• Unprecedented volatility in global jet fuel markets
• Jet fuel prices increased sharply from US$85-$90 to US$150-$200 per barrel
• Airline 83% hedged against Brent crude, but exposed to volatile crack spread

Air New Zealand has suspended its FY2026 earnings guidance due to unprecedented volatility in global jet fuel markets following the recent escalation of conflict in the Middle East. At its interim results on 26 February 2026, the airline had provided qualitative guidance that based on current trading conditions and assuming an average jet fuel price of US$85 per barrel for the second half, it expected second-half earnings to be broadly in line with, or modestly below the first half, which was a loss of $59 million. However, since that time, conflict in the Middle East has led to extreme volatility in jet fuel markets. Jet fuel prices, which were around US$85 to $90 per barrel prior to the conflict, have increased sharply to between US$150 to US$200 per barrel in recent days. The airline is 83% hedged against Brent crude for the second half of the 2026 financial year, but remains exposed to movements in the crack spread, which has widened from approximately US$22 per barrel before the conflict to as high as US$115 per barrel. Due to this unprecedented volatility, the jet fuel price assumption underlying Air New Zealand's 26 February 2026 guidance is no longer appropriate, and the crisis is expected to meaningfully affect second-half earnings. Accordingly, the airline has suspended FY2026 guidance until fuel markets and operating conditions stabilise. In response, the airline has implemented initial fare adjustments and is progressing ongoing cost reduction initiatives to partially offset these pressures.

If the conflict leads to continued elevated jet fuel costs, the airline may need to take further pricing action and adjust its network and schedule as required.