- Air New Zealand (ASX:AIZ) reports that 2H FY24 will be “increasingly difficult”
- The company also reported that 1H FY24 results will match the lower end of October’s $180 million to $230 million guidance
- The company has neglected to include full-year guidance at all
- It reports soft demand, inflation, US competition and the effect of an engine recall hitting Airbus planes continues to hurt
- Shares last traded at 60 cents
Air New Zealand (ASX:AIZ) shares were down today after the company told shareholders to brace for impact.
The impact in question – AIZ is banking on only meeting the bottom end of its guidance for 1H FY24.
On October 12, AIZ issued a guidance range of $180-$230 million. Now shareholders are being told to forget all about that $230 million figure.
The company has pointed to domestic travel softness – especially among corporate and government clients.
Softness from consumers
“Signs of softness in domestic travel … have continued, with late booking activity remaining weaker compared to the prior year,” the company wrote.
“More recently, the airline has noted softer leisure demand in both the Domestic and Trans-Tasman markets.”
There’s another bit of turbulence for the $2 billion market cap stock.
While demand for North American travel remains “solid”, AIZ Is exposed to additional pricing pressure in that department as it competes with US carriers.
In short, the company has to drop ticket prices to remain competitive in that sector of its business where demand is currently the strongest, per its report on Wednesday.
“Air New Zealand will continue to monitor booking patterns” it added.
Full-year guidance miss
Perhaps what will most concern shareholders is that AIZ has foregone pointing to full-year guidance at all.
The concerns it has in this regard are multiple, including costs associated with engine issues.
In July this year, engines made by Pratt & Whiney were part of a recall that impacted Airbus planes due to safety concerns. At the time, AIZ flagged its expected operational pain.
Add in remaining “economic and inflation risks”, and AIZ has neglected to point towards what shareholders might be able to expect in terms of earnings by July 2024.
What’s more, it sees things getting worse.
The airline cautions against extrapolating first-half guidance and currently expects the second half of the financial year to be increasingly challenging.
Shareholders may need to decide whether they want to change flights.
AIZ shares last traded at 60 cents.