Air New Zealand said on Thursday its annual profit slumped 90 per cent in the year to June as the global economic crisis and intense competition took their toll.
Annual net profit for the flag carrier fell to 21 million dollars (14 million US) from 218 million dollars the previous year, the company said.
Operating revenue for the 12 months to the end of June fell 1.2 per cent, or 58 million dollars, to 4.61 billion dollars.
Air New Zealand carried 12.4 million passengers during the year to June, a decline of 6.1 per cent from the previous year, but it also reduced capacity by 7.2 per cent in the face of the downturn.
Profitability was hit by volatile foreign exchange rates and fuel prices, falling demand for air travel, and increased competition on routes to Australia and across the Pacific to North America, Air New Zealand said.
Looking ahead, chief executive Rob Fyfe said that while some certainty is provided by hedging of foreign exchange and fuel prices, demand remained difficult to predict.
"Although there are some early indicators that the slump in travel demand may be showing signs of having bottomed out, it would be naive to think that there won't be bumps on the road to economic recovery," he said.