AIR NEW ZEALAND LIMITED (AIZ)

Business Description:
Air New Zealand Limited (AIZ) is an international and domestic airline group which provides air passenger and cargo transport services within New Zealand, as well as to and from Australia, the South West Pacific, Asia, North America and the United Kingdom. Air New Zealand also encompasses business units providing engineering and ground handling services. Subsidiaries extend to booking systems, travel wholesaling and retailing services.

Strategy Analysis:
AIR is closely monitoring market conditions and will selectively increase capacity in certain routes where it sees good opportunities to stimulate growth. During the global financial crisis the firm cut back on some long haul routes which were adversely impacted by the slowdown. We suspect some of these routes will be reintroduced. In the wake of Virgin's exit from the domestic market, AIR filled this gap by lifting capacity in those sectors where Virgin Australia had a significant presence. The trans-Tasman AIR and Virgin alliance reduces the number of flights at similar times, allowing the airlines to add a wider range of flight times and flight connections. Air New Zealand reported NPAT of NZ$100m for the half-year ended 31 December 2012. Revenues from ordinary activities were $2,388m, up 3.6% from the same period last year. Diluted EPS was 9.1 cents compared to 3.5 cents last year. The net operating cash inflow was $343m compared to an inflow of $146m in the pcp. The interim dividend declared was 3 cents compared with 2 cents last year. Net Tangible asset per share was 154 cents compared to 140 cents in pcp.