Air New Zealand cuts profit forecast again, citing stiff competition and weak demand

Air New Zealand trimmed its full-year earnings forecast for a second time, as it flags increased competition on its North American network and softening domestic travel demand. For the year ending 30 June, the carrier now expects to post a pre-tax profit of between NZ$190 and NZ$230m ($113 to $136m), down from previous estimates of NZ$200-240m. In a filing dated 22 April, the carrier says it has “continued to see softening in revenue conditions” since its earlier profit guidance issued in February. The Star Alliance carrier says domestic travel demand has continued to soften, amid “challenging” economic conditions. It also notes that domestic corporate and government demand “remains subdued” in the near term. In its international network, it has been impacted by a ramp-up in capacity on North American routes by US carriers, which it says has led to “competitive pricing pressures”. Recent new entrants include Delta Air Lines, which launched direct flights between Los Angeles and Auckland. Air New Zealand’s Auckland base is also served by other North American carriers like American Airlines, Hawaiian Airlines, as well as fellow Star Alliance members Air Canada and United Airlines. It is not the first time Air New Zealand has flagged increased competition on the North American market. In February, when it released its half-year results, airline chair Therese Walsh blamed the pressure on yields on the capacity ramp-up from US carriers. <br/>