Air New Zealand says volatile jet fuel prices mean its previous guidance needs to be ditched. 

And it says fares will change and it will have to find ways to cut costs. 

The airline had assumed an average jet fuel price of US$85 per barrel for the second half, that being the six months to June 30. 

Based on that, it had expected earnings to be broadly in line with, or just below the first half loss of $59 million before tax. 

That guidance was already subject to engine issues and compensation. 

“Since that time, conflict in the Middle East has led to extreme volatility in jet fuel markets,” the airline said this morning. 

Jet fuel prices were about US$85 to US$90 per barrel before the conflict but had surged to US$150-US$200 in recent days. 

The airline today said there was “unprecedented volatility in global jet fuel markets”. 

The airline said it was 83% hedged against Brent crude for the second half of the 2026 financial year. 

But it was exposed to movements in the crack spread, or margin between crude and refined jet fuel. 

“For context, the airline’s estimated fuel consumption for the remainder of the financial year [from March to June] is approximately 2.9 million barrels.” 

The airline said it had implemented initial fare adjustments. 

It said if the Iran-Israel-US conflict caused more jet fuel price increases, it might need to take further pricing action and adjust its network and schedule. 

“In parallel, the airline is progressing ongoing cost reduction initiatives which are expected to partially offset these pressures.”