Analyst predicts half-year loss for Air NZ

Air New Zealand is expected to make a loss in the second half of the 2020 financial year due to the impact of coronavirus, stockbroking firm Forsyth Barr says.

On Monday Air New Zealand withdrew earlier earnings guidance it had provided the market due to increased uncertainty surrounding the duration and scale of the Covid-19 outbreak.

Forsyth Barr aviation analyst Andy Bowley said he expected the airline to incur a loss in the six months ending on June 30.

He also expected Air New Zealand to cancel its dividend for the half-year period.

Two weeks ago Air New Zealand lowered its full-year profit guidance to $300m to $350m before tax, at the same time as it suggested the Covid-19 impact on

the six months to June 30 would be $35m to $75m.

‘‘It is apparent that Air New Zealand is suffering from a severe downturn in forward bookings and an elevated level of cancellations,’’ Bowley said.

However, Forsyth Barr maintained its ‘‘outperform’’ rating for Air New Zealand, which ‘‘offered one of the most favourable structural positions for any airline globally’’, Bowley said.

The airline’s share price has dropped from $3 in early January to trade at $1.80 yesterday – a 40 per cent reduction.

Bowley said the company had a domestic market share of about 80 per cent, and its international business had mitigated competitive threats through joint ventures, keeping costs down, and brand positioning among highervalue New Zealand travellers.