Air New Zealand has seen demand for its services continue to increase strongly on both its domestic and international networks. Photo: AFP
Strong demand for travel and falling jet fuel prices has seen Air New Zealand improve its full year earnings guidance.
The airline is now forecasting underlying earnings for the 2023 financial year of between $510 million and $560m.
That is significantly better than the previous guidance range of $450m to $530m provided in its interim results in February.
"Since this time, the airline has continued to experience strong levels of demand on both the domestic and international networks," Air NZ told the sharemarket.
It said jet fuel prices had also fallen below assumed levels in the previous earnings guidance, but the weaker New Zealand dollar reduced the benefit of those falls.
"The improvements in revenue and jet fuel prices are expected to be partially offset by softer cargo revenues due to increased competitive capacity, particularly in Asia, impacting yields and load factors," it said.
Air NZ said network capacity expectations for the second half of the financial year remained largely unchanged, with domestic capacity at about 95 percent of pre-Covid levels and international at about 80 percent.
The updated guidance range assumed an average jet fuel price for the remainder of the year to be $US95 per barrel.
However, the airline warned the full year result could potentially be affected by ongoing fuel price volatility, recessionary risks and inflationary pressures.