A Fresh Look at Air New Zealand (NZSE:AIR) Valuation Following Milestone All-Electric Aircraft Flight

Air New Zealand (NZSE:AIR) has completed the maiden flight of its all-electric BETA ALIA CX300 aircraft, kicking off a four-month technical demonstrator program. This step marks real progress in the airline’s push for sustainable aviation.

See our latest analysis for Air New Zealand.

While Air New Zealand’s pioneering electric aircraft grabbed headlines this week, investors have seen momentum gradually build over the past year. Although the latest share price at $0.59 has barely shifted in the short term, the stock’s one-year total shareholder return sits at a healthy 13.9%. This is a notable sign that the market is warming to the airline’s sustainability focus, even as disruptions and weather-related delays have cropped up.

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So with shares still trading below analysts’ targets despite real progress on sustainability, is Air New Zealand an undervalued bet on the future of green aviation, or is all the good news already reflected in the price?

Most Popular Narrative: 14.2% Undervalued

With Air New Zealand’s shares closing at NZ$0.59, the most widely followed narrative assigns a fair value of NZ$0.69. This suggests analysts still see meaningful upside if growth plans pan out. The stage is set for bold transformation, but it is the mechanics behind this vision that truly demand a closer look.

Transformation and digitalization initiatives, including deployment of AI tools and automation for cost efficiency and enhanced passenger experience, are expected to drive further EBITDA improvement, productivity, and scalability as network capacity returns, boosting future earnings.

Read the complete narrative.

Want to know what makes analysts bullish on fair value? The future hinges on ambitious digital upgrades, premium route expansion, and efficiency gains that underpin the valuation narrative. The main drivers behind the price target remain hidden; discover the surprising assumptions inside the full story.

Result: Fair Value of $0.69 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent engine supply issues and rising operational costs could quickly dampen optimism. These challenges may impact Air New Zealand’s growth narrative and future margins.

Find out about the key risks to this Air New Zealand narrative.

Another View: Peer and Industry Comparisons

Looking through the lens of the price-to-earnings ratio, Air New Zealand appears pricier than the global industry average, trading at 15.3x earnings versus the sector's 9.7x. However, it is more attractive next to peers at 25.6x earnings and remains well below the suggested fair ratio of 30.8x. This split raises an intriguing question: are investors overlooking greater upside or underestimating the risks?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Air New Zealand Narrative

If you want to take a more hands-on approach and put your view to the test, it only takes a few minutes to build your own perspective. Do it your way

A great starting point for your Air New Zealand research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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