Air New Zealand (AIR) H1 2025 earnings summary

Executive summary

• Earnings before taxation reached NZD 155 million for 1H FY2025, at the upper end of guidance, despite significant operational challenges and global engine maintenance delays that grounded up to 8 jets and impacted both A321neo and 787 Dreamliner fleets.

• Net profit after tax was $106 million, with passenger numbers down 3% to 8.1 million and ASK down 4% year-over-year.

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

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

• 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% decline in passenger revenue to $2.9 billion.

• Cargo revenue increased 5.8% to $257 million, while contract services and other revenue rose 39% due to manufacturer compensation.

• 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, with net debt-to-EBITDA at 0.9x, below the 1.5–2.5x target range.

• Interim dividend payout ratio at 69% of underlying NPAT.

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.

• Strategic focus remains on maintaining financial resilience, investing in fleet and digital initiatives, and progressing decarbonisation goals.