Air New Zealand shares lift on improved outlook
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More news: Air New Zealand shares rallied on the ASX after the airline pointed to "signs of recovery" in corporate travel, despite ongoing headwinds that impacted its financial performance last year.
Air New Zealand shares were up 2.1% to 48.5 cents, after shedding 17% since the start of 2024.
Air New Zealand expects earnings dip amid trading headwinds
The news: Air New Zealand has warned that many of the headwinds that impacted last year's financial performance have persisted into the start of FY25, and expects first-half earnings before taxation to be lower year over year.
The numbers: The airline expects earnings before taxation for the first half of the 2025 financial year to be between NZD120 million ($107.5 million) and NZD160 million. It recorded full-year earnings before taxation of NZD222 million in FY24, with NZD185 coming in the first half of the year.
The first-half guidance includes around NZD10 million of unused travel credit breakage, NZD30 million of compensation from engine manufacturers relating to prior periods, and a gain of NZD20 million on the sale and leaseback of four A320 aircraft. The guidance range also assumes an average jet fuel price of USD91 ($139) per barrel for the first half.
The context: New Zealand’s flagship carrier said that while it has seen early signs of recovery in corporate travel, government travel demand remains subdued. It has also noted targeted reductions in competitive capacity in the North American market over the peak northern winter season.
The airline flagged that aircraft availability issues resulting from global engine maintenance delays have seen up to six Airbus neo aircraft and up to four Boeing 787 aircraft out of service across the first half of FY25. This represents over 16% of Air New Zealand's entire jet fleet, and the airline does not expect the availability issues to ease until early 2026.
Given the ongoing uncertainties in both the trading and operating environment, the company said it cautions against extrapolating first-half guidance for the 2025 financial year to the full year.
The source: ASX announcement
