Air New Zealand sees coronavirus hurting profitability

Air New Zealand forecasts its profit for the current 2019-20 fiscal year to 30 June being reduced by between NZ$35mn-75mn ($22mn-47mn) with a softer air travel market from the impact of the coronavirus outbreak.

The airline's revenue outlook will be affected because of softer demand for travel to and from Asian destinations, Air New Zealand said. Weaker forward bookings for travel between New Zealand and Australia and domestic networks have also emerged as a result of the coronavirus, it said.

At the midpoint of its forecast NZ$35mn-75mn net negative impact, the airline is targeting earnings before other significant items and taxation to be in a range of about NZ$300mn-$350mn.

Air New Zealand is offsetting the impact of lower demand by adjusting flight capacity across its Asia, trans-Tasman and domestic networks.

Further flight route reductions were announced today with services to Seoul, South Korea temporarily suspended from 7 March through to the end of June. Total Asia capacity will reduced by 17pc for February through to June. Air New Zealand previously announced capacity reductions across its Asia routes, predominantly related to Shanghai, China and Hong Kong services.

Air New Zealand's flight volumes to and from Australia will be reduced by 3pc from March through to May. It is cutting domestic capacity of 2pc across March and April, focused on Christchurch and Queenstown services to and from Auckland.

By Kevin Morrison