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Air New Zealand has suspended its earnings guidance for the 2026 financial year due to uncertainty around the price of jet fuel amid the Iran conflict.
The carrier, which recorded a NZ$59 million loss for the first half, had predicted second-half earnings “broadly in line with, or modestly below the first half”; however, “extreme volatility” in fuel prices has led it to suspend that guidance.
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“Jet fuel prices, which were around US$85 to $90 per barrel prior to the conflict, have increased sharply to between US$150 to US$200 per barrel in recent days,” the airline said in a statement to the NZX and ASX.
While Air New Zealand is 83 per cent hedged against Brent crude (underlying crude oil price) for the second half of the 2026 financial year, it says it remains exposed to movements in the crack spread (the difference between crude oil and the price of refined jet fuel).
“Since the conflict began, the crack spread has also been particularly volatile, widening from approximately US$22 per barrel before the conflict to as high as US$115 per barrel,” the airline said.
“For context, the airline’s estimated fuel consumption for the remainder of the financial year (from March to June) is approximately 2.9 million barrels.”
The “unprecedented volatility” means that the jet fuel price assumption underlying Air New Zealand’s half-yearly guidance is “no longer appropriate”, the carrier said.
“The crisis is expected to meaningfully affect second-half earnings and accordingly, the airline has suspended FY2026 guidance until fuel markets and operating conditions stabilise.
“In response, the airline has implemented initial fare adjustments. If the conflict leads to continued elevated jet fuel costs, the airline may need to take further pricing action and adjust its network and schedule as required.
“In parallel, the airline is progressing ongoing cost reduction initiatives which are expected to partially offset these pressures.”
Air New Zealand’s bottom line for the half was hit by continued headaches with global engine maintenance delays; a “slower than expected” domestic recovery; and a weak NZ dollar.
Though new and returning aircraft are expected to add capacity in the second half, the carrier warned last month that “improvements in aircraft availability are unlikely to translate immediately into earnings uplift”.
“This is because widebody capacity cannot be operationalised into the schedule and sold at short notice. The primary constraint is uncertainty in the timing of aircraft and engine returns, which limits the ability to plan and sell additional flying with confidence,” it said.
The airline is undertaking a “comprehensive review of all aspects of the business” with the aim of returning to profitability.
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