Air NZ Profit Hit Amid Engine Challenges
Air New Zealand’s underlying profits for the first half of its 2025 financial year fell sharply, as the airline continues to grapple with suppressed demand, rising costs, and persistent engine issues that have affected a significant portion of its mainline fleet. For the six months ending December 31, 2024, the Auckland-based carrier’s earnings before tax dropped to NZ$155 million ($88 million), a decline from NZ$185 million ($105 million) reported in the same period last year. Net profit also took a hit, falling by 22% from NZ$129 million ($73 million) to NZ$106 million ($60 million).
Despite these setbacks, Air New Zealand’s underlying profit remains near the upper end of its forecasted guidance of NZ$120 million to NZ$160 million for the period. Chair Dame Therese Walsh emphasized that the figures, though lower, represent a strong performance given the ongoing headwinds. “Air New Zealand’s strong balance sheet, liquidity, and financial discipline provide us with the flexibility to successfully manage the short-term challenges we face, while also continuing to invest in our future and return capital to our shareholders,” she said.
One of the most significant operational challenges the airline has encountered this year has been the widespread engine issues affecting both its Airbus A320neo family and Boeing 787 Dreamliners. The problems, which have been linked to additional maintenance requirements for the Pratt & Whitney GTF engines on the A320neo fleet and the Rolls-Royce Trent engines on its 787-9s, have resulted in numerous aircraft groundings over recent months. At times, up to six A320neo aircraft and four widebody 787s—almost 20% of its 59 mainline jets—have been out of service.
Chief Executive Greg Foran shed light on the impact of these engine challenges, noting that at one point the airline lost approximately 5,000 seats per week, resulting in millions of dollars in lost revenue. “Investment in modern, fuel-efficient aircraft is an important part of our fleet strategy. But with more than $1 billion worth of our newest, most efficient aircraft grounded at times, it’s been a tough year so far,” Foran explained. He added that, even after receiving NZ$94 million in compensation from engine manufacturers, the airline estimates its earnings would have been roughly NZ$40 million higher if it had been able to operate its full fleet.
In addition to the operational disruptions caused by engine maintenance delays, Air New Zealand has also experienced a 5% decline in passenger revenues, which now stand at NZ$2.9 billion. The drop in revenue has been partly attributed to weaker demand, especially in the higher-yield corporate and government segments. As a result, the airline has scaled back its dividend, planning to pay NZ1.25 cents per share compared to NZ2 cents per share in 2024. However, to bolster its financial position, Air New Zealand is set to announce an up-to NZ$100 million share buy-back scheme in the near future.
Looking ahead, Foran warned that 2025 will remain challenging, as the first full year impacted by these engine issues is expected to see up to 11 jets out of service at any one time. “We continue to strive to deliver a reliable experience for our customers, but with 4% less capacity available due largely to these maintenance delays, this has been a real challenge,” he said, adding that performance in the second half of 2025 is expected to be significantly lower than in the first half.
As Air New Zealand navigates these turbulent times, its focus remains on long-term operational resilience and customer service, even as immediate profit margins face pressure from a perfect storm of economic and operational headwinds.
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