Air New Zealand (AIR) H2 2025 earnings summary

Executive summary

• FY 2025 earnings before taxation were $189 million, down 15% year-over-year, with net profit after tax at $126 million, down 14%.

• Persistent engine availability issues led to up to 11 jets grounded, reducing capacity by 4% and causing significant operational disruption.

• Transformation Programme delivered $100 million incremental EBITDA benefit in FY 2025, targeting $300–$400 million cumulative by FY 2028.

• Customer experience, digital infrastructure, and operational resilience improved, with strong international demand, especially in premium cabins.

• 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; operating cash flow rose 16% to $940 million.

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

• Engine issues had a $280–$320 million impact, with $129 million in compensation received.

• Fuel costs fell 12% year-over-year, labor costs rose $78 million, and non-fuel operating costs increased 30% since COVID.

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

Outlook and guidance

• No material improvement in grounded aircraft expected for 12 months; gradual recovery from FY 2027.

• FY 2026 capacity growth expected in low single digits (2–4%), with more meaningful increases in FY 2027–2028 as engine constraints ease.

• First-half FY 2026 earnings before taxation expected to be similar to or less than $34 million (2H FY 2025), due to ongoing engine issues and cost pressures.

• Transformation benefits targeted at $200 million in FY 2026, aiming to offset 3–5% non-fuel cost inflation.

• Premium cabin demand expected to remain strong; two new 787s to be deployed in late FY26.