Air New Zealand has slashed up to $50 million off its profit forecasts.
In an announcement to the New Zealand Stock Exchange on Monday, the airline issued new earnings guidance for the 2024 financial year of between $200 and $240 million, a drop of $40 to $50 million on previous projections.
Air NZ is blaming a continued reduction in revenue, both in Aotearoa and on its North American routes.
"Domestic performance has seen ongoing softening, with challenging economic conditions and ongoing cost of living pressures," the national carrier said in a statement. "Government and corporate demand remains subdued."
Performance on the North American routes has also been hit by competitive pricing as "significant' capacity has been added by all three of the major US airlines: United, Delta and American.
Air NZ has also assumed an increased level of COVID-related costs after a drop in redemption of credits held by customers as result of the pandemic. Customers who have COVID-related credit have until January 2026 to redeem it.
Other cost headwinds include $35 million for the ongoing impacts of maintenance requirements from the Pratt & Whitney engines used on Air NZ's Airbus A320 and A321Neo aircraft. Seventeen planes have to be checked for microscopic cracks, which has forced flight schedules to be disrupted, including a seven-month suspension of the Auckland-Chicago route.
Air NZ's share price is trading around 56 cents, down 26 percent in the past year.
* This article has been updated to correct the share price and aircraft type information.
