Air New Zealand (NZX:AIR) updates its earnings guidance for 1HFY23

Highlights

• Air NZ increases its earnings guidance for the first half of fiscal 2023
• The company says it expects to earn in the range of NZ$295 million to NZ$325 million
• The increased guidance is on the back of a rise in demand for travel and the easing of the jet fuel price

New Zealand’s national carrier, Air New Zealand (NZX: AIR),  raised its earnings guidance for the first half of the financial year 2023 on Thursday (8 December 2022). In its announcement on the NZX, AIR said that due to continued demand for travel across the domestic and international circuit, it is expected to earn in the range of NZ$295 million to NZ$325 million.

This is compared to its previous guidance of NZ$200 million to NZ$275 million provided on 21 September 2022.

Reasons for increased guidance

The update revealed that the increased expectations are on the back of the current forward sales and a lower jet fuel price of around US$127/bbl for the six months to 31 December 2022.

The airline also expects to fly around 75% of pre-COVID-19 capacity levels across the domestic and international circuits with domestic travel running at almost 100% of its capacity.

According to the airline, ticket sales in the past two months have also been in a good position as Kiwis continued to book international and domestic travel tickets.

The jet fuel price has also been moderated. However, it is still higher than the pre-COVID-19 levels. However, it has decreased since September 2022, when the company gave its last update. The decrease in the jet fuel price has added NZ$20 million to the increased guidance range, the NZX update said.

Prices still high

Further, the company said that since the capacity remains constrained, the prices will continue to be impacted. Air New Zealand is currently focusing on operational reliability but will also be adding the capacity to ease pressure on tickets. Some steps in this direction include hiring 2,200 new employees and purchasing two new A321 aircraft for the fleet. These new aircraft will provide additional 200,000 seats per year to the airlines.

Recovery on track

Air New Zealand said that it was in an accelerated recovery mode even though CY22 had been a year of ups and downs for the airlines. Earlier, it had announced that it was in a recovery mode with a NZ$2.2-billion recapitalisation as the country’s borders reopened.

In its earlier announcement on the NZX, AIR also revealed improvement in figures from March onwards since travel restrictions started to lift. The domestic network has registered 105% of pre-COVID-19 levels and corporate bookings are at pre-COVID-19 levels.

However, the company, which has been posting losses since 2020, refrained from providing a full-year outlook, citing factors such as inflationary pressures and macroeconomics. 

Stock Update

On 9 December 2022, the stock was trading up by 0.64% at NZ$ 0.785, at the time of writing.