Air NZ suspends financial guidance, hikes fares as jet fuel spikes amid war in Middle East
Tuesday, 10 March 2026
Air New Zealand has suspended its earnings guidance due to unprecedented volatility in global jet fuel markets following the recent escalation of conflict in the Middle East.
Air New Zealand said in a statement to the NZX this morning it had increased some fares in response to the escalating cost of fuel. Domestic fares had been increased $10 one way, short haul international fares were up $20 and a long haul economy fare would cost an extra $90.
If the jet fuel costs continued to rise, fares would increase further and changes to services may also be needed, the carrier said. Ongoing cost reduction initiatives were expected to partially offset fuel cost increases.
At its interim results on February 26, Air New Zealand said that, based on current trading conditions and assuming an average jet‑fuel price of US$85 a barrel for the second half of the financial year, it expects second‑half earnings to be broadly in line with, or slightly below, the first‑half result — a $59m loss.
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However, Air New Zealand’s share price was up 4.26% in morning trading having plunged from 55.5c a share after announcing a first half year loss last week to 47c yesterday.
The airline told the market the outlook remained subject to material uncertainty including engine return schedules, the timing and quantum of compensation, and volatility across key input costs and demand conditions.
Since that time, conflict in the Middle East has led to extreme volatility in jet fuel prices. Around US$85 to US$90 per barrel prior to the conflict, they have increased sharply to between US$150 to US$200 per barrel in recent days.
Jet fuel pricing is made up of two elements, Brent Crude and the crack spread, which is the difference between crude oil and the price of refined jet fuel.
Since the Iran conflict began, the crack spread has also been particularly volatile, widening from about US$22 per barrel to as high as US$115 per barrel.
Air New Zealand is 83% hedged against Brent crude for the second half of the 2026 financial year. However it remained exposed to movements in the crack spread.
The airline’s estimated fuel consumption for the remainder of the financial year June 30 was about 2.9 million barrels.
Due to this unprecedented volatility, the jet fuel price assumption underlying the airline’s February 26 guidance was no longer appropriate.
The crisis is expected to meaningfully affect second-half earnings and accordingly, the airline has suspended guidance for the full year until fuel markets and operating conditions stabilise.
Craigs Investment Partners portfolio manager Mo Singh said Air New Zealand could hedge the price of oil, but it could not hedge the refining margins, “and that's what's going through the roof”.
Air New Zealand was now in cost-containment mode, which would also include reducing the least economically beneficial services if possible, Singh said.
Airlines were difficult to invest in “because there's so much stuff out of their control” including geopolitical events that affected demand, or escalating oil costs, he said.