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Air NZ lowers FY2019 earnings guidance

Air New Zealand (Air NZ) has lowered its earnings guidance for the 2019 financial year, as markets show signs of slower growth.

The carrier is expecting earnings before tax of of between NZ$340 million and NZ$400 million ($232 million to $274 million), down from its previously announced guidance of NZ$425 million to NZ$525 million. Its financial year ends on 30 June.

The lower guidance is based on recent forward booking trends. While revenue growth is expected to "remain positive," this will be at a slower rate than previously anticipated due to weaker domestic leisure travel and "softening" inbound tourism traffic.

As such, the airline has opted to grow its capacity by up to 4% during the full year, the lower end of its original capacity guidance of between 4% and 6%.

It also assumes the average fuel price for the rest of the financial year at approximately $75 per barrel, down from its previous assumption of $81 per barrel.

The latest profit guidance figure also takes into account impact from the global Rolls-Royce engine issues, which Air NZ says continues to post commercial and operational challenges, but is expected to improve over the year.

"We are concerned with our latest outlook which reflects the softer revenue growth that we are seeing in the second half of the year. Therefore, we have commenced a review of our network, fleet and cost base to ensure the business is on a strong footing going forward," says chief executive Christopher Luxon.

Air NZ expects to share more details on its full year guidance during the interim results announcement, set to take place on 28 February.

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