Air New Zealand has lifted its forecast for the current financial year due to a decline in jet fuel prices and stronger than expected demand. Photo: AFP
Strong travel demand and cheaper fuel are powering Air New Zealand's earnings.
It has upgraded its forecast for the current financial year ending this month and now expects earnings before tax and big one-off costs to be no less than $580 million, up from the April forecast range of $510m - $560m.
"Since the previous update, the airline has experienced stronger ongoing demand than usually observed at this time of the year, which is typically considered the airline's off-peak period," Air NZ said in a stock exchange statement.
"In addition to this, US dollar jet fuel prices have declined even further and have been consistently below those assumed in the earnings guidance provided in April."
The airline reported a half year profit of $213m after two years of losses caused by the pandemic, but remained cautious about the outlook for the coming year.
"The airline remains mindful of the uncertain economic environment it is facing into. With more capacity entering the market in the coming months, fares are expected to moderate from the current peaks."
Its most recent data showed Air New Zealand had more than doubled the number of passengers flown over the past year, reflecting the end of Covid-19 travel restrictions and open borders, although numbers were still down on pre-pandemic levels.
It also plans to spend about $3.5 billion in buying new planes and refurbishing current aircraft.