Air New Zealand (ASX:AIZ) share price moves higher on market update

The Air New Zealand Limited (ASX: AIZ) share price is rising today following the release of the airline's October traffic update and an extended contract.

| More on:
rising airline asx share price represented by boy playing with toy plane

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Air New Zealand Limited (ASX: AIZ) share price is bucking the trend today, rising against the overall ASX market sentiment. This comes after the company released its monthly traffic update for October and announced an extended contract award for cargo flights.

At the time of writing, the Air New Zealand share price is up 2.3% to $1.76. The S&P/ASX 200 Index (ASX: XJO) is 0.6% down to 6,809 points.

What's moving the Air New Zealand share price?

The Air New Zealand share price is pushing higher today following an update that highlights recovering passenger traffic in its domestic market.

According to the update, the company advised that passenger numbers are down 50.6% to 690,000 from the prior corresponding period. While total passenger traffic is still sitting at around half, the latest results indicate an improvement in the travel market.

In addition, revenue passenger kilometres (a transportation industry metric that shows the number of kilometres travelled by paying passengers) sank to $442 million, reflecting an 85.5% drop. Again, this is a slight recuperation from last month's revenue levels against its comparable period, which saw an 87.3% fall.

While Tasman and long-haul flights still remain off for some time, the company's short-haul business is coming back online. Passenger numbers in this sector have been increasing in the past few months, and are down just 44.2% from October last year. In contrast, long-haul flights are down 96% over the same period.

Cargo flight contract award

Further to the traffic report, Air New Zealand announced it has been awarded four months of additional international cargo flights. The second phase under the New Zealand Government's International Air Freight Capacity (IAFC) scheme will see the contract run until 31 March 2021.

Under the agreement, the government provides financial assistance in supporting the cost of flying to ensure freight aviation remains free-flowing. In light of the new award, Air New Zealand is now operating an average 55 flights per week. It is expected that the company will receive somewhere between NZ$100 million and NZ$145 million towards cargo revenue.

As COVID-19 has thrown curveballs at the airline industry, the IAFC has indicated it will continue to provide support until international borders reopen. With this in mind, Air New Zealand anticipates its cargo revenue segment for FY21 to exceed FY20 levels.

Interestingly, the company said that its cargo revenue has grown from 10% to almost half of the group's entire monthly revenue. Despite the growth, Air New Zealand is still forecasting a loss in FY21.

Air New Zealand share price summary

Shareholders for Air New Zealand will be hoping for a full recovery in 2021, as the company was hit hard during COVID-19. The Air New Zealand share price fell to as low as 80 cents in March and has been slowly climbing its way back since then.

Today's share price represents its highest mark since the dramatic fall 8 months ago, but is still well off its $3 highs reached in 2019. The Air New Zealand share price is currently trading at $1.76, valuing the company at close to $2 billion.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »