Air New Zealand has warned of softer profits during the last six months of 2023 owing to competitive pressures and softer demand for leisure travel.
For the first half of the 2024 financial year, Air NZ says pre-tax profits are likely to come in at the “bottom end” of the NZ$180-230 million ($106-137 million) range it originally forecast in October.
“Early signs of softness in domestic travel, particularly corporate and government travel, which were noted in the 12 October update have continued, with late booking activity remaining weaker compared to the prior year,” says Air NZ.
“More recently, the airline has noted softer leisure demand in both the Domestic and Trans-Tasman markets.”
While demand on North American routes is solid, competition from US airlines is pressuring on pricing.
The airline is, however, likely to get a NZ$45 million benefit from credits issued during the coronavirus pandemic that are unlikely to be redeemed.
In the first six months of Air NZ’s 2023 financial year, it generated a pre-tax profit of NZ$299 million.
Sustainment challenges also continue with the Pratt & Whitney PW1100G engines that power the carrier’s 17 A320neo family jets. In September, Air NZ had said that maintenance events related to the engines would impact schedules from January 2024.
As a result of PW1100G maintenance, Air NZ announced separately that it will re-enter a temporary lease agreement with Spain’s Wamos Air. The arrangement will see Wamos operate the Auckland-Perth route from 9 February to 30 April 2024.
“This is a proactive, temporary measure which means we can avoid major flight cancellations while we undertake additional aircraft maintenance in early 2024,” says Air NZ.
Air NZ also announced that it is working with satellite-based internet provider Starlink to introduce free internet on domestic services.
Starlink will be installed in a domestic jet and an ATR in late 2024. Following a trial, Air NZ aims to roll out Starlink across its domestic fleet in 2025.
