Why did Air NZ scrap its earnings outlook?

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Air New Zealand Scraps Earnings Outlook Due to Worsening COVID-19 Impact

Air New Zealand has withdrawn its annual earnings forecast, citing a more severe impact from the novel coronavirus than previously anticipated. The airline had initially warned of potential earnings reductions on February 24, but escalating global spread and subsequent demand drops have necessitated a complete withdrawal of its outlook as of March 9. The situation is described as unprecedented and highly unpredictable by the company's chief executive.
Escalating Financial Impact

The airline stated that the impact of the new coronavirus has been worse than expected since its last figures were issued two weeks prior to the March 9 announcement. On February 24, Air New Zealand had projected that annual pre-tax earnings could decrease by as much as NZ$150 million (US$95 million) due to flight reductions stemming from falling passenger demand. The company now believes the financial repercussions are likely to be more significant than initially estimated.
Softening Demand and Network Cuts

Air New Zealand has observed additional softness in demand as the virus has continued to spread beyond China. This trend has led to substantial adjustments in its operations. Specifically, flights into Asia have seen a 26 percent reduction, and services across the airline's entire network have been cut by 10 percent to manage the decreased demand.
Leadership and Staff Measures

In response to the evolving crisis, Chief Executive Greg Foran acknowledged the unprecedented nature of the situation, making future demand patterns difficult to predict. To mitigate the financial strain, Foran has offered to reduce his base salary of NZ$1.65 million by 15 percent. Furthermore, the executive team is extending an existing pay freeze, a hiring freeze on non-critical roles has been implemented, and operations staff have been offered the option to take unpaid leave.

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Why did Air NZ scrap its earnings outlook?

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