Air New Zealand informed its shareholders on the company's annual meeting on Friday that it had a tough year for fiscal 2010 but the airline's chairman expressed optimism that good days are ahead and recovery would accelerate come next year.

The company reported that its annual pre-tax profit slid by six percent to $137 million on financial year 2009/10, as compared to earnings posted in the prior year but Air NZ chair John Palmer was still happy to note that "we are one of very few airlines in the world to have paid a dividend through the last two challenging years."

Mr Palmer said that Air NZ issued payments of up to $NZ75 million or $A57.6 million to company shareholders in the year to June 30, which showed a jump of eight percent in dividend payments and pointed to improving outlook despite the profit retreat.

Still, the Air NZ board said that it remains confident that the carrier would be able to spring back to profitability in the medium term though it reiterated the importance of strengthening the company's financial flexibility in order to survive for the longer term.

On his part, Air NZ chief executive Rob Fyfe said that amidst the challenges posed by the difficult year, the airline currently holds $1.1 billion in cash while its operating cash flow racked up gains of up to 33 percent and still moving up, with the company's capitalised operating leases lifting off by 47 percent.

Mr Fyfe also used the occasion to criticise the earlier indications hinted by the Australian Competition and Consumer Commission (ACCC) that it intends to block Air NZ's proposed alliance with Virgin Blue on the trans-Tasman routes.

He characterised the planned deal with Virgin Blue as 'critical plank' on Air NZ's business strategy of accelerating its global consolidation, adding that ACCC's decision to turn down the proposal "effectively puts at risk competition within Australia and across the Tasman."

Mr Fyfe further stressed that ACCC's claim of protecting and promoting competition has been damaged by its draft decision as he asserted that "it is one thing to take on the challenge of competing fairly against a dominant market player and it is quite another to have to compete with one arm tied behind your back."