Air New Zealand suspends FY26 outlook, raises fares as fuel prices soar

By Shivangi Lahiri

March 10 (Reuters) – Air New Zealand suspended its fiscal 2026 earnings forecast on Tuesday and said it has raised fares due to unprecedented volatility in global jet fuel markets as Middle East tensions flare.

Jet fuel prices, which were around $85 to $90 per barrel prior to the conflict, have increased sharply to between $150 and $200 per barrel in recent days, New Zealand’s flag carrier said.

The spike in fuel prices — airlines’ second-biggest cost after labour, typically making up 20% to 25% of their operating expenses — prompted Air NZ to make “initial fare adjustments”. The carrier said it may take further pricing action, and adjust its network and schedule, if the conflict keeps costs elevated.

In an emailed response to Reuters, the airline said it has raised one-way economy fares by NZ$10 on domestic routes, NZ$20 on short-haul services and NZ$90 on long-haul flights.

Air NZ has become one of the first airlines to push through broad ticket-price increases, including on domestic flights, since the U.S.-Israeli conflict with Iran began.

“There is currently no disruption to domestic jet fuel supply in New Zealand, and we are working closely with our suppliers and the New Zealand government to monitor global developments,” it said.

The carrier had forecast second-half earnings to be flat or weaker than the first half in its interim results last month, when it posted a loss before tax of NZ$59 million.

“By adjusting schedules, lifting fares where possible, and tightening costs, the airline can partially offset higher fuel bills, although industry-wide pressures mean there are limits to how much of the spike can be passed through to passengers,” Marc Jocum of Global X ETFs said.

Air NZ shares rose as much as 4.3% by 2317 GMT, tracking broader gains after U.S. President Donald Trump hinted the Iran war could be nearing an end.

($1 = 1.6852 New Zealand dollars)

(Reporting by Shivangi Lahiri in Bengaluru, additional reporting by Nichiket Sunil; Editing by Shilpi Majumdar)