Air New Zealand (AIR) H1 2026 earnings summary

Executive summary

• Reported a net loss after tax of $40 million and a loss before tax of $59 million for 1H 2026, compared to a profit in the prior year, driven by ongoing fleet constraints, engine maintenance delays, slower domestic demand recovery, and rising costs.

• Passenger revenue grew 3.6% year-over-year to $3.0 billion, with premium cabin revenue up 10% and economy up 2%, but capacity remained flat at about 90% of pre-COVID levels due to grounded aircraft.

• No interim dividend declared, consistent with the capital management framework and focus on balance sheet resilience.

• Transformation initiatives delivered $45 million in benefits in 1H 2026, but these gains were largely offset by inflation and inefficiencies.

• Strategic review underway to address operational challenges, cost escalation, and future network and fleet strategy.

Financial highlights

• Operating revenue rose 1.2% year-over-year to $3.4 billion, with passenger revenue up 3.6% to $3.0 billion; operating cash flow fell 50% to $213 million.

• Received $55 million in engine compensation, but this covered only about one-third of the estimated $145 million impact from engine issues, with $90 million in lost earnings.

• Reported CASK rose 7.7% year-over-year due to cost inflation and subscale operations; non-fuel operating cost inflation totaled approximately $75 million.

• Liquidity at period end was $1.3 billion, within the target range; net debt-to-EBITDA at 2.6x, above the target range.

• Cargo revenue declined 7% to $239 million due to lower volumes, yields, and increased competition.

Outlook and guidance

• Second-half earnings expected to be broadly in line with or modestly below the first half, assuming average jet fuel price of $85/barrel.

• Full-year non-fuel cost inflation forecast at $150–$175 million, with maintenance and passenger services as main drivers.

• Capacity growth of 3%-4% planned for the second half, contingent on improved engine reliability and new aircraft deliveries.

• Material uncertainty remains around engine return schedules, compensation timing and amount, and input cost volatility.

• Active negotiations ongoing with engine manufacturers for further compensation.