Shane Solly: Harbour Asset Management spokesperson on Air New Zealand's projected first-half earnings

Air New Zealand isn't going into the 2025 financial year with rosy expectations. 

The airline expects its first-half pre-tax profit to be in a range of $120 million to $160m, down from $185m in the previous comparable half year.

Harbour Asset Management's Shane Solly unpacked the mood of investors.

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Episode Transcript

Speaker 1 (00:00):
And solid harbor asset management with US now. Hey Shane,
Hello Heather Shane. You've been at the New Zealand AGM today.
How's it looking like?

Speaker 2 (00:07):
It's been a really tough environment for a New Zion.
Despite this tough newsion economy and what's really massive supply
channel shues, they've actually provide a slightly positive update to day,
driven by better cost control, revenue better than expected, talking
about a little grin shoots and to the small medium
sized enterprises corporate travel Domestic still got sixteen percent of

(00:28):
their fleet grounded by lack a part supply chain. They're
saying could get through the worst of that by early
twenty twenty six, and they're even talking about growing a
network again to three to four percent. But it's all
been driven by things they're doing internallyders, some transformation programs,
talking about three to four hundred men savings, a couple
of interesting nuggets in there, some new products, some new

(00:48):
services will be apparently released pretty soon, but certainly investing
for the growth up to eight hundred million of capital
investment and per annum, so massive investment. Talking about continuing
with their Clean Skies initiative by twenty thirty bearing ten
percent of sustainable owned viewers. But yeah, I think a
lot of these enhancements they've been working hard on last

(01:10):
year or two post COVID starting to come through. It's
still very tough.

Speaker 1 (01:14):
So we are, i think, part way through the company
reporting the season for the September period. What's the tone
that you're getting from the ins and xlisted companies right now?

Speaker 2 (01:22):
Yeah, Look, we are in to think of it hither
You're right at the margin results are looking slightly better
than expected, and it just suggests that the earnings for
ZE own companies may be basing again. Like in New Zealand,
it's been some tough runs, but we are seeing some
real spread of outcomes global logistics something the main forre
it better result starting to say there's in some green
shoots a bit of improvement. Reles that companies like Goodman

(01:43):
and Argasy saying, hey, we're seeing things getting a little
bit better, but we're not getting to eat it ourselves.
And we've got companies that may people they've bounced back
from a really tough a whole space lad and then
we've got companies okay to total one out of the box,
big upgrade. So yeah, I think management teams still being cautious.
They're becoming increasingly cautiously optimistic and bit of a contrast there,

(02:04):
and we think that might just provide a bit of
upside for the ze own company earnings.

Speaker 1 (02:07):
Hey, are we still are we still expecting a fifty
basis point cut this week?

Speaker 2 (02:11):
Yeah? I think that's right. The market is saying fifty
basis points. You know, the data continues to point to
inflation falling. We are seeing businesses a little bit more confident.
There's another reading later this week on Thursday, actually after
the Reserve Banking Design is due to report. But you know, again,
employment level is that so thing we're going to watch
for that There is actually put unemployments and the creep
up Reserve Bank may want to get ahead of that.

(02:33):
This is of course their last meeting before mid February
when they come back after the summer break. So they
have maintained this path of less regrets, which means they
don't want to be the reserve bank that lets the
inflation gene out of the bottle by not by easing
interest rates to really, so I probably want to keep
it a little but not get too carried away. So
A three quarter point seven five percent cut, That would

(02:54):
be a surprise. So fifty is the odds on money
at this stage.

Speaker 1 (02:58):
Yeah. Hey, over in the US shape, we've obviously had
the Trump trades push everything up and has come back
a wee bit. Now what are you looking when you
look at that? What do you think that means for
returns for the U S share market and then for
US as well.

Speaker 2 (03:09):
Yeah, look, you've seen some extremes there. There's definitely some
of the leveraged exchange trade of phones, the cryptophones, all
the sort of speculative elements have really gone hot. But
there's four things that we're looking at that are sort
of seeing people will just be a bit more cautious
of recent days. Firstly, we've seen the Central Bank, the Reserve,
Central Bank Reserve, US Federal Reserve. Some of the commentators
just stepping back from cut expectations say saying, hey, the

(03:32):
complation is not going away so quick quickly as we thought.
We're going to want to just be a bit slower
people are watching. Secondly, the Ukraine war getting broader. Thirdly,
certainly some of the policy certainty around some of the
appointments that mister Trump's proposing is just challenging a few
parts of the economy. And finally, I think you know,
we've seen some results, truly impressive results, but not enough,

(03:54):
not enough for expectations. And so normally we've see the
US market rally into the end of the year, into
december've already seen four and a half five percent rally.
It's a long way for us here in New Zealand.
We've got to be careful about moatility around these political appointments,
particularly what that means for US bond markets and shure markets.
And certainly this more expansion in US fiscal spending AI

(04:17):
the government spending more money that has potential to keep
the reserve bank interest rates higher and the US viedual
reserve higher, and so that could mean that US dollar
stays stronger, makes it tougher for holidays.

Speaker 1 (04:27):
Heither totally does Shane. Thanks very much appreciated, Shane Solly
Harbor Asset Management. For more from Hither Duplessy Allen Drive,
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