A relaxation of strict border rules and an increase in the number of passengers in the air are starting to have a significant impact on Air New Zealand’s results. Late last week, the Auckland-based airline said it would lose less money than previously expected this financial year. Air New Zealand had reported losses of NZ$800 million in the 12 months to March 31, 2023. They are now revising that figure to NZ$750 million (US$475 million).
Reopening borders means more passengers and more revenue for Air New Zealand
New Zealand now allows its citizens to come and go freely, provided they are fully vaccinated. The country has also reopened its borders to travelers from around 60 countries and will start welcoming everyone by early August. Air New Zealand typically derives two-thirds of its revenue from international flights, so two years of border closures have significantly reduced the airline’s operations and financial performance.
“The airline continues to see strong passenger booking activity on short-haul and international services following the opening of the New Zealand border. Domestic demand has also improved in recent weeks, with business-related demand returning to around 90% of pre-COVID levels,” said an update from the New Zealand Stock Exchange on Friday. “The airline now expects its fiscal 2022 result to be a loss before other significant items and taxes of less than $750 million.
“The airline remains aware that the macroeconomic environment continues to be uncertain with disruptions caused by the impact of COVID variants, continued travel restrictions in certain markets and the ongoing conflict in Ukraine contributing to high jet fuel prices. “
Many of Air New Zealand’s key international markets have now reopened to travellers. Photo: Getty Images
Air New Zealand’s long-haul routes are starting to recover
Friday’s announcement was the second time this year that Air New Zealand has cut its expected loss. Earlier in the year, the airline recorded losses of more than NZ$800 million in fiscal 2022. In March, when releasing interim financial results for fiscal 2021, Air New Zealand said losses for the 2022 financial year would be around $800 million. Friday’s announcement slashed a further $50 million from that figure.
Air New Zealand’s key Australian market is open to fully vaccinated travellers, and traffic on routes between the two countries has come back to life, pumping much-needed dollars into Air New Zealand’s coffers. Elsewhere, there are signs of life on these lucrative long-haul routes to and from Auckland.
Air New Zealand’s Boeing 787-9s will return to five destinations in the United States and Canada by September. Photo: Boeing
Air New Zealand is resuming daily flights on the AKL – LAX route next month (increasing to 10 flights a week in August and September), as they fly to five destinations in the US and Canada by September. In addition to Los Angeles, Air New Zealand’s Boeing 787-9 Dreamliners will land in Honolulu (HNL), Houston (IAH), San Francisco (SFO), New York (JFK) and Vancouver (YVR).
In the other direction, flights to Singapore (SIN) are operational again, along with flights to a network of Australian and Pacific Island airports. North Asia remains a problem, with many countries still banning tourists and/or imposing onerous entry restrictions. However, this is a problem faced by all airlines that normally serve the North Asian market.