Air New Zealand has announced a 65% drop in net profit for the 2024 financial year amid operational and economic headwinds.
The flagship carrier reported earnings before tax this year of $222 million, compared to $574 million for the same period last year. Net profit after tax was $146 million, compared with $412 million the year before — a 65% drop. Operating revenue grew.
Air New Zealand’s chief executive Greg Foran said the result was “as expected”, with a reduction on the prior year, when the airline recorded one of its highest ever results following the reopening of New Zealand’s border.
National carrier recorded a net profit after tax of $146 million, compared with $412 million the year before. (Source: 1News)
The airline said the second half of the financial year proved “increasingly challenging”, attributing a drop in domestic demand to a “tougher economic backdrop in New Zealand” alongside operational challenges.
It also listed inflationary cost pressures and the impacts of aircraft availability issues and significant elevated competition on US routes as some of the reasons for this “significant drag” on the airline’s financial performance.
“Accelerated maintenance requirements for Pratt & Whitney PW1100 engines worldwide have meant that up to six of the airline’s newest and most efficient Airbus neo aircraft have been out of service at times.
“Ongoing additional maintenance requirements on the Trent 1000 engines that power the existing Boeing 787 Dreamliner fleet and reduced levels of spares in the market have meant that up to three Dreamliners are also on the ground at times.
“While average jet fuel prices were slightly lower for the year, total fuel costs increased by around $190 million, driven by capacity growth across the network.
Passenger revenue increased 11% to $5.9 billion, driven by a 23% ramp-up in capacity, primarily across the international long-haul network, partially offset by the “weaker demand environment and higher levels of competition”.
“With landing charges, air navigation fees and engineering materials leading the increases, the non-fuel operating cost uplift of six percent for the year brings the cumulative impact of inflation across the past five years to 20 to 25%.”
It said $90 million of credit breakage for unused customer credits that were considered highly unlikely to be redeemed were also included in this passenger revenue figure.
Air New Zealand’s Chief executive Greg Foran thanked customers and staff for their ongoing support, saying the challenges faced by the airline were “not unique to Air New Zealand”.
“Supply chain and aircraft delivery delays, growing costs and a shortage of labour in key areas like engineering are major issues facing many airlines across the global aviation industry.
“However, the reality is that while these issues continue to play out, Air New Zealand is expecting a challenging year ahead.”
He said immediate action was taken to minimise disruption from engine maintenance requirements through leasing three Boeing 777-300ERs, securing additional spare engines and adjusting the network and schedule to deliver greater reliability.
“We remain committed to investing for the future, with expected aircraft-related capital expenditure of $3.2 billion over the next five years. This includes a significant, multi-year interior retrofit programme on our 14 existing Dreamliner aircraft.
“We anticipate delivery of the first new GE-powered Boeing 787-9 aircraft towards the end of the 2025 calendar year, which will provide options for continued growth, cost efficiencies and network expansion opportunities.”
He acknowledged flight disruptions due to engine issues had been “far from perfect for impacted customers”.
Foran said Air New Zealand expected these trading conditions to remain similar through the first half of the 2025 financial year.
