Key facts
- Air New Zealand is planning for elevated jet fuel costs through its 2027 financial year.
- The airline bases its planning on a jet fuel price of approximately $150 per barrel.
- 25% to 40% of higher fuel prices have been offset by hedging and fare increases.
- Further fare increases are being considered in markets with resilient demand.
- The airline's balance sheet and unencumbered aircraft assets are expected to prevent the need for additional liquidity.
- Most grounded aircraft due to engine issues are expected back in service within months.
Air New Zealand is planning for elevated jet fuel costs extending into its 2027 financial year, with Chief Executive Nikhil Ravishankar indicating that only 25% to 40% of the impact from higher prices has been offset through hedging and fare increases. The airline is basing its planning on a jet fuel price of approximately $150 per barrel, referencing the Singapore Jet Index. Ravishankar stated that while fuel supply is not an issue, the price shock remains a significant challenge. The company has already implemented two rounds of fare increases and is considering further tactical hikes in markets with resilient demand, acknowledging that infinite price increases would soften demand. Air New Zealand believes its balance sheet and unencumbered aircraft assets provide sufficient capacity to withstand prolonged periods of elevated fuel prices without needing to tap markets for additional liquidity. The airline is also recovering from engine problems and aircraft delivery delays that had grounded up to 20% of its fleet, a figure that has now fallen to less than 5%, with most aircraft expected to return to service within the next two to three months. Compensation from Boeing, Rolls-Royce, and Pratt & Whitney has partially mitigated the economic damage from these issues.