Air New Zealand has suspended its earnings guidance – barely two weeks after it first disclosed it – amid “unprecedented volatility” in the jet fuel market following the ongoing Middle East conflict.
The Star Alliance operator says its previous guidance issued with its half-year results on 26 February “is no longer appropriate”. At the time, it had estimated its pre-tax loss for the six months to 30 June to be around NZ$59 million ($34.9 million), similar to its loss in the previous six months.
“The crisis is expected to meaningfully affect second-half earnings and accordingly, the airline has suspended [fiscal year 2026] guidance until fuel markets and operating conditions stabilise,” the airline states.
Air New Zealand notes that while it is hedged against Brent crude – one of two elements in jet fuel – it “remains exposed” to price movements in crack spread, which has seen volatility in recent days. Crack spread is the price difference between a barrel of crude oil and the refined jet fuel produced from it
Fuel prices spiked in the days following the attacks from Israel and the USA on Iran on 28 February. Iran in retaliation has effectively shut off the Strait of Hormuz, which handles about a quarter of the world’s seaborne oil trade.
The disruption caused prices to rise to levels not seen since 2022, at the start of Russia’s invasion of Ukraine. In recent days jet fuel prices ranged between $150 and $200 per barrel.
However, early on 10 March, fuel prices plunged to as a low as $84 a barrel following comments from US president Donald Trump that the conflict could be over “very soon”. Trump also hinted that his administration would be open to lifting fuel sanctions on some countries in a bid to stabilise the oil market.
To mitigate the fuel price fluctuations, Air New Zealand has “implemented initial fare adjustments” and is looking at ways to reduce costs.
“If the conflict leads to continued elevated jet fuel costs, the airline may need to take further pricing action and adjust its network and schedule as required,” the carrier states.
Air New Zealand is the latest carrier – and the first in Asia-Pacific – to highlight the operating cost pressures from the ongoing conflict. On 5 March, central European low-cost operator Wizz Air cut its full-year financial forecast over the impact of the conflict.
