Highlights

  • Air New Zealand suspends FY2026 guidance due to extreme volatility in jet fuel markets.
  • Jet fuel prices surged from USD85-90 to USD150-200 per barrel following Middle East conflict.
  • Airline implements initial fare adjustments and continues cost reduction initiatives to offset pressures.

Air New Zealand Ltd (NZE:AIR) has suspended its FY2026 earnings guidance, citing unprecedented volatility in global jet fuel markets. The decision follows the recent escalation of conflict in the Middle East, which has caused significant fluctuations in crude oil and refined fuel prices.

At its interim results on 26 February 2026, Air New Zealand had provided qualitative guidance. The airline expected second-half earnings to be broadly in line with, or modestly below, the first half loss of 59M. This assumption was based on an average jet fuel price of USD85 per barrel for H2 FY2026.

Sharp Increase in Jet Fuel Prices
Since the outbreak of conflict, jet fuel prices have risen sharply to between USD150 and USD200 per barrel. The pricing comprises two components: Brent Crude, which represents the underlying crude oil price, and the crack spread, or refinery margin. The crack spread widened dramatically from approximately USD22 per barrel before the conflict to as high as USD115 per barrel.

Air New Zealand is 83% hedged against Brent crude for H2 FY2026 but remains exposed to movements in the crack spread. The airline’s estimated fuel consumption from March to June 2026 is approximately 2.9M barrels, highlighting the scale of exposure to ongoing market fluctuations.

Operational Responses and Cost Measures
In response to rising fuel costs, Air New Zealand has implemented initial fare adjustments. Management noted that if jet fuel prices remain elevated, further pricing actions and potential adjustments to the network and schedule may be required. Simultaneously, cost reduction initiatives are ongoing, which are expected to partially offset the pressures from fuel price volatility.

The airline emphasized that the FY2026 guidance suspension will remain in place until fuel markets and operating conditions stabilize.

Share Performance Impact
Shares of Air New Zealand traded at 0.45 NZD as of 12 March 2026, down 0.0075 (1.63%) on the day. Over the past five days, the stock fell 0.09 (16.20%) and 0.13 (21.98%) over the past month, reflecting investor concerns over elevated fuel costs and suspended guidance.

Air New Zealand Ltd (NZE: AIR) suspended its FY2026 guidance after jet fuel prices spiked sharply due to Middle East conflict. The airline is partially hedged against Brent crude but remains exposed to crack spread volatility. Initial fare adjustments and cost reduction measures are underway, though earnings are expected to face material uncertainty until markets stabilize.

FAQs

Q1: Why did Air New Zealand suspend its FY2026 guidance?
The airline suspended guidance due to unprecedented volatility in jet fuel markets from Middle East conflict.

Q2: How much is Air New Zealand hedged against Brent crude?
Air New Zealand is 83% hedged against Brent crude for the second half of FY2026.

Q3: What actions is Air New Zealand taking to manage fuel cost pressures?
The airline implemented initial fare adjustments and continues ongoing cost reduction initiatives.