Coronavirus turbulence hits Air New Zealand as it cuts capacity in Asia

Air New Zealand is cutting its capacity by about 17 per cent in Asia until June to soften the impact of the coronavirus on its second half earnings.

The airline expects earnings to be in the range of NZ$35 million to NZ$75 million due to lower demand and capacity cuts.

“The airline’s revenue outlook for the remainder of the year is expected to be adversely impacted as a result of softer demand for travel to and from Asian destinations,” it said.

“The airline will continue to assess the appropriate level of capacity and other potential actions to reflect the changing demand environment.”

The carrier has already suspended all flights to Hong Kong and about two-thirds of services to Shanghai. This week, it announced a temporary suspension of Seoul operations from 7 March through the end of June.

The airline is also reducing trans-Tasman flights by three per cent until May, mainly to Sydney, Melbourne and Brisbane.

The update came as the national carrier posted a 33 per cent drop in net profit to NZ$101 million for the six months to December.

“Air New Zealand is a resilient business and we have demonstrated the ability time and again to respond quickly to changing market conditions,” said chief executive Greg Foran.

“We have a highly capable and experienced senior leadership team who have dealt with challenges such as this before and I am confident that we will effectively navigate our way through this.”