Air New Zealand warns of up to $231 million loss as fuel prices surge

Air New Zealand on Thursday, May 14, warned it expects a full-year pre-tax loss of between $201.8 million and $231.4 million, as sharply rising jet fuel prices driven by tensions in the Middle East weigh heavily on earnings.

The national carrier said fuel costs for the second half of fiscal 2026 are now forecast at about $581.6 million, up from a previous estimate of around $439.1 million, creating a $142.4 million headwind despite existing hedging measures.

In a market update, the airline said jet fuel prices have surged from roughly $85–$90 per barrel before the Middle East conflict to as high as $230 per barrel in recent weeks. Refining margins have also spiked, adding further pressure across the global aviation sector.

Air New Zealand said it has reduced capacity by approximately 3–5 per cent since the conflict began in late February, while also raising fares and accelerating cost-cutting efforts to offset the impact. However, it noted that demand has softened across domestic routes, trans-Tasman services, and some long-haul flights.

The airline added that it has identified up to $59.3 million in annualised cost savings and is reviewing its capital expenditure plans, while maintaining total available liquidity of about $771.5 million.

Despite these measures, the carrier said its outlook remains uncertain due to continued volatility in jet fuel prices, shifting demand conditions, and broader economic risks.

By Tamilla Hasanova