* Qantas underlying first-half profit down 7.5 pct
* Air NZ pretax profit tumbles 24 pct
* Competition expected to moderate
(Recasts with Air NZ results, adds CEO and analyst comment)
By Jamie Freed and Charlotte Greenfield
SYDNEY/WELLINGTON Feb 23 Qantas Airways Ltd
and Air New Zealand Ltd reported first-half
profit declines as an expansion in capacity by rivals hit
international airfares, but both airlines said they expect the
fierce competition to moderate.
Shares in the carriers climbed as Air New Zealand said it
was already seeing a reduction in flights by Chinese competitors
while Australia's flagship carrier forecast a much slower pace
of growth in capacity in the second half.
Lower fuel prices had encouraged carriers like American
Airlines Group Inc and Qatar Airways to add flights to
Australia and New Zealand, taking some of the shine off what has
been a recent robust period or earnings for both firms.
"We're at the high water tide mark of new competitors coming
into the market place and we're really encouraged by the fact
that some of our competition's already adjusting capacity
downwards," Air New Zealand Chief Executive Christopher Luxon
said on a call with analysts.
He noted the first half had been 'abnormal' as capacity on
longhaul flights to the Pacific nation had risen 30 percent.
Air New Zealand was hit harder during the period with profit
before tax tumbling by a quarter to NZ$349 million and its
revenue per available seat kilometre (RASK) dropping 14.3
percent on long-haul international routes.
Qantas booked a 7.5 percent slide in first-half underlying
profit before tax, its most closely watched measure, to A$852
million ($656 million), beating guidance slightly. Its RASK fell
8.9 percent on international routes.
Despite the declines, the results measured up well
historically with Air New Zealand - widely regarded as a well
managed airline with a dominant position - reporting its
second-best first-half performance.
Qantas, which has benefited from a cost-cutting program and
weakness at rival Virgin Australia Holdings Ltd in the
domestic market, turned in its third-best result for a
first-half. It also forecast the domestic market would improve
in the second half.
Shares in Qantas surged as much as 6.5 percent to their
highest levels in nearly 10 months, while Air New Zealand's
stock climbed 3.7 percent to a one-month high.
Australia's biggest airline also said it would push back the
delivery date for the first of 99 Airbus SE A320neo
aircraft to be used by its low-cost Jetstar division until the
financial year ended June 30, 2019.
It had expected previously to receive it by the end of this
That follows a similar move by Virgin Australia, which
postponed the delivery of new Boeing Co 737 MAX aircraft
for at least a year after reporting a 48 percent decline in
underlying earnings last week.
Macquarie Equities analyst Sam Dobson said he believed the
decision to defer was positive as it could lead to more cash to
give back to shareholders.
"If you are seeing your competitor not necessarily bring in
an aircraft that is a step change from current technology then
there isn't really any need for you to do the same," he said.
Qantas announced plans to pay an interim half-franked
dividend of A$0.07 a share on Thursday.
($1 = 1.2980 Australian dollars)
(Reporting by Jamie Freed and Charlotte Greenfield; Editing by