\u201cIt\u2019s one of those businesses that is quite sensitive to the ebbs and flows of the economy,\u201d said Mark Lister, Craigs Investment Partners investment director.<\/p>\n
It was also vulnerable to currency and fuel price volatility.<\/p>\n
Lister said a lot of travel was discretionary, so airlines took big hits when the economy was sluggish and consumer confidence was down.<\/p>\n
\u201cI\u2019ll be interested in the result from the perspective of what it\u2019s telling me about where the economy is heading.\u201d<\/p>\n
He said information on forward bookings would be useful too.<\/p>\n
\u201cIt\u2019s a barometer of activity more broadly in the New Zealand economy,\u201d ASB senior economist Mark Smith said.<\/p>\n
Regardless of the big loss Walsh signalled, Smith said people should also look for the airline\u2019s revenue guidance and data on passenger numbers.<\/p>\n
\u201cIf they are reporting reasonably good volumes coming into the country … that will be a positive signal.\u201d<\/p>\n
Domestic freight numbers should provide some insights too, he said.<\/p>\n
Any trends there would help illuminate the state of domestic demand in the New Zealand economy more broadly.<\/p>\n
The airline had taken a hit in recent years from cutbacks to corporate travel.<\/p>\n
\u201cThere are signs there that businesses are starting to look a bit more outward and increase flights,\u201d Smith said.<\/p>\n
Ongoing aircraft engine maintenance issues have also been a drag on Air New Zealand.<\/p>\n
\u201cIt\u2019s slowly improving, but it\u2019s still got quite a long tail on it,\u201d Walsh said of engine issues when she attended a parliamentary select committee hearing late last week.<\/p>\n
She and Ravishankar were asked at the transport and infrastructure committee about regional fares.<\/p>\n
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%.<\/p>\n
Walsh added: \u201cWe don\u2019t see any lack of competition except in the areas of the country where it is really costly to fly.\u201d<\/p>\n
She said Jetstar had surrendered those routes.<\/p>\n
\u201cWe continue to do it, irrespective of the economics.\u201d<\/p>\n
And she said the airline was \u201cfiercely competing\u201d on inter-city domestic routes and internationally.<\/p>\n
After that meeting, Airports Association chief executive Billie Moore blasted the airline over competition issues.<\/p>\n
She said regional New Zealand routes faced increasing fares and lower capacity.<\/p>\n
\u201cWith over 80% domestic market share, there is little risk another airline will step in to challenge Air NZ\u2019s decisions to cut early morning and evening flights,\u201d Moore said.<\/p>\n
\u201cRegional businesses lose the flight times they need, with no alternative.\u201d<\/p>\n
It\u2019s understood some airport leaders are fuming over the airline\u2019s persistent complaints about fees when other airlines are modernising fleets and in growth mode.<\/p>\n
Qantas and its Jetstar stablemate have been aggressively expanding, and Qantas in late August posted a $1.78 billion profit<\/a>.<\/p>\n Air New Zealand the same day posted a $126 million net profit after tax for the financial year, down from $146m the year before.<\/p>\n Air NZ has repeatedly complained about aeronautical fees \u2013 the money it pays airports and public sector agencies for everything from landing to air traffic control and aviation security services.<\/p>\n Walsh told the MPs these fees had been outstripping inflation.<\/p>\n She also alluded to many key financial issues being outside of the airline\u2019s control, with recent wild weather<\/a> as one example.<\/p>\n With weather and fuel costs beyond the airline\u2019s control, it might be expected to keep pushing hard on areas it can influence \u2013 such as fees.<\/p>\n