsh said the result was important, given the critical role of the airline in New Zealand both socially and economically.

“We are proud of the result Air New Zealand has delivered this financial year, and of the value we have created for our shareholders.”

The airline announced an order for two new ATR turboprop aircraft for regional routes, as well as two new Airbus A321neos for its international short-haul network.

That’s in addition to the existing domestic Airbus A321neo orders, and the eight new Boeing 787 Dreamliners coming into the fleet as it retired Boeing 777-300s over time.

Chief executive Greg Foran said a strong Air New Zealand was good for New Zealand.

“We have rehired and trained in a tight labour market, lifted the starting wage for the airport teams to $30 an hour and improved the way we work with digital systems on the ground and in the air,” Foran said.

(E tū union has taken issue with the $30 an hour figure, saying that includes the rolling in of pre-existing weekend penal rates to their base pay, in order to average out pay packets.)

Foran said restoring services to 500 flights a day is not only good for Kiwis who’ve been able to take that long-planned holiday, but it has also brought tourist dollars back to the regions and supports exporters who rely on regular air freight.he

He said increased costs and high demand had made flying more expensive.

‘‘In the past year, we put more aircraft and seats in the air, so there are more choices for customers which helps alleviate the cost of flying.

“At the same time, our own costs continue to rise and the reality is that airfares are unlikely to return to pre-pandemic levels.“

The airline said the 2023 financial year was unique with significant customer demand, constrained market capacity and lower fuel prices in the second half.

‘‘Looking ahead to the first half of the 2024 financial year, customer demand remains strong across our markets. We are mindful of the uncertain economic environment, however, and acknowledge a number of factors that may impact future customer demand and profitability.”

These factors included increased international competition, volatile fuel prices, a weaker New Zealand dollar, ongoing wage inflation and increased airport charges.

Given the uncertainty and volatility of macroeconomic factors, the airline said it would not be providing guidance at this time.

Air New Zealand is boosting international capacity by 25 per cent over summer.

At present, capacity is running at about 94 per cent of pre-Covid levels on the domestic network and 71 per cent on international operations.

The airline was putting more tickets on sale for flights from October, expanding international services from Auckland, Wellington and Christchurch during the northern winter, when schedules around the world change.

It will fly more than 75 flights a day across 36 global routes, with 560,000 extra seats on offer compared with the previous year.

But its expansion plans have suffered a dent after one of its 14 Dreamliner aircraft was damaged when a truck crashed into it on the tarmac at Auckland International Airport.

Flights have been impacted while the plane remains out of service.

The Dreamliners are the mainstay of the airline’s international long haul fleet.

It is understood the truck was an Air NZ vehicle used by the airline’s caterers.

Air New Zealand said it was working with affected passengers and they would be re-accommodated.

It was unclear how long the aircraft would be out of action but the planes, made largely of carbon fibre, could be challenging to repair when they suffered dings.

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.