The airline's continued focus on sustainable cost initiatives also contributed to the interim performance, as efficiencies offset the impact of inflation on unit costs, excluding fuel.

Cash flow from operations grew $103 million or 27 percent to $479 million, driven by growth in cash operating earnings and a strong working capital cash flow as the business grows.

Air New Zealand chairman Tony Carter said shareholders would be pleased with the result that came in the face of an 18 percent increase in fuel prices. 

"This high quality interim performance was driven by robust passenger demand and revenue growth, reflecting the airline's strong position in New Zealand and throughout our Pacific Rim network," Carter said.

The Board has declared a fully imputed interim dividend of 11.0 cents per share, an increase of 10 percent from the prior period and the highest ordinary interim dividend in the airline's history.

"Based on the strength of the result, and the airline's financial position, future capital commitments and positive trading environment, the Board felt it appropriate to raise the level of the interim dividend," said Carter. The interim dividend will be paid on 16 March 2018 to investors on record as of the close of business on 9 March 2018."

Chief Executive Officer Christopher Luxon said 2018 is shaping up to be another year of growth for Air New Zealand.

"The domestic market continues to show strength driven by the New Zealand economy as well as inbound tourism, and we will be increasing capacity approximately six percent across our regional and jet services to support that demand over the second half of the financial year," Luxon said.

"The Trans-Tasman and Pacific Island routes have also responded strongly to additional wide-body services and targeted capacity increases. Finally, our alliance partnerships continue to drive value across our international long-haul network, and have been a key factor in our ability to effectively compete against much larger airlines."

The airline also announced today the launch of a new direct service to Taipei, beginning in November 2018.

Taipei will become the airline's seventh destination in Asia, and is another strong addition to Air New Zealand's focused strategy of connecting the Pacific Rim to New Zealand. Taipei is an economic centre with renowned attractions, cuisine and shopping, and the airline is excited to offer New Zealanders the opportunity to explore this new destination.

Luxon also acknowledges and the work of the airline's staff in mitigating the impact of a number of disruptions over the year. 

"We have had some unprecedented weather events, along with the fuel pipeline disruption and the unscheduled engine maintenance on some of the Boeing 787-9 aircraft," he said.

"All of these disruptions are outside of our control, but our people have been remarkable, with a clear focus on doing the best for our customers, and that is what really sets us apart and drives such strong loyalty for our airline."