Air New Zealand has cut its pre-tax earnings guidance for this financial year by $40 million to $50m due to worsening market conditions.
The airline now expects its pre-tax profit to come in at $190m to $230m, down from a previous guidance of $200m to $240m.
The prior guidance, issued in February, included the benefit of $65m in Covid-related credit “breakage” for the year, with $45m recognised in the first half, and $20m of assumed credit breakage in the second half.
The new range includes the $40m to $50m impact of deteriorating market conditions, as well as a total of $95 million in Covid-related credit breakage for the 2024 financial year.
“Since providing that guidance, Air New Zealand has continued to see softening in revenue conditions over the fourth quarter both domestically and on the North American market,” the company said.
Domestic performance had seen ongoing softening, with challenging economic conditions and ongoing cost-of-living pressures.
Government and corporate demand had remained subdued.
North American performance continued to be impacted by very competitive pricing pressures, as the market adjusted to the significant capacity added into the New Zealand market by US carriers.
Separately, following a significant decline in the rate of redemption of Covid-related credits in recent months, the airline had increased the assumed level of additional Covid-related credit “breakage” for the second half from $20m to $50m.
Customers who have a Covid-related credit have until January 31, 2026, to book travel for completion by December 31 of that year.
Today’s revised guidance assumes a jet fuel price of USD$105/barrel for the second half.
Last year, Air NZ’s earnings before taxation came to $574m.
Staff Reporter
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