New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Air New Zealand&#8217;s (AIR) May 2026 passenger (pax) statistics indicate that year on year revenue growth has continued.</li><li>May 2026 group monthly revenue was up +3% on the prior year, with a +5% increase in long-haul revenue while short-haul revenue was flat.</li><li>The US-Iran deal to open the Strait of Hormuz has put further downward pressure on oil prices, which AIR is ~85% hedged against, and the crack spread (the difference between oil and jet fuel prices), which AIR is fully exposed to.</li></ul>

Air New Zealand&#8217;s (AIR) May 2026 passenger (pax) statistics indicate that year on year revenue growth has continued.May 2026 group monthly revenue was up +3% on the prior year, with a +5% increase in long-haul revenue while short-haul revenue was flat.The US-Iran deal to open the Strait of Hormuz has put further downward pressure on oil prices, which AIR is ~85% hedged against, and the crack spread (the difference between oil and jet fuel prices), which AIR is fully exposed to.

Air New Zealand (AIR.NZ) - Holding Its Altitude

<ul><li>Air New Zealand's (AIR) reissued FY26 loss guidance highlights a P&L under significant strain but a balance sheet that has plenty of capacity to absorb losses for the foreseeable future.</li><li>Simplistically, the new guidance suggests that AIR is taking higher fuel costs on the chin with limited mitigation elsewhere.</li><li>With industry capacity cuts modest at best, and Middle Eastern carriers rebuilding theirs, the ability for AIR and other airlines to retain the elevated RASK evident in the early weeks of the crisis is eroding.</li></ul>

Air New Zealand's (AIR) reissued FY26 loss guidance highlights a P&L under significant strain but a balance sheet that has plenty of capacity to absorb losses for the foreseeable future.Simplistically, the new guidance suggests that AIR is taking higher fuel costs on the chin with limited mitigation elsewhere.With industry capacity cuts modest at best, and Middle Eastern carriers rebuilding theirs, the ability for AIR and other airlines to retain the elevated RASK evident in the early weeks of the crisis is eroding.

<ul><li>FY26 profit before tax (PBT) loss guidance, which was withdrawn on 10 March 2026, has been reissued at -NZ$340m to -NZ$390m.</li><li>Management now expects 2H26 fuel costs of ~NZ$980m (vs our estimate of NZ$990m), which compares to February 2026 guidance of ~NZ$740m.</li><li>AIR has ample liquidity (currently ~NZ$1.3bn) for the time being and has ~NZ$4bn of available aircraft ‘equity’ on un- or under-encumbered aircraft.</li></ul>

FY26 profit before tax (PBT) loss guidance, which was withdrawn on 10 March 2026, has been reissued at -NZ$340m to -NZ$390m.Management now expects 2H26 fuel costs of ~NZ$980m (vs our estimate of NZ$990m), which compares to February 2026 guidance of ~NZ$740m.AIR has ample liquidity (currently ~NZ$1.3bn) for the time being and has ~NZ$4bn of available aircraft ‘equity’ on un- or under-encumbered aircraft.

Air New Zealand (AIR.NZ) - A Thorough Update; Larger Near-Term Losses

<ul><li>Air New Zealand&#8217;s (AIR) March 2026 passenger (pax) statistics indicate that revenue growth was strong, and we estimate it was AIR&#8217;s second-highest ever daily pax revenue month.</li><li>Group monthly revenue was up +13% on the prior year, with a +20% increase in long-haul revenue and a +8% increase in short-haul revenue.</li><li>We expect the impact of the conflict to be a material net negative for AIR, with 2H26 fuel costs tracking towards ~NZ$1,000m (vs. now withdrawn guidance from the February 2026 result of ~NZ$740m).</li></ul>

Air New Zealand&#8217;s (AIR) March 2026 passenger (pax) statistics indicate that revenue growth was strong, and we estimate it was AIR&#8217;s second-highest ever daily pax revenue month.Group monthly revenue was up +13% on the prior year, with a +20% increase in long-haul revenue and a +8% increase in short-haul revenue.We expect the impact of the conflict to be a material net negative for AIR, with 2H26 fuel costs tracking towards ~NZ$1,000m (vs. now withdrawn guidance from the February 2026 result of ~NZ$740m).

Air New Zealand (AIR.NZ) - Strong March, Strong Headwinds

<ul><li>Air New Zealand's (AIR) response to the fuel price crisis has been to moderately reduce capacity (predominantly on domestic and short haul international routes) and lift prices.</li><li>The net impact will be deeper losses than those incurred in 1H26, adding pressure to AIR's balance sheet.</li><li>Our proprietary time series airfare data shows that quoted prices have increased materially in recent weeks, which will help soften the bottom line impact from higher fuel costs, though will also dampen demand given elasticities.</li></ul>

Air New Zealand's (AIR) response to the fuel price crisis has been to moderately reduce capacity (predominantly on domestic and short haul international routes) and lift prices.The net impact will be deeper losses than those incurred in 1H26, adding pressure to AIR's balance sheet.Our proprietary time series airfare data shows that quoted prices have increased materially in recent weeks, which will help soften the bottom line impact from higher fuel costs, though will also dampen demand given elasticities.

Air New Zealand Airfare Inflation In Full Flight

New Zealand

Air New Zealand Limited operates an airline business that provides international and domestic air passenger and cargo transport services throughout New Zealand and the South West Pacific. The Company also provides engineering and ground handling services.

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Air New Zealand (AIR NZ)