Air New Zealand Financial Statement Analysis
Industry Analysis
Tasman Empire Airways Limited (TEAL), a flying boat company was established in 1940 (Air New Zealand, Company History 2006). In 1965, the New Zealand Government took over TEAL and subsequently renamed it Air New Zealand Limited (AIZ) . The primary operations of AIZ include the transportation of passengers and cargo both domestically and internationally (Table 1). Due to these two industries accounting for a significant proportion of AIZs total revenue, this will be the focus of report. Other forms of services performed by the group range from ground handling such as repairs and overhauls to booking systems, training and travel wholesaling .

Table 1
Source : Extracted from Air New Zealand Annual Company Reports
Macroeconomic Factors That Influence the Industry
The cyclical nature of the global economy has greatly affected the airline industry. The current financial crisis has brought world GDP to a depressing state as depicted in Figure 1. This decline has had a significant impact on worldwide airline revenues. Short term arrivals and departures from New Zealand both decreased immensely in February 2009 in comparison to the same month in the prior year . Furthermore, the international freight traffic has declined significantly due to the economic downturn (Figure 2).

Figure 1
Figure 2
Source : International Air Transport Association. 2008,
IATA Economic Briefing
The airline industry is also influenced by the level of unemployment in the economy. Due to the economic crisis, New Zealands unemployment rate has risen to approximately 4.6% in February 2009 (Figure 3). As unemployment rises, disposable income will decrease and consumers will become more price-sensitive. Disposable income in New Zealand has been affected in recent times by the high oil and food prices . As a result, demand for goods and services are likely to be spent on necessities in the current environment. The airline industry is positioned to be a luxurious product, thus airlines will face lower demands in times of economic turmoil.

The New Zealand Dollar has depreciated relative to other major currencies (Figure 4). This has dampened the demand of New Zealanders to travel to international markets, thus short term departures have fallen by 10%3. However, to try and offset AIZ has implemented a foreign exchange hedging program, limiting the volatility of the New Zealand dollar fluctuations .

Figure 3

Get Your Essay

Cite this page

Air New Zealand And Airline Industry. (July 4, 2021). Retrieved from https://www.freeessays.education/air-new-zealand-and-airline-industry-essay/