While revenue was expected to grow during the remainder of the year, it would do so at a slower rate than previously expected, Air New Zealand said, with domestic leisure travel and in-bound international tourism traffic both slowing.
Air New Zealand chief executive Christopher Luxon said the company was “concerned” with the trading update.
“Therefore, we have commenced a review of our network, fleet and cost base to ensure the business is on a strong footing going forward,” he said.
Capacity growth would be about 4 per cent this year, compared to previous guidance of between 4 and 6 per cent, the airline said.
The earnings downgrade came despite the falling price of oil meaning its fuel bill would come in lower.
Air New Zealand has been caught up in a global industry headache caused Rolls-Royce’s Trent 1000 engines that were revealed to have “durability issues” on their compressor rotor blades.
That led aviation authorities to demand airlines carry out more regular maintenance, and forced Air New Zealand to ground several of its aircraft.
Air New Zealand’s dual ASX- and NZX-listed shares were down 12.7 per cent to $2.75 by 10.45am Sydney time on Wednesday, while Qantas’ were down 5.6 per cent to $5.57.
Virgin Australia’s shares were down 2.7 per cent to 18¢.