“It’s one of those businesses that is quite sensitive to the ebbs and flows of the economy,” said Mark Lister, Craigs Investment Partners investment director.
It was also vulnerable to currency and fuel price volatility.
Lister said a lot of travel was discretionary, so airlines took big hits when the economy was sluggish and consumer confidence was down.
“I’ll be interested in the result from the perspective of what it’s telling me about where the economy is heading.”
He said information on forward bookings would be useful too.
“It’s a barometer of activity more broadly in the New Zealand economy,” ASB senior economist Mark Smith said.
Regardless of the big loss Walsh signalled, Smith said people should also look for the airline’s revenue guidance and data on passenger numbers.
“If they are reporting reasonably good volumes coming into the country … that will be a positive signal.”
Domestic freight numbers should provide some insights too, he said.
Any trends there would help illuminate the state of domestic demand in the New Zealand economy more broadly.
The airline had taken a hit in recent years from cutbacks to corporate travel.
“There are signs there that businesses are starting to look a bit more outward and increase flights,” Smith said.
Ongoing aircraft engine maintenance issues have also been a drag on Air New Zealand.
“It’s slowly improving, but it’s still got quite a long tail on it,” Walsh said of engine issues when she attended a parliamentary select committee hearing late last week.
She and Ravishankar were asked at the transport and infrastructure committee about regional fares.
Ravishankar said that since pre-Covid, the consumers price index inflation was up 29% and domestic fare increases were up 32%, but costs to the domestic network were up about 40%.
Walsh added: “We don’t see any lack of competition except in the areas of the country where it is really costly to fly.”
She said Jetstar had surrendered those routes.
“We continue to do it, irrespective of the economics.”
And she said the airline was “fiercely competing” on inter-city domestic routes and internationally.
After that meeting, Airports Association chief executive Billie Moore blasted the airline over competition issues.
She said regional New Zealand routes faced increasing fares and lower capacity.
“With over 80% domestic market share, there is little risk another airline will step in to challenge Air NZ’s decisions to cut early morning and evening flights,” Moore said.
“Regional businesses lose the flight times they need, with no alternative.”
It’s understood some airport leaders are fuming over the airline’s persistent complaints about fees when other airlines are modernising fleets and in growth mode.
Qantas and its Jetstar stablemate have been aggressively expanding, and Qantas in late August posted a $1.78 billion profit.
Air New Zealand the same day posted a $126 million net profit after tax for the financial year, down from $146m the year before.
Air NZ has repeatedly complained about aeronautical fees – the money it pays airports and public sector agencies for everything from landing to air traffic control and aviation security services.
Walsh told the MPs these fees had been outstripping inflation.
She also alluded to many key financial issues being outside of the airline’s control, with recent wild weather as one example.
With weather and fuel costs beyond the airline’s control, it might be expected to keep pushing hard on areas it can influence – such as fees.
John Weekes is a business journalist covering aviation and court. He has previously covered consumer affairs, crime, politics and courts.
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