Air New Zealand lost $40m after tax in the first half of this financial year, which ended two months before the Iran war broke out.<\/p>\n
Bowley and Lockwood in a note today said the airline had a balance sheet with plenty of capacity to absorb losses for the foreseeable future. <\/p>\n
And it would not likely need to get the begging bowl out and beseech the Government to help, they added.<\/p>\n
But that assumed no major deterioration in the fuel cost or broader trading environment, the analysts said.<\/p>\n
Bowley and Lockwood expected the airline to keep losing money in the next financial year, starting July 1.<\/p>\n
They said losses would be cushioned if engine maintenance issues were resolved quickly, and meaningful cost-cutting emerged from the current restructure.<\/p>\n
The \u201creset\u201d chief executive Nikhil Ravishankar announced after the first-half loss<\/a> is expected to involve job cuts, and the Herald understands numerous senior managers are impacted.<\/p>\n \u201cWe expect a wide-ranging review, with further cost-out initiatives (on top of existing targets) likely balanced with disciplined network expansion,\u201d the analysts said.<\/p>\n The analysts said the airline resumed hedging, and was 55% hedged for exposure to crude oil prices in the first half of next financial year.<\/p>\n That was up from 46% when the current Middle East crisis began, they said.<\/p>\n But the analysts said the airline faced another problem.<\/p>\n \u201cDemand is weakening, particularly from New Zealand point of sale, given the fuel crisis impact on household travel budgets.\u201d<\/p>\n Stats NZ today said domestic airfares were up 4.2% in April compared to March.<\/p>\n International fares were up 6.2%, Stats NZ said in the selected price indexes release<\/a>.<\/p>\n Bowley and Lockwood said their airfare tracking analysis showed big March and April fare increases unwinding for both current and forward travel.<\/p>\n The analysts gave the airline an underperform rating today, as they did twice in March<\/a>.<\/p>\n The airline yesterday said the Middle East war would cost it about $240m more than it had previously expected to pay for jet fuel<\/a>.<\/p>\n It also said it had reduced overall capacity 3-5% since the Iran-Israel-US war started.<\/p>\n Air New Zealand said it had strengthened its funding flexibility in recent years.<\/p>\n That was because it had about $4 billion of available equity across aircraft it owned outright and those where its planes were worth more than any loans on them.<\/p>\n Ravishankar this morning told Newstalk ZB<\/a> a recent drop in jet fuel prices from about US$200 to US$150 a barrel was helpful, but not enough.<\/p>\n