Air New Zealand expects a “significantly lower” financial performance for the six months to end-June, as it continues to be impacted by engine issues on its Airbus A320neo family aircraft and Boeing 787 fleets.
The Star Alliance operator does not provide a detailed earnings guidance, saying that there is a “degree of uncertainty” over the number of aircraft grounded due to engine reliability issues.
It anticipates having up to 11 jets – six narrowbodies and five widebodies – grounded at any time through the end of the 2025 financial year, which ends 30 June. Maintenance timeframes could change this, adds the carrier.
The airline has already made network cuts in the past few months, including suspending operations to Seoul and Chicago, to mitigate the groundings.
The outlook comes as the airline reported a 16% decline – to NZ$155 million ($88.3 million) – in its pre-tax profit for the six months to 31 December 2024.
Passenger revenue for the half-year slid 5% to NZ$2.7 billion on the back of a 4% decrease in capacity due to aircraft groundings. However, this was slightly offset by a 6% rise in cargo revenues to NZ$257 million, leading to a 2% drop in operating revenue for the half-year.
The airline disclosed receiving NZ$94 million in compensation over the engine issues but notes that this was still insufficient to make up for the total financial impact of the groundings, which is estimated at up to NZ$150 million for the six-month period.
“Despite receiving NZ$94 million in compensation from engine manufacturers, the airline estimates that first-half earnings would have been approximately NZ$40 million higher had it been able to operate aircraft as intended,” it states.
Separately, the airline will begin a share buy-back programme from 7 March, targeting up to NZ$100 million of shares.
Airline chair Therese Walsh says the buy-back “reflects our confidence in the strength of Air New Zealand’s fundamentals and our commitment to delivering value to our shareholders, while ensuring we remain well-positioned for the future”.
