Why is the Air New Zealand share price falling today?

Uncertainty continues to hamper investor confidence in the travel industry for now.

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Key points

  • Air New Zealand share price has dropped on the open, alongside many ASX shares today
  • The airline expects to book a loss of less than NZ$750 million in FY22, an improvement on earlier forecasts
  • Business travel has rebounded to 90% of pre-pandemic levels

The Air New Zealand Ltd (ASX: AIZ) share price is falling in morning trade, down almost 1%.

Air New Zealand shares are currently trading for 55 cents after closing yesterday at 56 cents.

The Air New Zealand share price isn't the only one sliding today.

After heavy selling in the United States and European markets overnight, the majority of ASX shares are in the red, seeing the All Ordinaries Index (ASX: XAO) down 1.0% at this same time.

The Kiwi airline also released a price-sensitive performance and outlook update this morning.

What did the airline report?

The Air New Zealand share price is sliding today after the company announced that it expects to book a loss of less than NZ$750 million, before other significant items and taxation, for the full 2022 financial year (FY22).

On 30 March, the airline forecast FY22 losses of less than NZ$800 million.

While today's forecast is an improvement on the 30 March estimate, the Air New Zealand share price could be under some pressure following a boost in investor expectations on 4 May. On that day, the airline's trading update stated that the FY22 result "could be better than that expectation".

Looking ahead, the company reported that with New Zealand's border reopened, it continues to see "strong passenger booking activity on short-haul and international services".

Domestic travel has come back strongly over the past weeks. The airline reported that its business travel demand has rebounded to some 90% of pre-COVID levels.

But global uncertainty remains the name of the game in the travel industry for now.

According to the release:

The airline remains mindful that the macroeconomic environment continues to be uncertain with disruptions caused by the impact of COVID variants, continued travel restrictions in some markets, and the ongoing conflict in Ukraine contributing to high jet fuel prices.

Air New Zealand share price snapshot

The Air New Zealand share price has struggled to come back from the thrashing it took in the wake of the pandemic.

In 2022 shares are down 40%. That compares to a 9% loss posted by the All Ords.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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