Passenger growth boost for Air NZ

Air New Zealand expects to see a big bump to its six-month profits as Kiwis start to fly again, with a fall in jet fuel prices cutting one of its major costs.

Its first-half profit before tax and other significant items is expected to be in a range of $295 million to $325m, the airline said yesterday.

That beat previous guidance in September of between $200m and $275m.

Air NZ had a ‘‘phenomenal’’ start to its financial year as it benefited from robust demand for travel while there were limited aircraft in the air, analysts said in October.

Forsyth Barr said at the time that Air NZ could be heading for its fourth-highest first-half pre-tax profit in its entire history, one year on from its worst first-half underlying result.

Air NZ reported three years of losses after the Covid-19 pandemic closed international borders to travellers.

‘‘Continued strong travel demand across the domestic and international networks, as well as a recent decline in jet fuel prices has accelerated the airline’s financial recovery,’’ Air NZ said in a statement to the stock exchange yesterday.

The updated range was based on current forward sales expectations and assumed an average jet fuel price of around US$127 per barrel.

It also assumed Air NZ would fly about 75% of pre-Covid levels across its network this month.

‘‘Ticket sales over the past two months have remained strong as New Zealanders continue to book travel overseas and at home, and as the majority of our remaining international destinations reopen for passenger travel.

‘‘Fuel prices have also moderated in recent weeks, with current jet fuel prices of approximately US$102/bbl.’’

A decline in fuel prices since Air NZ’s last update in September had added almost $20m to the airline’s guidance range, despite prices remaining about 20% higher than pre-Covid levels.

Higher prices due to lower capacity had also provided a boost.

‘‘Air New Zealand is focused on ensuring operational reliability while also adding capacity to alleviate this pressure,’’ the airline said.

Air NZ had hired more than 2200 staff since February, and two Airbus A321 neo aircraft had begun flying, adding an extra 200,000 seats a year on the domestic network.

The airline did not provide fullyear guidance, warning that further fuel price volatility, a global recession, continued inflation and higher costs were among factors that could potentially slow its profits and recovery.

Air NZ will report its first-half financial results in February.