Air New Zealand Faces First-Half Loss Amid Maintenance Delays and Weak Demand

Air New Zealand reported a significant first-half loss before tax of NZ$59 million (approximately $35.38 million) for the six months ending December 31, 2025. This loss is a stark contrast to the profit of NZ$144 million reported in the same period the previous year. The airline attributed this downturn to ongoing engine maintenance delays, a slower-than-expected recovery in domestic travel demand, and rising aviation system costs. The reported net loss after tax stood at NZ$40 million. This result exceeded the airline's earlier guidance, which anticipated a loss between NZ$30 million and NZ$55 million.

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The primary factors contributing to Air New Zealand's financial difficulties include global engine maintenance issues that have kept up to eight aircraft grounded at various times, resulting in an estimated NZ$90 million in lost earnings. The airline has been particularly affected by maintenance requirements for Pratt & Whitney and Rolls-Royce engines, leading to a strategic review of its operations. Chief Executive Officer Nikhil Ravishankar indicated that the airline is focused on returning to sustained profitability through operational improvements and cost transformation initiatives.

Air New Zealand reports half-year loss

In light of the financial challenges, Air New Zealand is conducting a comprehensive review of its business operations. The airline aims to enhance operational performance and pursue sustainable growth. Despite the current difficulties, the airline expects to see a rise in capacity during the second half of the financial year as grounded aircraft return to service and new aircraft deliveries commence. However, the airline cautioned that earnings may not benefit immediately from these changes, forecasting second-half earnings to be flat or potentially weaker than the first half.

Air New Zealand reports half-year loss

Nikhil Ravishankar stated, "With the support of the Board, we are undertaking a comprehensive review of all aspects of the business, with the objective of returning the airline to sustained profitability." He also expressed disappointment regarding the prolonged engine availability issues but noted progress with the return of four grounded Airbus neo and Boeing 787 aircraft throughout 2026.

Air New Zealand reports half-year loss

Despite the airline's efforts to manage the situation, analysts and market observers have raised concerns about the effectiveness of the strategic review and the airline's ability to recover from the ongoing challenges. The airline's share price has declined by 10% over the past year, underperforming compared to the S&P/ASX 200 Index, which has risen by 11%.

Air New Zealand reports half-year loss

While Air New Zealand's loss figures are consistent across reports, there is some discrepancy regarding the anticipated financial recovery timeline and the impact of ongoing compensation discussions with engine manufacturers. The airline has received NZ$55 million in compensation but estimates that an additional NZ$90 million could have been realized if its fleet had operated as intended.

Reuters

Air New Zealand's strategic review is expected to yield operational improvements aimed at enhancing profitability. The airline will continue to monitor the timing of aircraft returns and the outcomes of compensation negotiations, alongside the volatility in costs and demand that could affect future earnings.

Air New Zealand reports half-year loss