Air New Zealand has lifted its expectation for annual profit with the demand for travel remaining strong and a fall in price of jet fuel. In a statement at NXZ, New Zealand Stock Exchange, the airline said that it expects profit before tax and one-time items of $510 million to $560m in the year to the end of June, up from its February 23 forecast of $450m to $530m and a turnaround from a pre-tax loss of $725m last year.
“The airline has continued to experience strong levels of demand on both the domestic and international networks,” the airline said in a statement.
US dollar jet fuel prices have declined below those assumed in the earnings guidance provided in February 2023, although the New Zealand dollar has also weakened over this time, reducing the impact of these declines.
“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,” the statement added.
The airline is in recovery after suffering heavy losses due to COVID-19 pandemic for three consecutive years and is expecting to return to profit this year.
In the first half of FY22-23, the airline reported a net profit of $213m, compared with a $272m loss in the same period a year earlier.
Prices for domestic air transport jumped 53.7% in the first three months of this year compared with the same time last year, while prices for international air travel rose 16.7%, according to the latest inflation data from Stats NZ.
Air New Zealand is still operating at a lower capacity than before the Covid-19 pandemic. The airline also clarified that its network capacity expectations for the second half of the financial year remain largely unchanged from its February guidance, with about 95% of domestic and 80% of international pre-Covid capacity levels across the network.
The Government owns 51% of the airline and supported the operations financially during the pandemic. Last year, the airline raised $1.2 billion selling shares at a significant discount to repay debt.