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 global engine maintenance delays, capacity constraints, cost escalation, and slow domestic demand recovery.

• Passenger revenue grew 3.6% to $3.0 billion, with international premium demand and additional Tasman and Pacific Islands capacity, but network growth was flat due to engine issues and inflationary pressures.

• Operating revenue rose 1.2% year-over-year to $3.4 billion, but operating cash flow fell 50% to $213 million.

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

• Transformation initiatives delivered $45 million in benefits in the half, but these were largely offset by inflation and inefficiencies.

Financial highlights

• Passenger revenue increased 3.6% year-over-year; premium cabin revenue up 10%, economy up 2%.

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

• Reported CASK rose 7.7% year-over-year due to supplier cost inflation and inefficiencies.

• Non-fuel cost inflation was $75 million (3.5%) in the half, mainly from mandated levies, engineering, and landing charges.

• Net debt-to-EBITDA at 2.6x; liquidity at $1.3 billion as of 31 December 2025, within target range.

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.

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

• Full-year non-fuel cost inflation forecast at $150 million–$175 million; life cycle maintenance headwind of $80 million–$100 million.

• Transformation benefits for the full year expected at $100 million–$120 million.

• Outlook subject to material uncertainty, including engine return schedules, compensation timing and amount, and continued volatility in input costs and demand.