Air New Zealand (AIR) H2 2025 earnings summary

Executive summary

• Earnings before taxation reached $189 million for FY2025, down 15% year-over-year, with net profit after tax at $126 million, reflecting resilience amid persistent engine availability issues and cost inflation.

• Transformation initiatives delivered $100 million in incremental EBITDA benefits in FY2025, supporting progress toward FY2028 targets and targeting $300–$400 million cumulative by 2028.

• Network growth and ASK capacity declined 4% due to grounding of up to 11 aircraft from global engine maintenance requirements, significantly impacting capacity and earnings.

• Customer experience, digital infrastructure, and operational resilience improved, with notable gains in on-time performance and deployment of AI tools to staff.

• Recognized as the world's safest airline for 2025, reflecting a strong safety culture.

Financial highlights

• Operating revenue was $6.8 billion, flat year-over-year, with passenger revenue down 2% to $5.9 billion due to reduced network capacity.

• Earnings before taxation reached $189 million; net profit after tax was $126 million.

• Direct and indirect impact of engine issues estimated at $280–$320 million, with $129 million in compensation received; EBIT could have been ~$165 million higher without disruptions.

• Fuel costs fell 12% year-over-year, while non-fuel operating costs rose 6% ($235 million), mainly from higher landing charges, labor, and engineering materials.

• Cargo revenue rose 6% to $487 million, driven by international long-haul and Asian network strength.

Outlook and guidance

• Engine-related groundings to persist into 2026, with no material improvement in grounded aircraft expected for the next 12 months; gradual recovery anticipated from FY2027.

• FY2026 capacity growth expected in low single digits (2–4%), with a more meaningful increase in FY2027–2028 as engine constraints ease.

• First-half FY2026 earnings before taxation expected to be similar to or less than $34 million (2H FY2025), due to ongoing engine issues and cost pressures.

• Transformation benefits targeted at $200 million in FY2026, aiming to offset 3–5% non-fuel cost inflation.

• System-wide aviation costs projected to rise by $85 million in FY2026 due to increased fees and levies.