AUCKLAND: Air New Zealand trimmed its annual earnings estimates, citing economic headwinds and a cost-of-living crisis leading to softer revenue in domestic and North American markets, sending the carrier’s shares to a near two-year low.Shares of Air NZ slipped as much 3.5% to 55 NZ cents, hitting their lowest level since July 1, 2022.

The shares were poised for their worst day since March 7.

New Zealand’s flagship carrier now expects earnings before taxation between NZ$190mil (US$112mil) and NZ$230mil for 2024, down from previous estimate of NZ$200mil to NZ$240mil.

“North American performance continues to be impacted by very competitive pricing pressures, as the market adjusts to the significant capacity added into the New Zealand market by US carriers,” the carrier said in a statement.

Earlier in February, the company forecast lower earnings for 2024 and flagged an impact from high engine maintenance costs.

The airline has been struggling to cope with stiff competition from its US peers on pricing terms.

“They have a very small domestic market and have always run on very thin margins.

“The geographic challenge for Air NZ in international competition will never change,” said Brad Smoling, managing director at Smoling Stockbroking.

“I think they will continue to find it very challenging in the days ahead.”

Air New Zealand said in the statement that its earnings will also take a hit of NZ$95mil in Covid-related credit breakage for this financial year.

Auckland-based Air New Zealand operates scheduled passenger flights to 20 domestic and 30 international destinations across 18 countries and territories.

These are mainly within the Pacific Rim.

 -Reuters