Air New Zealand on Thursday warned of a full-year pre-tax loss of 340-390 million NZ dollars, as surging jet fuel prices driven by Middle East tensions hit earnings.

The New Zealand national carrier said fuel costs for the second half of fiscal 2026 are now forecast at about 980 million NZ dollars, up from about 740 million NZ dollars previously, creating a 240-million-NZ-dollar headwind despite hedging.

The airline said in a market update that jet fuel prices have risen from around 85-90 U.S. dollars per barrel before the Middle East conflict to as high as 230 U.S. dollars in recent weeks, while refining margins have also spiked, adding pressure across the global aviation sector.

Air New Zealand has cut capacity by around 3-5 percent since the conflict broke out in late February, raised fares and accelerated cost reductions to mitigate the impact, though it warned demand has softened on domestic, trans-Tasman and some long-haul routes.

The carrier said it has identified up to 100 million NZ dollars in annualized cost savings and is reviewing capital expenditure, while maintaining total available liquidity of about 1.3 billion NZ dollars.

However, the revised outlook remains uncertain due to volatile jet fuel prices, demand conditions and broader economic risks, it added.