Air NZ braces for impact

CORONAVIRUS is expected to cost Kiwi carrier Air New Zealand up to NZ$75 million in lost earnings in the current financial year, the airline has conceded.

In an update released this morning, the carrier predicted its revenue outlook would be adversely impacted by the softer demand for travel to and from Asian destinations as a result of the health crisis, which has also impacted Tasman and domestic routes.

Air New Zealand Chief Executive Greg Foran said the carrier had taken immediate steps to mitigate the impact brought on by the reduced demand, cutting capacity on Asian routes by 17% for the months of Feb through Jun, and reducing capacity on its transTasman services by 3% between Mar and May.

The airline also announced it will suspend services to Seoul from 07

Mar to the end of Jun.

“Air New Zealand is a resilient business and we have demonstrated the ability time and again to respond quickly to changing market conditions,” Foran said.

“We have a highly capable and experienced senior leadership team who have dealt with challenges such as this before and I am confident that we will effectively navigate our way through this,” he added.

While the airline has warned the coronavirus will hit its revenue, the update noted that the capacity reductions, combined with lower aviation fuel prices, will partially offset against the full impact of the outbreak.

The airline also noted it was targeting earnings before other significant items to be in the range of NZ$300 - $350 million, when its H1 results are released on Thu.