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Air New Zealand has suspended its earnings guidance for the 2026 financial year following sharp volatility in global jet fuel markets linked to escalating conflict in the Middle East.
The airline says jet fuel prices, which were around US$85 to US$90 per barrel prior to the conflict, have surged to between US$150 and US$200 per barrel in recent days.
At its interim results on February 26, Air New Zealand had expected second-half earnings to be broadly in line with, or slightly below, the first half, which recorded a loss of $59 million.
That guidance assumed an average jet fuel price of US$85 per barrel for the second half of the financial year.
The airline says the recent spike in fuel prices means that assumption is no longer valid.
Jet fuel pricing is influenced by two components: the underlying Brent crude oil price and the “crack spread”, which represents the refinery margin between crude oil and refined jet fuel.
Air New Zealand says the crack spread has widened significantly since the conflict began, rising from about US$22 per barrel to as high as US$115.
The airline is 83 per cent hedged against Brent crude for the second half of the 2026 financial year but remains exposed to movements in the crack spread.
Air New Zealand expects to consume approximately 2.9 million barrels of fuel between March and June.
The airline says the volatility is expected to materially affect second-half earnings and guidance has been suspended until fuel markets and operating conditions stabilise.
Air New Zealand has implemented initial fare adjustments in response to higher fuel costs.
The airline says further pricing changes, as well as potential network and schedule adjustments, may be required if fuel prices remain elevated.
At the same time, the airline says it is progressing cost reduction initiatives to help offset some of the financial pressure.
