Air New Zealand has posted an interim net profit of $106 million, but is expecting performance for the second half of the year to be “significantly lower”.
It’s interim net profit last year was $129m.
Chief executive officer Greg Foran noted ongoing challenges, which included aircraft groundings associated with engine maintenance problems impacting Pratt & Whitney and Rolls-Royce customers globally, which power its Airbus Neo and Boeing 787 Dreamliner jets.
“Investment in modern, fuel-efficient aircraft is an important part of Air New Zealand’s fleet strategy.
“But with over $1 billion worth of our newest, most efficient aircraft grounded at times, it’s been a tough year so far. Delivering the performance we have and maintaining such a strong balance sheet, is a real credit to our people and I’m proud of what we have achieved.”
The company noted while it had received $94 million in compensation from engine manufacturers, it estimated its first-half earnings would have been approximately $40 million higher if it had been able to operate as intended.
Foran said the company is pleased to have received some compensation, but it is “frustrating” to be in this position.
“While compensation has played an important role in offsetting some of the financial impact of the delays, it falls well short of making the airline whole for the operational and economic losses sustained.”
‘Significantly lower’ result expected in second-half
Foran acknowledged 2025 is set to be “particularly challenging financially”, as the airline to navigates having up to 11 jets out of service at times.
“The airline notes a large degree of uncertainty exists regarding engine maintenance timeframes.”
In light of the grounding, associated diseconomies of scale and inefficiencies, and potential compensation, it currently expects performance for the second half of the 2025 financial year to be “significantly lower than the first half”.
“Given the degree of uncertainty surrounding the number of grounded aircraft across the second half and any associated compensation, the airline is not in a position to provide guidance at this time.”
Passenger revenue declines
Passenger revenue has decreased to $2.9 billion, driven by a 4% reduction in capacity due to fleet constraints and lower domestic demand – which the company said was particularly notable in corporate and government segments.
The airline said included in passenger revenue was $10 million in unused customer credits which were considered “highly unlikely” to be redeemed. Last year, unused credits made up $45 million of passenger revenue.
Lower fuel prices
Air New Zealand said average jet fuel prices were 16% lower for the period. Total fuel costs were also down around 15%, or $133 million.
“This was primarily driven by reduced capacity due to fleet constraints, as well as lower Singapore jet fuel prices.”
Other operating costs up
While fuel prices were down, non-fuel operating cost inflation of approximately $100 million weighed “heavily” on the airline’s performance.
“With landing changes, labour and engineering materials leading the increases, the non-fuel operating cost uplift of 5% for the period brings the cumulative impact of inflation across the past five year to 25 to 30%.
Share buy-back
Chairwoman Dame Therese Walsh said the result highlights the airline’s “resilience and adaptability” amid “economic headwinds”.
Shareholders will also receive a unimputed ordinary dividend of 1.25 cents per share. It will be paid on March 19, and to shareholders on record on March 7.
Dame Therese said the company has a “strong balance sheet”, and announced a share buy-back of up to $100 million.
