Financial Analysis of Air New Zealand

Contents
1
2 Introduction
The airline industry is fragmented withseveral regional carriers such as Air2there, Air Chathans;
international carriers such as Qantas. (Everipedia International, 2018)The New Zealand Airline
Industry is a worth over $10 billions and sizeabele chunk of this indusry has been captured by Air
New Zealand, the state owned Full services Carrier Network. Air Zealand does not just provide civil
avaiation services to passengers but also provides a variety of other ancilliary services such as
Aircraft Leasing, Financing and Insurance. The airline alone has a fleet of 105 aircraft and 27 on
order. (Air New Zealand 2017)
The Air New Zealand Group consists of several subsidiaries such as (Air New Zealand 2018) and
joint ventures that do not just hep provide aircraft services but also data analytics, insurance and
more.
3 Revenues and Profitability
The Air New Zealand group total Operational revenues have grown consistently over the period of
last six years and showed a dip only in the year 2017. These revenues do not just include revenues
from passenger operations but also revenues from leasing and financing of air craft, lease of
poreperty and equipment and also, payment earned from interest received as well as foreign
exchnage. However, the year after that i.e in the year 2017, the revnues dipped sharply to 4376
million New Zealand Dollars. (Air New Zealand, 2018)
However, accounting for revenues alone, would be a folly and provide an incomplete picture. In
order to understand the financial position of the aircraft carrier better, some profitability and
solvency measures must be looked at:
Net Assets
Net Assets describe the position of the assets at the end of the year. (CPA Australia, 2017) They
provide a significant amount of insight into the holdings that the airline currently holds.

Net Assets have shown stable growth , implying that the Group has been converting significant
amounts of cash into holding such as pplant , equipment and other sources of revenues such as
financial investment.
Working Capital
Working Capital helps understand the scale of the operations of the airline, Working simply helps
understand whether a firm shall be able to cover it's short term liabilities and be able to operate
under financially stable conditions in the short term. Airlines usually require a lot of oworking
capital, one of the reasons behind the failures oof several airlines. (CPA Australia, 2017)
Earnings Per Share
Illustration 1: Net Assets for Air New Zealand (2012-2017)

Earning Per Share is simply the amount of profit available per share. Earning per share may be used
to understand the profitability of an airline in the simplest way as well as provide an indicator of the
efficiecy at which it is managed. (CPA Australia, 2017)
Illustration 2: Earnings Per Share 2012-2017
As illustrated above, the earnings per share were highest in 2016. Hence, 2016 was not just the year
with the highest revenues but also with the highest profitability, In the year 2017, while revenues
may have been the worst since 2012, the earnings per share indicate that this might indded have
been a profitable year.
Illustration 3: Total Comprehensive Income for air New Zealand beween 2012-2017
Comprehesive Income provides an undertsanding of various sources of revenues such as foreign
exchane translations and unrealized gains and losses. These items are also crucial parts of
operations, although indirect as these items could be significant sources of revenues or losses from
the firm and affect the financial stability of the firm.
1 Sources of Revenues:
Ticket Sales are not the only sources of revenues an airline may have. There are several avenues
such as freight and cargo transport, leasing of aircraft etc.