Air NZ sees 'strong' sales, expects return to profit

Wednesday, 21 September 2022

Air New Zealand is seeing strong bookings since travel restrictions lifted.

Air NZ expects first-half profit
Seeing strong forward sales
Shares jump 8.1%

Air New Zealand expects to return to profit in the first half of its financial year as travel demand rebounds.

The national airline expects profit before tax and one-time items of $200 million to $275m in the six months to December 31, it said in a statement to the NZX on Wednesday. That’s a turnaround from its $367m loss last year.

The carrier was hard hit during the pandemic as international borders closed to travellers and last month reported its third straight annual loss. But it has seen a strong recovery in bookings since travel restrictions lifted and is expecting a significant improvement in its financial performance this year.

“Air New Zealand has continued to see strong forward sales over the first three months of the financial year, particularly for travel through to January 2023,” the airline said.

Watch as Air New Zealand's first direct flight to New York from Auckland lands at John F Kennedy International Airport. (First published in September 2022)

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It was operating at about 70% of its pre-Covid capacity in 2019, it said.

The airline said its forecast was based on continued strength in forward sales over the second quarter, with similar capacity and assuming an average jet fuel price of about US$130 (NZ$216) a barrel.

Air NZ said there were many uncertainties in the trading environment and it would not provide full-year guidance at this time. It warned against extrapolating the first-half guidance to the full year.

“Fuel prices remain highly volatile and that this is one of many factors that have the potential to slow our recovery and significantly impact earnings,” the company said.

Demand in the second half of the financial year remained “highly uncertain”, alongside global recessionary risks and other macroeconomic factors including inflationary pressures on costs, it said.

The airline’s shares jumped 8.1% to 73.5 cents in early afternoon trading on the NZX.