(Adds broker comment, market reaction)
By Charlotte Greenfield
WELLINGTON, Feb 25 (Reuters) - Air New Zealand AIR.NZ posted record half-year profits on Thursday as the airline expanded routes helped by low fuel prices and a tourism boom.
The airline announced its net profit after tax jumped 154 percent to NZ$338 million ($225 million) and that the group's capacity had risen 16 percent.
The performance was driven by the airline adding international flights as oil prices dropped and New Zealand attracted record tourism inflows.
CEO Christopher Luxon said the company would continue to focus on expanding its services and would start seasonal flights to Vietnam in June.
"Our network will provide more frequency, more routes and competitive prices throughout New Zealand and the Pacific Rim, combined with modern aircraft offering better operating economics," Luxon said in a statement.
The airline had already increased flights to the United States, Argentina and China in 2015.
It is targeting earnings before tax for the full year to exceed NZ$800 million and announced an interim dividend of 10 cents per share, a rise of 54 percent.
"It's a pretty good result but more important was the strong full year profit signal and capacity growth signals," said Brad Gordon, investment adviser at Macquarie Equities.
Low oil prices were a boost to profits, but in the longer term the gains would likely taper off, according to analysts.
"Short term it's certainly helping them, but eventually competition will bring yields down," said Gordon.
Air New Zealand shares rose 1.22 percent in morning trading to NZ$2.90, their highest level in almost three weeks.
($1 = 1.5017 New Zealand dollars)