Facing revenue headwinds, Air New Zealand cuts fiscal-year earnings guidance
By David Winning
SYDNEY - Air New Zealand warned on profits on Monday as it grapples with revenue headwinds in its home market and in North America.
Air New Zealand (NZ:AIR) said it now expects pretax earnings of between 190 million New Zealand dollars (US$112 million) and 230 million in the 12 months through June. That was lower than guidance for annual earnings of NZ$200 million-NZ$240 million outlined to investors in February.
"Since providing that guidance, Air New Zealand has continued to see softening in revenue conditions over the fourth quarter both domestically and in the North American market," Air New Zealand said.
It pointed to cost-of-living pressures in New Zealand where the economy has yet to regain its pep following sharp increases in interest rates. Air New Zealand said government and corporate demand remains subdued.
In North America, U.S. carriers have added seats and put more planes in the sky as travel booms in the aftermath of the COVID-19 pandemic. That has led airlines to compete heavily on price.
"These softer revenue conditions are expected to result in lower underlying profitability for the 2024 financial year of approximately NZ$40 million to NZ$50 million," said Air New Zealand, which assumes jet fuel prices average US$105/bbl in the six months through June.
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04-21-24 2115ET
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