May 14 (Reuters) - Air New Zealand on Thursday forecast its biggest annual pre-tax loss in four years, as the long-drawn Middle East conflict drives up jet fuel prices, inflating its expenses and adding to pressure from weak demand and fleet constraints.
The country's flag carrier forecast its annual pre-tax loss of between NZ$340 million and NZ$390 million ($201.62 million-$231.27 million), assuming average jet fuel price of $145 per barrel in the second-half. It had posted a profit of NZ$189 million last
year.
The U.S.-Israeli war against Iran has severely disrupted energy supply, sending crude prices soaring. That has caused the prices of jet fuel, derived from crude, to spike to $150-$200 per barrel, adding to the strain on airlines for which fuel accounts for up to a quarter of operating expenses.
Air New Zealand expects to consume about 4.1 million barrels in January to June period, taking its fuel bill to NZ$980 million in the second-half of the financial year, 32% higher than predicted in February.
That will rack up its annual bill to NZ$1.75 billion, compared with NZ$1.48 billion incurred in 2025.
"The scale and speed of recent movements in jet fuel prices and refining margins have created a material external shock for the global aviation sector," the carrier said.
"If fuel prices stay at these elevated levels, the airline expects to announce further capacity updates in the coming weeks."
Air New Zealand has already reduced its overall group capacity thrice across its network, and implemented fare increases. However, a recent slowdown in booking momentum and soft domestic and trans-Tasman demand continue to weigh.
($1 = 1.6863 New Zealand dollars)
(Reporting by Nikita Maria Jino in Bengaluru; Editing by Shilpi Majumdar)
