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Air NZ lowers earnings forecast because of engine troubles, slowdown in domestic travel

Air New Zealand has revised down its profit forecast for the 2019 financial year. 

The company announced they are expecting $340 million to $400 million in earnings, down from its earlier guidance of $425 million to $525 million.

This includes the financial impact of the global Rolls-Royce engine issues which continues to be challenging for the business, both commercially and operationally.

Revenue growth is expected to remain positive but at a slower rate than anticipated, the airline says. 

Markets showing signs of slower growth include travel within New Zealand, and inbound tourism.

The assumed price of fuel will partially offset the slower growth. 

Air NZ chief executive Christopher Luxon says, “we are concerned with our latest outlook which reflects the softer revenue growth that we are seeing in the second half of the year. Therefore, we have commenced a review of our network, fleet and cost base to ensure the business is on a strong footing going forward.”

The news saw Air NZ's share price fall 47c or 14.4 per cent, to $2.80 shortly after the markets opened. 

The full year guidance will be discussed in more detail at the interim result announcement on February 28 2019.

Over 100,000 people could have been affected by the three-day strike in the lead-up to Christmas.
Source: 1 NEWS