Join our daily newsletter At The Bell to receive exclusive market insights
It’s only seen around $185,000 in trades share hands on Tuesday, but for some reason, at least one investor has thrown money at Air New Zealand (ASX:AIZ), putting it up over 1% – on the same day the company has suspended its FY26 guidance.
Listen to the HotCopper podcast for in-depth discussions and insights on all the biggest headlines from throughout the week. On Spotify, Apple, and more.
I guess we can take from that at least one investor suspects the bottom for the already-troubled company is in – which might be the case, seeing as even Qantas (ASX:QAN) is bouncing on Tuesday, suggesting $8.50/sh may have been the floor for the latter (and implying, then, a pretty tasty price point.)
That’s neither here nor there – after all, Qantas was just a victim of a particularly harsh earnings season. In the background, though, there’s been one big other factor weighing on both companies – fuel prices.
Since war broke out with Iran, the price of all hydrocarbon products used in combustion engines has increased, which includes not only automotive fuel (and diesel) but also marine and aviation fuel.
A respite in oil on Tuesday (Brent’s currently back under US$90/bbl at the time of writing, 2pm AEDT) could be why investors are rotating back to (or throwing cash at) Qantas – but that doesn’t explain AIZ’s price movement. (Presumably, there’s one bullish investor out there who may be fairly called ‘gambling-minded.’)
But to get back to the point: It’s the price of jet fuel, or fluctuations thereof, that have been blamed by AIZ for its inability to give the market guidance.
“Air New Zealand is 83% hedged against Brent crude for the second half of the 2026 financial year. However, like most global airline peers, it remains exposed to movements in the crack spread,” the company wrote on Tuesday.
“Jet fuel pricing is made up of two elements, Brent Crude (the underlying crude oil price) and the crack spread, which is the refinery margin (the difference between crude oil and the price of refined jet fuel).
“Since the conflict began, the crack spread has also been particularly volatile, widening from approximately US$22 per barrel before the conflict to as high as US$115 per barrel.”
Long story short? AIZ is suspending its earnings guidance. All too hard to figure out. What isn’t hard to figure out, though? Fare adjustments. The Kiwi company has said that if the conflict leads to long-lasting, expensive jet fuel costs, “The airline may need to take further pricing action.”
Perhaps that’s what the $185,000 worth of share traders were thinking. But this could all just be a handy excuse: AIZ didn’t offer a full-year forecast back in FY24, and in that same period, also advised the market it was struggling with engine maintenance costs as well as early-post-COVID demand.
AIZ last traded at 40.5cps today.
Join the discussion: See what HotCopper users are saying about Air New Zealand Ltd and be part of the conversations that move the markets.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
