\u201cUnit revenue growth has accelerated, particularly on long-haul services, helped by reduced industry capacity.\u201d<\/p>\n
They said the airline\u2019s passenger revenue was up 12% in the first quarter, compared with a year earlier. <\/p>\n
But they also estimated Air NZ was spending about $6.8m a day on fuel, compared with $5.6m at the start of the financial year.<\/p>\n
\u201cWe assume some moderation of current fuel prices, but lift our annual cost assumption to [about] $2.3 billion,\u201d Bowley, Lockwood and Visser said.<\/p>\n
They said the airline\u2019s overall load factor was up, reaching 84.8%, and overall capacity was at 91% of pre-Covid levels.<\/p>\n
A taxpayer bailout was deemed unlikely to be needed.<\/p>\n
\u201cWe don\u2019t foresee any liquidity issues in the meantime or a need to raise additional equity, but continue to expect the company to defer capex where possible in order to prudently manage the balance sheet.\u201d<\/p>\n
Oil prices soared after the Iran-Israel-US conflict started on February 28. <\/p>\n
The \u201ccrack spread\u201d or premium paid for refined fuel was still high, the analysts said.<\/p>\n
Bowley, Lockwood and Visser also discussed hedging \u2013 locking in or protecting against future fuel prices.<\/p>\n
They said the airline had not embarked on any additional hedging over the past two months.<\/p>\n
\u201cLike airlines around the world, Air New Zealand is facing significant pressure from high jet fuel prices,\u201d Air NZ chief financial officer Kris Cudmore said.<\/p>\n
\u201cJet fuel now costs more than twice what it did before the war, while Stats NZ figures show petrol and diesel prices increased by 26% and 56% respectively between February and September.<\/p>\n
\u201cWe continue to manage our financial position carefully in what remains a challenging operating environment.<\/p>\n
\u201cAs outlined in our latest market update, we had hedged 80% of our Brent crude exposure and 20% of our jet fuel crack spread exposure for the first half of the 2027 financial year, as at 30 September.\u201d<\/p>\n
The airline said it did not comment on individual analyst forecasts, as those reflected analyst assumptions about future market conditions.<\/p>\n
The International Air Transport Association\u2019s latest jet fuel price monitor said the global average price of US$192.44 (about $338) a barrel was more than double the price a year earlier.<\/p>\n
Air New Zealand recorded a $336m pre-tax loss<\/a> in the last financial year.<\/p>\n After that, Prime Minister and former Air NZ chief executive Christopher Luxon rebuked the airline<\/a> for \u201ca very poor result\u201d.<\/p>\n That prompted Luxon\u2019s predecessor Rob Fyfe to chastise the PM for wading into the company.<\/p>\n Air NZ chief executive Nikhil Ravishankar in August said the airline should make a profit this financial year if jet fuel prices stay within its predictions<\/a>. <\/p>\n Overseas, Reuters on Friday reported resilient passenger traffic and sharply higher fares had not been enough to fully offset soaring fuel costs for US airlines.<\/p>\n \u201cThe surge in jet fuel expenses has pressured margins and prompted these companies to take a more cautious view on profit and capacity growth.\u201d<\/p>\n When are flights cheaper?<\/p>\n Meanwhile, the Forsyth Barr analysts said domestic flights booked 90 days ahead of travel were 47% cheaper than those booked in the week of travel.<\/p>\n People booking two months ahead of travel were likely to pay just over 40% less than those booking the same week they travelled.<\/p>\n