Air New Zealand says domestic travel is weaker amid tougher economic conditions. Photo: RNZ / Dan Cook
Air New Zealand has downgraded its full-year earnings guidance, as it faces softening domestic demand and a competitive North American travel market.
The national carrier said its pre-tax earnings for the 2024 financial year was forecast to be in the range of $190 million to $230m, compared to its previous guidance of $200m to $240m.
It was significantly lower than the airline's 2023 pre-tax earnings of $585m.
"These softer revenue conditions are expected to result in lower underlying profitability for the 2024 financial year of approximately $40m to $50m," the airline told the share market.
It said domestic performance conditions were softening, with challenging economic conditions and ongoing cost-of-living pressures, while government and corporate demand remained subdued.
"North American performance continues to be impacted by very competitive pricing pressures, as the market adjusts to the significant capacity added into the New Zealand market by US carriers."
Air New Zealand said its 2024 guidance assumed an average jet fuel price of US$105 a barrel and included $95m in unclaimed Covid-related credits.
In February, the airline said it was facing "unprecedented competition" in North America and was experiencing pricing pressure from United States carriers.
Engine availability and maintenance issues have been another major headache for the airline.
It also said the second half would be difficult, given the impact of its Pratt & Whitney engine maintenance requirements, economic risks, and softness in domestic demand.
Last week, the airline revealed that issues with the availability of its Rolls Royce Trent 1000 engines meant it had to extend the pause on its Chicago service until the second half of 2025.