Trans-Tasman bubble proves to be ‘no bonanza’ for Air New Zealand
A trans-Tasman bubble will provide a welcome boost to Air New Zealand, but to date it has been ‘‘far from a bonanza’’ for the airline, analysts say.
Forsyth Barr analysts Andy Bowley and Scott Anderson have put out a research note on Air New Zealand, which has seen its share price drop from $3.25 in 2019 to $1.72.
The price has rebounded from a low of 90c last year.
They said that, as the bubble provided the airline’s first commercial international passenger services in more than a year, the opening sugar-rush of travellers visiting friends and relatives was dominated by New Zealand passport holders from both sides of the Tasman.
‘‘Demand has since slowed, yet airline schedules suggest a gradual capacity build over the next few months. We expect Air NZ to still generate a material loss in the second half of 2021 and to be lossmaking through the 2022 financial year.’’
Air New Zealand is currently competing with Qantas and Jetstar.
Virgin Australia has indicated it will not return until October. Forsyth Barr said Singapore Airlines, China Airlines and Emirates were likely to be absent until broader border reopenings.
Bowley said Air New Zealand had more capacity on the transTasman route than its competitors at present.
Bowley and Anderson said the airline’s current enterprise value was just 4 per cent below what it was on December 31, 2019, despite the current loss-making outlook and significant uncertainty over the recovery profile and size of the aviation market in future.
‘‘We are confident that Air NZ will enhance its competitive position as a result of Covid-19.’’
Bowley said Air New Zealand would eventually get back to operating at its pre-Covid levels but it might look a bit different.
The airline might focus on some routes rather than others.
Flights to Buenos Aires might not return, he said, while the profit that had been generated from the United States had been relatively strong from an international point of view and the airline could be expected to try to get back into that market as soon as possible.