Air New Zealand’s loss ‘better than expected’ after delayed border reopening

New Zealand’s extended Covid lockdowns and delayed border reopening have led to another big loss for the country’s national carrier.

Air New Zealand CEO Greg Foran has admitted to substantial increases in airfares to cover sky-high fuel prices. Picture: Getty Images

New Zealand’s extended Covid-19 lockdowns and delayed international border closure have led to another big statutory before tax loss for the country’s national carrier of $NZ810m ($723m).

However, Air New Zealand chief executive Greg Foran said the result was better than expected, despite being almost double last year’s loss.

He said passenger revenue came in at $NZ1.7bn in the 12 months to June 30 compared to a pre-pandemic $NZ5bn.

“That reflects the fact for pretty much most of the last financial year, New Zealand was in some form of lockdown,” Mr Foran said.

“The good news is there’s now strong demand for travel and we’re reaping the benefits of that at the moment.”

Even significantly higher fares are not dampening demand, with Mr Foran revealing international fares were 50 per cent up on pre-pandemic levels, trans-Tasman fares up 40 to 45 per cent and domestic airfares 20 per cent more expensive.

As with Qantas, Mr Foran said the increases were required to recover skyrocketing fuel costs, which had leapt $NZ192m in the last year.

“It is expensive to fly at the moment and we keep an eye on that,” he said. “We’re not seeing any pushback on it but if economic conditions continue the way they are there is a point where if pricing gets too high, people will work out alternatives.”

Due to the fuel price volatility and ongoing workforce challenges, Mr Foran was reluctant to offer any guidance for the 2023 financial year. Although bookings are strong, particularly in the corporate sector, a tight labour market is making growth difficult. As a result Air Zealand expect to be back to about 80 per cent of pre-pandemic capacity by year’s end.

However Mr Foran said early indications were it would be a “good year”.

Air New Zealand shares closed down 5 cents at 59.5 cents a share, a long way from pre-pandemic highs of $1.80.