Should Air New Zealand's Lowered Earnings Outlook amid Rising Costs Prompt Action from NZSE:AIR Investors?

• Air New Zealand recently announced that it expects earnings before taxation in the first half of the 2026 financial year to be similar to or less than the $34 million reported in the second half of 2025, as elevated sector levies and subdued domestic demand weigh on near-term financial performance.
• This update also comes as monthly passenger numbers saw only slight growth year-on-year, with ongoing cost pressures and muted demand signaling a challenging operating environment for the airline.
• We’ll explore how Air New Zealand’s cautious earnings outlook amid rising aviation charges impacts the company’s investment narrative.

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Air New Zealand Investment Narrative Recap

To be an Air New Zealand shareholder right now is to believe that the airline can overcome persistent cost headwinds and weak domestic demand, and ultimately benefit from future fleet renewal, international tourism growth, and efficiency gains. The recent guidance update for subdued earnings in early FY26 weighs on near-term recovery hopes, and intensifies focus on whether the company can offset rising aviation charges, arguably the most pressing short-term challenge, while ongoing engine supply constraints remain the most significant risk to the underlying investment case.

Among recent announcements, the August 2025 operating results provide useful context: while monthly passenger numbers and load factor saw modest year-on-year increases, demand remains patchy and capacity constrained. These figures reinforce that near-term catalysts for Air New Zealand, especially a rebound in core domestic revenue streams, remain highly sensitive to shifting demand patterns and further cost inflation, both of which will influence management’s ability to stabilize earnings in the coming quarters.

Yet, against these pressures, investors should be aware that…

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

Air New Zealand is projected to deliver NZ$7.8 billion in revenue and NZ$239.0 million in earnings by 2028. This outlook assumes an annual revenue growth rate of 4.7% and a NZ$113.0 million increase in earnings from the current NZ$126.0 million.

Uncover how Air New Zealand's forecasts yield a NZ$0.688 fair value, a 14% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided four fair value estimates for Air New Zealand ranging from NZ$0.688 to NZ$0.90 per share. In contrast, ongoing uncertainty around sector levies and the company’s ability to navigate cost inflation may continue to affect short-term sentiment and earnings stability, making it important to review a variety of viewpoints on this stock.

Explore 4 other fair value estimates on Air New Zealand - why the stock might be worth as much as 49% 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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