Macquarie assesses the FY19 outlook has softened a little, as the airline is unable to pass on higher fuel costs to customers in the current demand environment. The stock offers a strong dividend yield, which is sustainable, given the balance sheet and recent deferrals of capital expenditure.
Yet the broker is still unsure whether targeted cost improvements will bridge the earnings decline completely. In line with the updated outlook, medium-term capacity is being trimmed. Underperform. Target is NZ$2.40.
Current Price is $2.56. Target price not assessed.