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, with net profit after tax of $106 million, despite significant operational challenges and up to 8 jets grounded due to global engine maintenance issues, reducing network capacity by 4%.

• Transformation initiatives contributed NZD 40 million to first-half EBITDA, with further gains expected in the second half and a target of $300–$400 million by 2028.

• Received global recognition for service quality, including "Best Airline in the World" by Condé Nast Readers Choice UK.

• Announced a share buyback program of up to $100 million and an interim dividend of 1.25 cents per share, reflecting strong balance sheet and liquidity.

• Continued investment in fleet upgrades, digital initiatives, and sustainability projects, including the largest SAF purchase to date and digital bag tags.

Financial highlights

• Operating revenue was $3.4 billion, down 2% year-over-year due to a 4.4% reduction in capacity; passenger revenue declined 5% to $2.9 billion, while cargo revenue rose 6% to $257 million.

• Net profit after tax was $106 million, down 18% from 1H 2024.

• Liquidity stood at $1.8 billion at period end, with net debt to EBITDA at 0.9x.

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

• Reported CASK deteriorated by 2.9%; underlying CASK up 6.7% year-over-year, mainly due to inflation and inefficiencies from grounded aircraft.

Outlook and guidance

• Up to 11 jets expected to be grounded at times in H2 FY2025 due to ongoing engine maintenance, with significant uncertainty around timing and compensation.

• Performance for H2 FY2025 is expected to be significantly lower than H1; no formal guidance provided for the remainder of FY2025 due to high uncertainty.

• Capacity growth anticipated from FY2026 as new aircraft are delivered and engine issues gradually resolve.