Air New Zealand Raises Full-year Forecast

DALLAS — Flag carrier Air New Zealand (NZ) readied its full-year forecast for earnings. This comes as the demand for travel remains strong and jet fuel prices fall.

On Thursday, the airline stated that it expects profit before tax and one-time items to be no less than NZ$580m (US$350m). This is a significant increase from its forecast on February 23, where the airline expected an earning of NZ$510m (US$310m) to NZ$560m (US$340m). 

Air New Zealand has experienced a stronger demand following the reopening of New Zealand’s domestic and international borders last July. This has also helped NZ achieve a profit in the first half of the year for the first time in three years. Due to the COVID-19 pandemic, the aviation industry as a whole ground to a halt, but now, as travel has rebounded, airlines are posting strong results over the last few months.  

The carrier commented, “The improvements in revenue and jet fuel price are expected to be partially offset by softer cargo revenues due to increased competitive capacity, particularly in Asia, impacting yields and load factors.”

One of the factors that have contributed to the strong full-year forecast is the price of jet fuel. In June, the price of jet fuel is just US$89 per barrel, down from US$105 per barrel in February. With that said, the times of substantial profits may not last as airline capacity ramps up. Travel demand may slow down after an initial increase, and a decline in fuel prices could create more competition. 

Even with the strong forecast, NZ is still operating at a lower capacity than it was pre-pandemic. The airline’s network capacity for the second half of 2023 is almost identical to that of its capacity in the first half. They will operate almost 95% domestic and 80% international per-pandemic capacity levels across their route network.

Despite the forecast, NZ stressed that fuel price volatility, inflationary pressures on the supply chain, and global recessionary risks might impact the final financial result for 2023. 

The New Zealand Government owns 51% of the flag carrier and helped prevent the airline from going bankrupt during the pandemic. To repay the debt to the government, the carrier sold NZ$1.2m (US$730m) worth of shares at a discount. 

Air New Zealand has an operating fleet of 105 aircraft and serves destinations across Oceania, North America, and Europe from its hub at Auckland International Airport (AKL).

Featured image: Air New Zealand ZK-OKP Boeing 777-319(ER). Photo: Luca Flores/Airways