As at Wednesday, 3 October 2018, the Air New Zealand Ltd [NZX:AIR] stock price has risen from $2.99 (at market opening) to $3.04 (11.47AM) — a 1.67% increase.

Air New Zealand is a multi-billion-dollar New Zealand airlines company with a market capitalisation of $3.41 billion.


Why did the [NZX:AIR] share price increase?

This recent increase is interesting considering the US Navy has just awarded Air New Zealand a US$17 million contract to overhaul twelve GE turbine engines that the Navy uses to power some of their cruisers.

This work is going to be done in Auckland in Air New Zealand’s Gas and Turbines facility. The announcement of this latest contract is a possible cause for the jump in the Air New Zealand share price. Last year, Air New Zealand secured a total of $20 million in contracts with the US Navy to overhaul some of their GE turbine engines. Perhaps the success of Air New Zealand to deliver on those contracts has solidified a relationship between the US Navy and Air New Zealand. Could this possibly lead to further growth in the future?

Over the past two years Air New Zealand has seen a rise in share price from a low of $1.715 in October 2016 to a high of $3.60 in September 2017. That’s an increase of over 200% in a single year! This large growth has since teetered off. With the share price fluctuating and slowly decreasing over the past year to where it is today. After this last share jump the price sits just above $3.00.


Could we see a rise in the Air New Zealand share price over the coming year?

Over the last financial year ending June 2018, Air New Zealand announced earnings before taxation of $540 million — the second highest in the airline’s history. Chairman Tony Carter commented on the companies amazing performance:

This is an impressive financial result, driven by strong revenue growth across the airline’s key markets, as well as continued focus on sustainable cost improvement, despite significantly higher fuel prices.’

Could this impressive run cause the company to see an increase in equity investment and a boost in their share price over the next coming months? It’s possible. And we all know that with summer on the way, travel across the southern hemisphere will see an increase, further adding to the possibility that we may see the share price increase.



Taylor Kee,
Editor, Money Morning New Zealand

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