Air New Zealand has announced a pre-tax profit of $155 million for the first half of fiscal year 2025, positioning itself at the upper end of the forecast range provided in November 2024. The airline also reported a net profit of $106 million and declared an interim dividend of 1.25 cents per share, payable on March 19, 2025, to shareholders registered by March 7.
Strong Performance Amid Challenges
Dame Therese Walsh, Chair of Air New Zealand’s Board of Directors, highlighted that these results reflect the airline’s resilience and adaptability in a challenging operational environment.
“This is a solid result given the obstacles we have faced over the past year. It reflects the hard work and dedication of our 11,600 employees and the effectiveness of the measures we have taken to address these challenges and position the airline for future success,” Walsh stated.
Additionally, the airline announced a share buyback program of up to $100 million, a move that, according to Walsh, underscores the board’s confidence in the company’s long-term outlook.
Capacity Reductions Due to Engine Maintenance
The report revealed a 4% reduction in network capacity, as up to five narrow-body and three wide-body aircraft were grounded due to additional global engine maintenance requirements. These issues affected customers of Pratt & Whitney and Rolls-Royce, leading to significant additional costs and lower operational efficiency.
Air New Zealand CEO Greg Foran emphasized the importance of investing in modern, fuel-efficient aircraft while acknowledging the challenges posed by these groundings.
“It has been a tough year, with over a billion dollars’ worth of next-generation aircraft out of service at various times. Maintaining a strong balance sheet and delivering this performance is a testament to the effort of our team,” Foran said.
Financial Performance and Compensation
Passenger revenue declined by 5% to $2.9 billion due to reduced capacity and lower demand in the corporate and government sectors. The airline received $94 million in compensation from engine manufacturers but estimated that its profits would have been $40 million higher if the affected aircraft had been operational as planned.
Strategy and Outlook for 2025
The report warns that the financial impact of maintenance-related issues will be more pronounced in the second half of the year, with up to 11 aircraft grounded simultaneously. To mitigate the impact, Air New Zealand plans to adjust its flight schedule, lease additional engines, and prioritize customer experience.
Looking ahead, key milestones for 2025 include:
- Modernization of more than half of its Boeing 787 Dreamliner fleet, featuring new interiors and Business Premier Luxe™ seats.
- Leasing additional engines to enhance operational resilience.
- Testing new technologies, such as digital baggage tags and onboard Wi-Fi for domestic flights.
- Introduction of an all-electric demonstrator aircraft by mid-year.
Foran reiterated that despite ongoing challenges, the airline maintains a strong balance sheet, clear strategic priorities, and a committed team to navigate the situation. However, due to uncertainty regarding the duration of aircraft groundings and related compensations, Air New Zealand cannot provide a specific financial forecast for the second half of the fiscal year.
The company will continue assessing the impact of maintenance challenges and refining its strategy to minimize operational disruptions.
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