Air New Zealand (ASX: AIZ) announced a significant revision to its FY26 outlook on 14 May 2026, primarily driven by the substantial and volatile increase in global jet fuel prices following the conflict in the Middle East. The airline, a key player in domestic and international air travel connecting New Zealand with the world, now anticipates a loss before taxation for FY26 in the range of $340 million to $390 million. This revised forecast reflects a material external shock for the global aviation sector, with the outlook incorporating approximately $70 million in mitigation actions.
The company reported that jet fuel prices, which were around US$85-US$90 per barrel prior to the conflict, have recently traded between approximately US$160 and US$230 per barrel. This has driven an estimated 2H26 fuel cost of $980 million, marking a $240 million headwind for FY26 compared to earlier assumptions. Air New Zealand is 85 per cent hedged against its 2H26 Brent Crude exposure. Mitigation actions include three targeted capacity consolidations, reducing Group capacity by 3 to 5 percent, and fare increases across its network, though booking momentum has moderated.
Air New Zealand highlighted its strong liquidity, with approximately $1.3 billion available, and is not contemplating capital transactions. A US$400 million secured revolving credit facility is being finalised to further bolster liquidity. Moody’s reaffirmed the airline’s Baa1 credit rating but downgraded the outlook to negative. Management has identified up to $100 million in annualised cost savings for FY27 and beyond, while improved aircraft availability is expected with all Boeing 787s returning to service by late June, enhancing operational resilience.
