Air New Zealand’s Projected Loss and Fuel Costs Might Change the Case For Investing In NZSE:AIR

• On October 21, 2025, Air New Zealand reported a modest year-on-year increase in passenger volumes and capacity for September, but also issued earnings guidance forecasting a pre-tax loss of between $30 million and $55 million for the first half of fiscal 2026, assuming average jet fuel prices of US$85 per barrel.
• The airline highlighted that upcoming capacity expansion in the second half could significantly alter the full-year picture, cautioning investors against directly extrapolating first-half performance.
• We'll consider how Air New Zealand's projected first-half loss and the explained influence of jet fuel prices affect its investment outlook.

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Air New Zealand Investment Narrative Recap

To hold Air New Zealand shares, investors need to believe in the airline's ability to overcome significant operating headwinds, such as capacity constraints and cost pressures, and unlock earnings recovery as planned capacity expands. The latest guidance for a first-half pre-tax loss, driven by high jet fuel prices, does not materially alter the near-term catalyst: restoring network capacity and improving margins remain central, while the most immediate risk continues to be persistent engine availability issues that restrict growth and efficiencies.

Of the recent announcements, the October 21, 2025 guidance confirming expected losses for the first half of FY 2026 is most relevant. This reiterates the ongoing challenge of managing volatile input costs and subdued demand, but Air New Zealand continues to flag capacity restoration in the second half as a key turning point for the underlying business, tying directly into its crucial catalyst of network and fleet optimization.

By contrast, investors should be especially alert to ongoing engine shortages and how prolonged constraints could further pressure capacity and earnings if recovery is delayed...

Read the full narrative on Air New Zealand (it's free!)

Air New Zealand's narrative projects NZ$7.8 billion revenue and NZ$239.0 million earnings by 2028. This requires 4.7% yearly revenue growth and a NZ$113 million earnings increase from current earnings of NZ$126.0 million.

Uncover how Air New Zealand's forecasts yield a NZ$0.67 fair value, a 14% upside to its current price.

Exploring Other Perspectives

Fair value estimates for Air New Zealand from four Simply Wall St Community members range from NZ$0.60 to as high as NZ$0.90 per share. While expectations on valuation differ, ongoing engine constraints highlight the operational risks that could impact whether the company achieves its growth ambitions, explore how others interpret these risks and what that could mean for future performance.

Explore 4 other fair value estimates on Air New Zealand - why the stock might be worth as much as 53% more than the current price!

Build Your Own Air New Zealand Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Air New Zealand research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Air New Zealand's overall financial health at a glance.

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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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