{"id":316991,"date":"2026-03-07T02:59:11","date_gmt":"2026-03-07T02:59:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/316991\/"},"modified":"2026-03-07T02:59:11","modified_gmt":"2026-03-07T02:59:11","slug":"air-new-zealand-risks-extra-4m-5m-cost-per-day-from-war-driven-jet-fuel-spike-analysts-warn","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/316991\/","title":{"rendered":"Air New Zealand risks extra $4m-$5m cost per day from war-driven jet fuel spike, analysts warn"},"content":{"rendered":"

The spread is frequently volatile<\/a> but for most of the past decade was below US$10 ($17).<\/p>\n

The analysts said the crack spread was at an all-time high on Thursday night of US$140, though it had since fallen about 15%.<\/p>\n

High prices may not last long.<\/p>\n

Bowley and Lockwood expected an oil market supply response to higher crack spreads.<\/p>\n

But they said that could take time because refinery flexibility was typically limited in the short term. <\/p>\n

The analysts said they were reticent to extrapolate today\u2019s crack spread given the volatility of oil markets and the ultimate supply response.<\/p>\n

But they still estimated Air New Zealand was exposed to an additional daily fuel cost of about $4 million to $5m.<\/p>\n

The airline has not confirmed that number.<\/p>\n

The International Air Transport Association (Iata) went into this year assuming an average Brent crude price of US$62, and crack spread of US$26.<\/p>\n

Bowley and Lockwood said Iran\u2019s Strait of Hormuz blockade was disproportionately impacting jet fuel markets. <\/p>\n

\u201cAround 20% of seaborne jet fuel transits the strait.\u201d<\/p>\n

They said jet fuel was sensitive to such disruptions because crude had larger inventories and more diverse sources.<\/p>\n

\u201cMost refineries operate at high utilisation rates, meaning that there isn\u2019t significant spare capacity to offset lost Gulf refinery output,\u201d they said.<\/p>\n

\u201cRefiners may prioritise diesel supply over jet fuel given its role in industrial production, ground transport and power generation.\u201d<\/p>\n

\"SmokeSmoke rises after a military strike on the Iranian capital of Tehran on Thursday, with conflict in the Middle East impacting global fuel prices. Photo \/ Atta Kenare, AFP<\/p>\n

The analysts estimated every US$10 increase above US$20 in the average crack spread through this half, ending June 30, would cost Air NZ an additional $67m.<\/p>\n

That was based on Forsyth Barr thinking the airline had assumed an average crack spread of US$20.<\/p>\n

Air New Zealand hedged to protect itself from oil price turmoil and in its half-year results provided a simplified version of its hedging profile.<\/p>\n

\u201cIt said that it had undertaken some \u2018opportunistic Singapore jet swaps\u2019 for 2H26, though we understand that these swaps have already expired.\u201d<\/p>\n

Swaps are derivatives, or synthetic financial instruments, and are effectively bets on where the price will go.<\/p>\n

The airline was already under pressure before war broke out, posting a $40m after-tax loss last week<\/a>.<\/p>\n

It said a \u201creset\u201d or comprehensive review<\/a> was happening.<\/p>\n

\u201cHigher for longer jet fuel prices may mean greater structural changes as a result of the strategy review,\u201d Bowley and Lockwood said.<\/p>\n

Brent crude was up from US$76.27 on Monday to US$84.21 by mid-afternoon Friday.<\/p>\n

Airlines for America today said jet-fuel spot prices for Chicago, Houston, Los Angeles and New York were up 58% since last Friday.<\/p>\n

Airline stocks down<\/p>\n

At about 3pm on Friday, Air New Zealand\u2019s share price was down 10.62% this week and Qantas shares had slipped 8.27%.<\/p>\n

The world\u2019s three biggest airlines were faring worse.<\/p>\n

American Airlines Group was down 11.49%, Delta Air Lines had dropped 13.05%, and United Airlines was 18.04% lower.<\/p>\n

Smaller US carriers Southwest Airlines and Jet Blue were down 13.78% and 21.38% respectively.<\/p>\n

US analysts Rothschild & Co Redburn downgraded American Airlines to neutral.<\/p>\n

But they voiced more positive views on Delta and United, according to Yahoo Finance. <\/p>\n

\u201cAnalysts see the main impact coming through fuel inflation, which has forced a reduction in earnings forecasts.\u201d<\/p>\n

The analysts reportedly said Delta and United were better positioned because of lower fuel sensitivity.<\/p>\n

John Weekes<\/a> is a business journalist covering aviation and court. He has previously covered consumer affairs, crime, politics and courts.<\/p>\n

Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter<\/a> \u2013 your essential weekly round-up of all the business news you need.<\/p>\n","protected":false},"excerpt":{"rendered":"The spread is frequently volatile but for most of the past decade was below US$10 ($17). The analysts…\n","protected":false},"author":2,"featured_media":316992,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[171771,68,2172,66148,138,4187,124,5972,12474,14768,27308,66147,71,2678,13484,28372,57334,4380,117,111,139,69,42300,1519,312,2441,171772,26697,80],"class_list":["post-316991","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-4m5m","tag-air","tag-analysts","tag-barr","tag-business","tag-cost","tag-could","tag-day","tag-dollars","tag-every","tag-extra","tag-forsyth","tag-from","tag-fuel","tag-higher","tag-jet","tag-margins","tag-millions","tag-new","tag-new-zealand","tag-newzealand","tag-nz","tag-per","tag-risks","tag-says","tag-spike","tag-wardriven","tag-warn","tag-zealand"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/316991","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=316991"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/316991\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/316992"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=316991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=316991"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=316991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}