Key facts
- Australian and New Zealand companies are experiencing financial strain due to the Middle East conflict.
- Higher fuel prices and supply chain disruptions are impacting corporate earnings and confidence.
- Several airlines are resuming limited flights to the Middle East, while others maintain suspensions.
- Disruptions continue to affect global travel routes and airline operations.
Australian and New Zealand companies are facing significant financial strain as a result of the ongoing conflict in the Middle East, with higher fuel prices, inflation, and supply chain disruptions impacting corporate earnings and confidence. Several firms have already revised profit forecasts downward or announced price increases to mitigate these effects.
In response to the conflict, many airlines have suspended or reduced flights to the region. While some carriers are beginning to restore services to parts of the Middle East, widespread disruptions continue to affect global travel. For instance, Lufthansa plans to resume flights to Tel Aviv on July 1, while others like Delta have extended suspensions for their Atlanta-Tel Aviv route through December 18. Many airlines, including Air France-KLM, Cathay Pacific, and Lufthansa Group, have extended cancellations for flights to Dubai, Riyadh, and other cities until late summer or fall.
These disruptions and increased operational costs are having a direct financial impact on businesses. Air New Zealand forecasts a substantial pre-tax loss, while Auckland Airport has reported significant drops in passenger numbers and seat capacity on Middle East routes. Companies like Cleanaway Waste Management and Cochlear have slashed profit forecasts, and Fletcher Building is considering price hikes on plastics. Flight Centre Travel has revised its profit forecast, and Fonterra has reported supply chain impacts. Banks such as National Australia Bank are increasing credit provisions due to these emerging profit pressures, with NAB targeting a significant capital raise through a dividend reinvestment plan.