Air New Zealand: Rapid Normalization of Air Travel Profitability as Competition Increases

We lower our fair value estimate for Air New Zealand by 7% to NZD 0.90 (AUD 0.84) per share. Airline profitability is normalizing after an exceptional fiscal 2023. Pent-up demand has largely exhausted, and previously constrained capacity is beginning to ease. While we had expected elevated profitability to prove short-lived, we did not expect conditions to normalize so rapidly. The company now expects first-half profit before tax to be at the bottom of the prior guidance range of NZD 180 million to NZD 230 million. We lower our full-year fiscal 2024 forecast by 23% to NZD 325 million—a 43% decline on fiscal 2023.