Air New Zealand expects its half year earnings to December to be at the lower end of its October forecast. Photo: 123RF
Air New Zealand says slowing passenger demand and competition are cutting into its earnings, and business could get tougher.
The airline now expects earnings for the six months ended December to be at the bottom end of its October forecast of between $180 million and $230m.
"Early signs of softness in domestic travel, particularly corporate and government travel, which were noted in the 12 October update have continued, with late booking activity remaining weaker compared to the prior year," the company said in a statement to the NZX.
"More recently, the airline has noted softer leisure demand in both the domestic and trans-Tasman markets."
Air New Zealand said the Asia and Pacific Island demand remained unchanged, but increased competition from US airlines was putting pressure on prices.
It said the new forecast included about $45m of travel credits which were unlikely to be redeemed.
It gave no new information on potential disruptions that might be caused by required checks for the Pratt & Whitney engines on 16 of its planes, which it said in October could have a "noticeable impact" on services.
The carrier gave no full year earnings forecast because of the uncertainties caused by economic and inflation risks, and repeated that its first half performance should not be used an indicator of the second half, which it said was likely to be "increasingly challenging".