Air New Zealand is expecting to make $20 million in six months from travel credits that customers won’t use.
The airline told the NZX today it expects its full-year underlying profit to be down as much as a third compared to last year given a “substantial” drop in the compensation it expects to get from engine manufacturers for its grounded aircraft.
The national carrier estimates earnings before taxation for the 2025 financial year to be within a range of $150 million to $190m, compared with $222m last year.
Air New Zealand said it expected to make $20m from “credit breakage” in the second half of its financial year – money from prepaid airfares, travel vouchers and other credits that customers have not used and now probably will not.
The airline counts the credits as revenue when it is confident they will not be redeemed or they have expired.
Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, said the Covid-19 pandemic led to mass cancellations and many people opted for credits instead of refunds at the time.
“Some may have forgotten these, moved or found travel plans unfeasible especially with Air New Zealand’s reduced capacity limiting booking options.”
He said the $20m was probably more than Air New Zealand had been expecting.
“It’s a material amount of their earnings for the period.
“Check your Air New Zealand Airpoints or credits you have with them, roll them over if possible, and do it quickly before they expire. Use them if you can, transfer them to someone else if you can or use them to buy in store if you’ve got Airpoints, but $20m in credit breakage expected in the second half of this year is a decent chunk of consumer money about to be worthless.”
Air New Zealand has been approached for comment.
Credits that were issued during the lockdown period of the pandemic have to be used to make a booking by January 31 next year and the travel must be completed by the end of the year.
Anyone with credit that was issued after October 1 in 2022 has 12 months from the date of issue to book it and then the travel must be completed within 355 days.
