Macquarie has signalled that Air New Zealand is in the midst of a strategic reset while largely retaining the carrier's existing plans, with additional specifics expected to be released. The broker noted the airline still targets capacity growth of 3-4% per year for the period from fiscal 2026 through fiscal 2031.
Air New Zealand's fiscal 2026 guidance remains unchanged, with a projected loss in the range of NZ$340 million to NZ$390 million. Yet capacity metrics point to much weaker near-term expansion: capacity grew only 0.9% in the first half of fiscal 2027 compared with the previous year.
Macquarie maintained an Underperform rating on the stock, arguing that fiscal 2027 will be another hard year for the carrier. The broker expects that meaningful benefits from a normalised aircraft availability profile and scale economies will not be fully realised until after that period.
In response to elevated fuel costs, the airline introduced fare increases intended to offset some of the higher energy expense. Management indicated those price rises have mitigated roughly 25-30% of the fuel cost impact, according to the recent update. Despite the fare hikes, operating statistics show only limited improvement in revenue per available seat kilometre (RASK), Macquarie said.
Macquarie also highlighted that demand elasticity presents challenges across domestic and outbound travel given the current economic backdrop, while inbound travel could see relatively better cost recovery due to currency movements and conditions in offshore economies.
Capacity growth has been slowing with targeted reductions connected to fuel cost sensitivity. The broker reported that second-half fiscal 2026 capacity growth is now about 1.1% year-over-year, down from roughly 3.3% reported in February. For the first half of fiscal 2027, growth is about 0.9% year-over-year, down from approximately 3.2%, and this figure includes a further reduction of about 1.6 percentage points since May.
These capacity adjustments include route-level changes. The carrier's introduction of new Christchurch-origin services has been accompanied by cuts elsewhere, including a reduction in Auckland-Tokyo Narita frequencies and trimmed Los Angeles flights.
Competitive dynamics have also shifted. Rivals have pulled back capacity, with Jetstar's domestic capacity now negative year-over-year after previously strong growth. Outside Air New Zealand, international capacity was down about 8% in the second quarter of calendar 2026 and about 5% in the third quarter across key regions. Macquarie suggested this broader pullback has limited the launch of some new routes that had been planned by other carriers.
On the fleet front, Air New Zealand's aircraft-on-ground position has improved, a development that appears to be prompting the early retirement of some leased aircraft and a flagged deferral of new deliveries in light of softer near-term demand. Macquarie reiterated that fiscal 2027 remains challenging, citing ongoing fuel cost pressure, economic headwinds and the prospect of reduced compensation before the carrier can fully exploit the capacity of returned aircraft.
Bottom line: Air New Zealand has signalled a reset while preserving its longer-term capacity roadmap, but near-term metrics point to a slower recovery. Macquarie expects fiscal 2027 to be transitional and has kept its Underperform view pending clearer signs of improved aircraft availability and scale benefits.