Air New Zealand announced Thursday it anticipates its largest annual pre-tax loss in four years, projecting deficits between NZ$340 million and NZ$390 million ($201.62 million-$231.27 million) as the prolonged Middle East conflict sends jet fuel costs soaring and compounds challenges from sluggish demand and aircraft limitations.
The national airline’s projection assumes jet fuel will average $145 per barrel during the second half of the year. This represents a dramatic reversal from the NZ$189 million profit the company reported last year.
The ongoing U.S.-Israeli conflict with Iran has significantly disrupted energy markets, causing crude oil prices to surge. This has driven jet fuel costs, which are refined from crude oil, to spike between $150-$200 per barrel, creating additional financial pressure on airlines where fuel represents up to 25% of operational costs.
The airline projects it will use approximately 4.1 million barrels during the January through June timeframe, pushing its fuel expenses to NZ$980 million in the financial year’s second half – a 32% increase from February projections.
This will drive the company’s total annual fuel costs to NZ$1.75 billion, up from NZ$1.48 billion spent in 2025.
“The scale and speed of recent movements in jet fuel prices and refining margins have created a material external shock for the global aviation sector,” the carrier said.
“If fuel prices stay at these elevated levels, the airline expects to announce further capacity updates in the coming weeks.”
The airline has already cut its overall network capacity three times and raised ticket prices. Despite these measures, declining booking trends and weak domestic and trans-Tasman travel demand continue to create headwinds.
