Air New Zealand has reported a half-year net profit after tax of $106 million, down 18% on the same period last year with the result at the upper end of market guidance.
Operating revenue for the six months to December 31 was down 2% to $3.4 billion. This included $2.9b in passenger revenue which was down 5% and $257m in cargo revenue, up 6%.
Chair Dame Therese Walsh says the result reflects the airline’s resilience amid the economic environment.
“This is a strong result when you consider the headwinds we have been navigating for almost a year now. It reflects the hard mahi and dedication of our 11,600-strong Air New Zealand whānau and the effectiveness of the actions we have taken, and continue to take, to mitigate these challenges and position the airline for future success,” she says.
The airline announced an unimputed interim ordinary dividend of 1.25 cents per share alongside a share buy-back of up to $100m, reflecting confidence in its long-term outlook.
Operational challenges
The airline continues to face constraints due to global engine maintenance requirements, with up to five narrowbody and three widebody jets grounded at various times. This contributed to a 4% decline in network capacity.
Chief executive Greg Foran acknowledged the operational difficulties caused by aircraft groundings.
“Investment in modern, fuel-efficient aircraft is an important part of Air New Zealand’s fleet strategy. But with over $1 billion worth of our newest, most efficient aircraft grounded at times, it’s been a tough year so far. Delivering the performance we have and maintaining such a strong balance sheet is a real credit to our people and I’m proud of what we have achieved,” he says.
Despite receiving $94m in compensation from engine manufacturers, the airline estimates that first-half earnings would have been approximately $40m higher had all aircraft been operational.
“While compensation has played an important role in offsetting some of the financial impact of the delays, it falls well short of making the airline whole for the operational and economic losses sustained,” Foran says.
The airline worked to control costs while maintaining service quality. Average jet fuel prices were 16% lower, contributing to a 15%, or $133 million, reduction in total fuel costs.
However, non-fuel operating cost inflation of approximately $100m continues to weigh on financial performance, driven by rising landing charges, labour costs, and engineering expenses.
The airline anticipates a difficult second half due to ongoing engine maintenance disruptions.
“The road ahead is not without obstacles, but our balance sheet strength, our clear strategic priorities, and the skill and commitment of our team position us well to navigate the year ahead,” Foran says.
