Air New Zealand (ASX:AIZ) suspended its earnings guidance for the 2026 financial year, citing "unprecedented volatility" in global jet fuel markets.
The decision follows a sharp escalation of conflict in the Middle East, which has caused fuel prices to decouple from previous projections.
In late February, the airline had forecasted second-half earnings to align with its first-half loss of $59 million, based on an assumed price of US$85 per barrel.
However, market prices have since surged to between US$150 and US$200 per barrel.
The airline highlighted that while it is 83% hedged against Brent Crude price fluctuations for the remainder of the financial year, it remains highly exposed to the "crack spread"—the cost difference between raw crude and refined jet fuel.
The refinery margin has widened dramatically, jumping from US$22 to as high as US$115 per barrel since the onset of the conflict.
With an estimated consumption of 2.9 million barrels between March and June, the soaring input costs have rendered previous financial assumptions obsolete.
In an effort to mitigate the impact on its bottom line, Air New Zealand has already implemented initial fare adjustments.
The carrier warned that if elevated costs persist, further pricing actions, network reductions, and schedule changes may be necessary.
The measures are being paired with ongoing cost-reduction initiatives to partially offset the mounting operational pressures.
The suspension of guidance will remain in effect until fuel markets and broader operating conditions stabilise.