Air New Zealand Pilots Into Profitability

We maintain our NZD 0.97 fair value estimate for shares in no-moat Air New Zealand following the release of interim fiscal 2023 results, largely in line with our prior forecasts. Our fair value estimate for Australian-listed securities is AUD 0.88 based on the current AUD/NZD exchange rate of about 1.10. Underlying pretax profit of NZD 299 million was a significant turnaround from the NZD 367 million loss in the prior corresponding period, or pcp, which was marred by lockdowns and border restrictions. While air travel capacity remains constrained, demand is strong, leading to expensive tickets, fuller planes, and exceptional profitability. Air New Zealand also provided guidance for fiscal 2023 profit before tax of between NZD 450 million to NZD 530 million. We make no changes to our fiscal 2023 forecast of NZD 516 million, near the top of the range.