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Air New Zealand follows Qantas to upgrade profit forecast – Australian Aviation

admin by admin
December 10, 2022
in Airlines News


Victor Pody shot this Air NewZealand 777, ZK-OKC, arriving at Melbourne in 2018

Air New Zealand has followed Qantas in significantly upgrading its half-year profit guidance by what could be an extra $NZ95 million.

The flag carrier said strong ticket sales and stabilising fuel prices were behind it targeting up to $NZ325m in the six months to 31 December.

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It also admitted that “constrained” capacity was a factor behind high-ticket prices, but said it was focussed on eventually adding more seats for sale to “alleviate this pressure”.

Airlines are currently holding flights and staff in reserve to mitigate the issues of delays and cancellations seen earlier this year, in part due to sick leave and staff shortages.

Air New Zealand’s statement to the ASX follows Qantas upgrading its half-year profit forecast by an extra $150 million. Rex and Virgin have similarly posted hugely positive financial news.

“The airline now expects earnings before other significant items and taxation for the first half of the financial year to be in the range of $NZ295 million to $NZ325 million,” said Air New Zealand in a statement to the ASX.

“This compares to the previous guidance range provided on 21 September 2022 of $NZ200 million to $NZ275 million for the half year.

“The updated range is based on current forward sales expectations and assumes an average jet fuel price of around US $127/bbl for the six months to 31 December 2022.

“It also assumes we will fly approximately 75 per cent of pre-Covid capacity levels across the entire network in December, with Domestic running at just under 100 per cent, short-haul at about 85 per cent and international at around 70 per cent.

“Ticket sales over the past two months have remained strong as New Zealanders continue to book travel overseas and at home, and as the majority of our remaining international destinations re-open for passenger travel.

“Fuel prices have also moderated in recent weeks, with current jet fuel prices of approximately US$102/bbl.

“While fuel prices are around 20 per cent higher than pre-Covid levels at present, the six-month average has declined since the airline’s last market update in September, adding almost $20 million upside to the guidance range.

“Whilst fuel is a contributor to this earnings update, it is not the only factor.”

Air New Zealand said it was “focussed on ensuring operational reliability” and had hired more than 2,200 employees since February 2022.

It comes after the ACCC warned it would be keeping a close eye on Australian airlines to ensure they lower prices after the busy Christmas period.

However, the competition commission on Tuesday said it is “expecting” prices to go down after the holidays end and more employees are recruited.



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