Air New Zealand has pulled its FY2026 guidance, the company said today (March 10).
“Due to unprecedented volatility in global jet fuel markets following the recent escalation of conflict in the Middle East, Air New Zealand is suspending its earnings guidance,” the airline said.
The airline had initially assumed jet fuel prices at $85 per barrel for the second half of the fiscal period. Yesterday oil prices surged at over $100 per barrel — a threshold that was last passed in 2022 amid the war in Ukraine.
The company expected second half losses to be in line with its NZ$59 million ($35 million) loss in the first half. The airline said that with the volatility, the company's guidance is “no longer appropriate”.
Air New Zealand said the conflict is expected to “meaningfully affect second-half earnings” and has suspended guidance until “fuel markets and operating conditions stabilise”.
“Since that time, conflict in the Middle East has led to extreme volatility in jet fuel markets,” said Air New Zealand. "Jet fuel prices, which were around US$85 to $90 per barrel prior to the conflict, have increased sharply to between US$150 to US$200 per barrel in recent days."
Jet fuel pricing is made up of not only Brent Crude — the underlying crude oil price — but also the crack spread, which is the refinery margin, or the difference between crude oil and refined jet fuel. Since the conflict began, crack spread has also proven volatile. The crack spread has widened from $22 per barrel before the conflict to as high as $115 per barrel, the airline said.
The airline is hedged at 83% against Brent crude for the second half of the 2026 financial year.
“However, like most global airline peers, it remains exposed to movements in the crack spread," the airline said. "For context, the airline’s estimated fuel consumption for the remainder of the financial year (from March to June) is approximately 2.9 million barrels.”
The company has raised fares to compensate for the higher fuel costs. If elevated jet fuel prices persist, the airline said it may need to raise prices further. Additionally, the airline is considering network and schedule adjustments if issues continue.
Air New Zealand said it is progressing with ongoing cost reduction initiatives that are expected to “partially offset” the fuel price pressures.