Air New Zealand (AIR) H1 2025 earnings summary

Executive summary

• Earnings before taxation reached $155 million for H1 FY2025, at the upper end of guidance, despite significant operational challenges and global engine maintenance issues affecting the A321neo and 787 Dreamliner fleets, resulting in up to 8 jets grounded and reduced network capacity by 4%.

• Net profit after taxation was $106 million, reflecting resilience amid operational and economic headwinds.

• Announced a share buyback program of up to $100 million and an interim unimputed dividend of 1.25 cents per share, reflecting confidence in long-term prospects and a strong balance sheet.

• Cargo revenue rose 6% to $257 million, surpassing pre-Covid levels, while loyalty membership increased 10% to 4.8 million.

• Ongoing cost inflation, reduced domestic demand, and capacity constraints impacted results, but strategic investments in fleet, digital innovation, and decarbonisation continue.

Financial highlights

• Operating revenue was $3.4 billion, down 2% year-over-year, mainly due to a 4.4% reduction in capacity and a 5% decrease in passenger revenue to $2.9 billion.

• Cargo revenue rose 5.8% to $257 million, driven by strong transshipment demand and higher volumes from Asia.

• Received $94 million in engine manufacturer compensation, with an estimated $40 million net adverse impact from engine issues.

• Liquidity at period end was $1.8 billion; net debt-to-EBITDA ratio at 0.9x, below the 1.5–2.5x target range.

• Interim unimputed dividend of 1.25 cents per share declared, with a 69% payout ratio.

Outlook and guidance

• Up to 11 jets are expected to be grounded at times in the second half of FY2025 due to ongoing engine maintenance, with significant uncertainty around timing and compensation.

• Performance for the second half of FY2025 is expected to be significantly lower than the first half; no formal guidance provided due to uncertainty.

• Capacity growth anticipated from FY2026 as new aircraft deliveries commence and grounded fleet numbers gradually decline.