Air NZ First Half Profit Falls 79 Percent

National carrier Air New Zealand posted a 79 percent fall in first half profit on Thursday, as it was hit by higher costs and fewer passengers, but expected an improvement in the second half.

The largely state-owned airline said net profit for the six months ended December 31 was NZD$24 million (USD$12.2 million), compared with NZD$115 million a year ago.

The company declared an interim dividend of 3 cents a share, compared with an ordinary dividend of 5 cents last year.

It said it expected to see a significant improvement in its financial performance in the second half through lower fuel prices and cost cutting.

The airline has moved to cut costs by using smaller aircraft and cutting uneconomic routes. Last November, it said it was aiming for annual savings of NZD$20 million through cutting up to 200 jobs.

It has faced increasing competition in the domestic market, which it dominates, from Australian carriers Qantas and Virgin Blue.

Qantas's low cost offshoot, Jetstar will replace its parent from June.