Air New Zealand trimmed its full-year earnings forecast for a second time, as it flags increased competition on its North American network and softening domestic travel demand.
For the year ending 30 June, the carrier now expects to post a pre-tax profit of between NZ$190-230 million ($113-136 million), down from previous estimates of NZ$200-240 million.
In a filing on 22 April, the carrier said it has “continued to see softening in revenue conditions” since its earlier profit guidance was issued in February.
The Star Alliance carrier says domestic travel demand has continued to soften, amid “challenging” economic conditions. It also notes that domestic corporate and government demand “remains subdued” in the near term.
Its international network has been impacted by a ramp-up in capacity on North American routes by US carriers, which it says has led to “competitive pricing pressures”. Recent new entrants include Delta Air Lines, which has launched direct flights between Los Angeles and Auckland.
Air New Zealand’s Auckland base is also served by other North American carriers like American Airlines, Hawaiian Airlines, as well as fellow Star Alliance members Air Canada and United Airlines.
It is not the first time Air New Zealand has flagged increased competition in the North American market. In February, when it released its half-year results, airline chair Therese Walsh blamed the pressure on yields on the capacity ramp-up from US carriers.
She said: “Intense international competition features heavily in the current environment, particularly for North America where our US competitors have not yet returned to China at scale, and for now have directed some of that additional capacity to the New Zealand market, putting pressure on yields.”
Air New Zealand’s North American network has also been impacted by ongoing engine reliability issues on its Boeing 787 fleet. The airline in early March suspended operations to Chicago through October, citing challenges with the availability of Rolls-Royce Trent 1000 engines.
In a fresh network update, the airline says it will extend the suspension of flights to Chicago into the second half of 2025 earliest, when it will receive a new 787-9 from Boeing.
However, it also plans to restore operations to points in Asia, including up-gauging operations to key regional cities.
Air New Zealand will resume thrice-weekly flights to Hobart and Seoul Incheon in October this year. The services will only operate seasonally between October and March 2025, it adds.
The carrier will deploy its 777-300ERs on flights to three Asian cities: Singapore, Tokyo and Taipei, replacing the existing 787s that operate these routes. The schedule change will be effective from November this year, through March 2025.
Air New Zealand outlines domestic cargo route plan for initial electric aircraft
Air New Zealand has disclosed its initial cargo network with Beta Technology’s all-electric conventional take-off and landing (CTOL) aircraft.
The Beta Alia CTOL aircraft will operate a cargo-only domestic flight between Wellington and Marlborough in 2026, when the airline takes delivery of its first example.
Air New Zealand, which has a firm order for one aircraft, options for two more and rights for a further 20, will operate the route in partnership with postal operator NZ Post.
