Air New Zealand, the country's largest airline, has reported a 40 percent boost in full-year pre-tax profit of NZ$663 million on the back of higher passenger numbers due to the tourism boom and lower fuel prices to produce the best result in its 76-year history.

Net profit for the financial year to June 30 was NZ$463 million, up 42 per cent on the previous year while record earnings before other significant items and tax of NZ$806 million were up 70 percent, the Auckland-based company said.

The board declared a fully imputed ordinary dividend of 10 cents per share, bringing the full-year dividends to 20 cents per share, up 25 percent on the previous year. And it has also announced a fully imputed special dividend of 25 cents per share.

Employees will benefit from a company performance bonus of up to NZ$2,500 to be paid to 8,200 staff not covered by other incentive programmes.

Air New Zealand said the outlook for operating earnings in the 2017 financial year was in the range of NZ$400 million to NZ$600 million, due to the uncertain impact of a growing number of competitive carriers and current market conditions.

The airline's shares closed yesterday at NZ$2.23 apiece.

This week Air NZ's Australian rival Qantas delivered a record AU$1.5 billion full-year profit and resumed paying dividends after a seven-year drought, paying out AU$500m to shareholders through a 7 Australian cents per share dividend and a share buy-back.