Air NZ has increased its fares by up to $90 and warns that ‘further pricing action’ and network changes may be needed. 
The domestic fares are increasing by $10, short-haul up $20 and long-haul prices are up $90. In a grim trading update today, NZ says it can no longer forecast its earnings for the rest of the financial year following a $59 million loss in the last six months.
Although oil price rises have eased today, that’s down from historically steep rises and refiners’ margins on jet fuel have surged. NZ says since the conflict began, the margin or ‘crack spread’, has also been particularly volatile, widening from approximately USD22 per barrel before the conflict to as high as USD115 per barrel. NZ is 83% hedged against Brent crude for the second half of this financial year.
However, it says that like most global airline peers, it remains exposed to movements in the crack spread.
. . . Unprecedented
NZ says due to unprecedented volatility in global jet fuel markets following the recent escalation of conflict in the Middle East, it is suspending its earnings guidance.
“The crisis is expected to meaningfully affect second-half earnings and accordingly, the airline has sus pended guidance until fuel markets and operating conditions stabilise,’’ says NZ.
In parallel with the fare increase and possible schedule changes, the airline says it is continuing ongoing cost reduction initiatives which are expected to partially offset these pressures.
