Air New Zealand swings to half-year loss amid severe fleet disruption

Source: Radio New Zealand

Air New Zealand has slumped to a half-year loss as it continues to face severe disruption due to grounded aircraft, with challenges likely to continue in the short-term.

The airline posted a bottom-line loss of $40m in the six months ended December, compared to last year’s profit of $106m.

Revenue was up just over 1 percent to $3.44b, compared to $3.4b a year ago.

Key numbers for the six months ended December 2025 compared with a year ago:

• Net loss $40m vs $106m
• Revenue $3.44b vs $3.4b
• Pre-tax loss $59m vs $155m profit
• No interim dividend vs 1.25 cents per share

The airline said the result was largely driven by global engine maintenance delays, slower-than-expected recovery in domestic demand, increasing costs, and a weaker New Zealand dollar.

The pre-tax loss came in worse than market expectations and the airline’s own forecast of between $30m and $55m.

Air NZ was also undergoing a major review of the business as it looked to cut costs and return to profitability.

“With the support of the board we are undertaking a comprehensive review of all aspects of the business, with the objective of returning the airline to sustained profitability through enhanced operational performance, growth and further cost transformation initiatives,” chief executive Nikhil Ravishankar said.

“While we are disappointed that the engine availability issues have taken longer than anticipated to resolve, we are pleased with recent progress and now expect a total of four grounded Airbus neo and Boeing 787 aircraft to return to service throughout the 2026 calendar year.”

Ravishankar expected Air NZ to receive two of its 10 new 787 aircraft later in the financial year, providing widebody capacity growth of 20-25 percent over the next two years.

Domestic demand soft, costs high

Air NZ said overall passenger revenue improved 4 percent to $3 billion on the back of more capacity to Australia and the Pacific Islands, and more premium seats on long-haul routes.

But it said domestic demand recovery was slower-than-expected, while international performance was supported by strong offshore bookings, particularly for premium cabins.

It said demand for outbound long-haul travel was subdued.

Jet fuel prices were on average slightly weaker than the prior period, but the airline said lower fuel prices were more than offset by a weaker New Zealand dollar.

“Non-fuel operating cost inflation of approximately $75 million was driven primarily by higher mandated domestic passenger levies, engineering and maintenance costs, and airport landing charges,” the airline said.

“The airline’s concern is not only about the current level of these costs, but the future trajectory and potential for further increases over time, which would place additional pressure on the business, and the sustainability of regional connectivity.”

Conditions not expected to improve in second half

Air NZ said while capacity would likely increase modestly in the second half with aircraft returning to service and new aircraft, the airline was cautious on whether it would translate to earnings uplift.

“This is because widebody capacity cannot be operationalised into the schedule and sold at short notice,” it said.

“The primary constraint is uncertainty in the timing of aircraft and engine returns, which limits the ability to plan and sell additional flying with confidence.”

The airline said disruption-related costs and inefficiencies would also take time to unwind.

Based on current trading conditions, and assuming a jet fuel price of US$85 per barrel, Air NZ expected second-half earnings to be broadly in line with, or modestly below the first half.

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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand