Air NZ sees competition headwinds coming

Air New Zealand says its 2017 earnings won't match the NZ$800m it has forecast for 2016 as the airline faces increased competition and gets less benefit from foreign exchange hedging. The airline faces some near-term challenges that will have an impact on the 2017 results, according to an investor day presentation. It didn't quantify the impact of increased competition but said the benefit of foreign exchange hedges in 2017 will be about $120m less than in 2016. While 2017 earnings "will be solid" they won't be at the level of 2016, it said. Its forecast for 2016 pre-tax earnings, excluding the contribution from Virgin Australia, given with the H1 results in February, build on the record $457m the company earned in H1, which was driven by lower fuel prices and a jump in passenger revenue as the airline added new routes and refurbished is fleet. Air New Zealand said increased capacity in the industry was driving "significant growth of seats across the network" and it expects "headwinds to overall yield as (the) market adjusts to new capacity". Against that, it expects to continue to benefit from growth in inbound tourism, a favourable outlook for fuel prices and the scale of its fleet.<br/>