Is Now The Time To Look At Buying Air New Zealand Limited (NZSE:AIR)?

As Air New Zealand Limited (NZSE:AIR) shares trade at 0.55, investors may be wondering if now is the right time to buy into this airline giant. With a market cap of 2.12 billion and an enterprise value of 3.66 billion, Air New Zealand is a significant player in the aviation industry. But is the stock a bargain, or is there more to consider before making a decision?



Air New Zealand's recent financial performance has been mixed. In 2024, the company's revenue increased by 6.67% to 6.75 billion, but earnings decreased by -64.56% to 146.00 million. This decline in earnings can be attributed to persistent engine issues, which have led to aircraft shortages and flight delays. As a result, the company's on-time performance and passenger satisfaction have been negatively impacted, and earnings for the first half of 2025 are expected to be lower.

However, Air New Zealand is not without its strengths. The company has a strong market position, with an unmatched domestic network and a strategic focus on the Pacific Rim. Its alliance-driven network underpins this competitive advantage, and the company's commitment to sustainability is likely to contribute to its long-term sustainability and operational efficiency.

Analysts have recently upgraded their recommendations for Air New Zealand, with Forsyth Barr upgrading the company to Neutral from Underperform and UBS adjusting its price target. These upgrades reflect a more positive outlook on the company's prospects, but investors should be aware that analyst recommendations can change quickly and should not be relied upon as a long-term indicator of the company's performance.

Air New Zealand's high dividend yield of 4.76% may also attract income-oriented investors, but the company's payout ratio of 189.04% raises concerns about the sustainability of the dividend in the long term. Investors should monitor the company's progress in addressing its engine issues and the sustainability of its dividend to make informed decisions.

In conclusion, Air New Zealand's recent financial performance has been mixed, with revenue growth offset by a decline in earnings due to persistent engine issues. While the company has strengths such as a strong market position and a commitment to sustainability, investors should be cautious about the company's high debt-to-equity ratio, low current ratio, and low profit margins compared to its competitors. Additionally, the company's high dividend yield may not be sustainable in the long term.

Investors should closely monitor Air New Zealand's progress in addressing its engine issues, the sustainability of its dividend, and the company's overall financial performance before making a decision to buy the stock. As always, it is essential to conduct thorough research and consider your risk tolerance and investment goals before making any investment decisions.