Air New Zealand posted a 47 percent fall in annual profit on Friday as higher fuel costs offset increased passenger numbers and cost cutting.

The national carrier, which has been undergoing restructuring and outsourcing of various operations, said a 44 percent rise in the price of jet fuel was largely responsible for the fall in profits and would directly influence the coming year's result.

"Given the extraordinarily challenging business environment the airline is operating in, this is a respectable result," Chairman John Palmer said.

Net profit after tax for the 12 months to June 30 was NZD$96 million (USD$60.9 million), compared with last year's NZD$180 million (USD$114.2 million).

In the past year Air New Zealand has reorganized its heavy engine maintenance divisions with a loss of 200 jobs and is in the midst of cutting more than 400 further jobs in its corporate structure.

"There are still more tough strategic, workforce and workplace decisions to be taken to ensure Air New Zealand meets its potential," Chief Executive Rob Fyfe said.

The company has increased fares to combat rising fuel costs, proposed a code-sharing agreement with Australian carrier on trans-Tasman routes and is revamping long-haul routes.

Operating revenue for the year was up 5 percent to NZD$3.8 billion (USD$2.41 billion), while expenses rose 7 percent to NZD$3.7 billion (USD$2.35 billion).

It said its fuel bill had risen by NZD$275 million (USD$174.6 million) although it had booked fuel hedge gains of NZD$70 million (USD$44.4 million). For the coming year it has 60 percent of its oil usage hedged at USD$71 a barrel.