Air New Zealand has cautioned brokers its 2017 earnings, which include a decline on foreign exchange earnings, will not match those of 2016.
The effects of increasing competition cannot yet be quantified.
Following its annual investor day, Craigs Investment Partners broker Peter McIntyre said the presentation mainly covered strategic and operational elements and ‘‘broad-brush trends'', with no update on financial guidance.
‘‘Overall, we remain comfortable with our financial forecasts and a ‘hold' recommendation on the stock,'' he said.
While lacking guidance, Mr McIntyre noted Air New Zealand's full-year 2017 would not include the expected foreign exchange gains of 2016 of about $120million; which he said was in line with Craigs' estimate of about $117million. Forecast 2016 earnings were about $800million.
Mr McIntyre said the national carrier's profits and returns ultimately depended on where the competition drove profit margins and Air New Zealand's return on investment capital.
‘‘Competition is squeezing yields down, with the ultimate extent difficult to quantify at this stage,'' he said.
There was a ‘‘strong tourism macro'' element underpinning the medium-term outlook, maintaining New Zealand as an attractive tourist destination.
While there were about 1.7million visitors to New Zealand during the past year, globally there were 60million ‘‘actively considering'' a visit.
China and the US made up two-thirds of the untapped ‘‘considering'' market, which were both large and ‘‘lowly penetrated'', but where Air New Zealand now has partners, he said.
Mr McIntyre highlighted that of all visitors to New Zealand from China, that figure represented only 0.27% of all tourists leaving China.
‘‘Air New Zealand's a success in converting latent international demand in recent times suggests that this will be a long-term tailwind,'' he said.
On the question of Air New Zealand's sale of all or some its 26% stake in Virgin Australia, Mr McIntyre expected a decision some time in coming months.
‘‘All options are apparently still on the table,'' he said.
One alternative could be to sell a 19.9% stake, leaving a 6% stake, which would deliver about 20c per share, Mr McIntyre said.
Its forecast for 2016 pre-tax earnings, excluding the contribution from Virgin, given with the first-half results in February, build on the record $457million the company earned in the first half, BusinessDesk reported.
Those earnings were driven by lower fuel prices and a jump in passenger revenue as the airline added new routes and refurbished is fleet of aircraft.
Air New Zealand said increased capacity in the industry was driving ‘‘significant growth of seats across the network'' and it expects ‘‘headwinds to overall yield as [the] market adjusts to new capacity''.
Against that, it expects to continue to benefit from growth in inbound tourism, a favourable outlook for fuel prices and the scale of its fleet.
The airline is halfway through a $2.2billion capital expenditure programme to add new aircraft, reduce the age of its fleet and cut back on the variety of planes it operates. It expects to have reduced the average age of its fleet to 6.7 years by 2018 from 8.6 years in 2012.
It will be made up of the wide-body Boeing B787s and B777s, the narrow-body Airbus A320 and the ATR762s and Q300 turboprops, reducing the airline's fleet types by three, to five in total.
Its gearing rose to 52.4% in 2015 from 42.9% the previous year, and it aimed to keep gearing in a range of 45% to 55%, Air New Zealand said. The increase in debt reflected investment in its fleet and a stronger US dollar.
