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Air NZ sees headwinds in 2017

NZ NewswireNZ Newswire 2/05/2016 Jonathan Underhill

Air New Zealand says its 2017 earnings won't match its forecast for this year as it faces increased competition and gets less benefit from foreign exchange hedging.

The airline faces challenges that will have an impact on the 2017 results, according to an investor day presentation.

It didn't quantify the impact of increased competition but said the benefit of foreign exchange hedges in 2017 will be about $120 million less than in 2016.

While 2017 earnings will be solid they won't be at the level of 2016, it said.

It's forecasting 2016 pre-tax earnings of $800m, driven by lower fuel prices and a jump in passenger revenue as it added new routes and refurbished its fleet.

It expects to continue to benefit from growth in inbound tourism, a favourable outlook for fuel prices and the scale of its fleet but is facing increased capacity in the industry.

The airline is halfway through a $2.2 billion capital expenditure programme to add new aircraft, reduce the age of its fleet and cut back on the variety of planes it operates. It expects to have reduced the average age of its fleet to 6.7 years by 2018 from 8.6 years in 2012.

Its shares last traded at $2.51.

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