March 10 (Reuters) - Air New Zealand suspended its earnings forecast for fiscal 2026 and flagged potential network changes on Tuesday, citing unprecedented volatility in global jet fuel markets due to tensions in the Middle East.
New Zealand's flag 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.
"Since that time, conflict in the Middle East has led to extreme volatility in jet fuel
markets," Air NZ said in its statement.
"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."
The carrier said it has made initial fare adjustments in response to the spike in fuel prices and may take further pricing action, as well as adjust its network and schedule, if the conflict keeps costs elevated.
Fuel is the second-largest expense for air carriers after labour, typically accounting for a fifth to a quarter of operating costs.
Air NZ estimates to consume about 2.9 million barrels of fuel over the rest of the financial year, and said it was 83% hedged against Brent crude for the second half of fiscal 2026.
Fuel hedging can shield airlines from price spikes through derivative contracts, but it can also backfire when prices fall, leaving carriers locked into above-market swap rates — a type of hedge that has hurt some airlines in the past.
Air NZ did not immediately respond to a Reuters request for comment on details regarding fare changes.
($1 = 1.6858 New Zealand dollars)
(Reporting by Shivangi Lahiri in Bengaluru; Editing by Shilpi Majumdar)
