Air New Zealand's full year guidance update

Air New Zealand (ASX: $AIZ) has provided an update on its full year guidance, indicating a significantly challenging second half of the financial year. The airline expects softer forward trading conditions due to various factors including engine maintenance requirements, economic and inflation risks, and softness in domestic demand. The upcoming Interim financial result for the six months ended 31 December 2023 is expected to align with the previously cautioned guidance.

Executive Commentary

The airline's forward bookings profile indicates an expected adverse impact on revenue performance for the remainder of the financial year. Additionally, significant inflation has contributed to cost base pressures, coupled with ongoing weakness in domestic corporate and government demand. To address operational pressures and customer impacts from unplanned engine maintenance requirements, the airline anticipates approximately $35 million in temporary cost headwinds for the second half of the financial year. Air New Zealand will continue to assess the likely impacts and duration of these conditions and circumstances.

Summary of Full Year Guidance Update

Air New Zealand anticipates a markedly lower performance for the second half of the 2024 financial year compared to the first half. The airline expects earnings before taxation for the 2024 financial year to be in the range of $200 million to $240 million, factoring in additional Covid-related credit breakage over the second half. The Board remains committed to its Capital Management Framework and ordinary dividend policy. Further context to the outlook will be provided upon the release of the Interim results on Thursday, 22 February 2024.