Air New Zealand in the red as high costs bite bottom line

In particular, the airline said increased fuel costs had an estimated NZ$135 million impact on its pre-tax result after fare adjustments and capacity reductions, with a fuel bill NZ$328 million higher than its second-half expectations and NZ$205 million after hedging.

“It’s been a very challenging year for aviation, and our financial result reflects these challenges. Given the price sensitivity of air travel, airlines globally have not been able to recover the full increase in fuel costs,” said Air New Zealand CEO Nikhil Ravishankar.

“We took quick and decisive action through fare adjustments and capacity reductions to balance affordability for customers and maximise recovery and will continue to do so.

“However, we are making real progress on what we can control, including improving our on-time performance from 77.5 per cent in 2025 to 84.0 per cent in the second half of the financial year, alongside an improvement in customer satisfaction.”

According to Ravishankar, the airline has reviewed its schedule and rolled out new digital tools to support operational communication and decision-making.

“We have also taken decisive action to simplify parts of the organisation and evolve our operating model, including restructuring across a number of areas to reduce duplication, sharpen accountability and improve productivity,” he said.

VIEW ALL

>

“We have retrofitted 9 out of 14 of our Boeing 787 fleet – and the new interior product is resonating very well with customers. The remaining 787 fleet fit-out will be completed by November this year, slightly ahead of schedule.

“Additionally, after several years of disruption, the engine challenges that have constrained our network are now substantially behind us. Our teams have worked relentlessly with Rolls-Royce and Pratt & Whitney to return grounded aircraft to service earlier than expected, with aircraft availability improving by the end of the financial year.

“There are still residual risks and costs to work through, but we enter 2027 in a considerably more reliable fleet position.”

According to the airline’s chair, Dame Therese Walsh, the carrier’s future strategy launched in June will aid its ambition to become “the world’s most respected airline”.

“The Board and management have a well-defined plan to rebuild a financially resilient and commercially sustainable national airline, underpinned by our new strategy, Te Pae Hou – Our Future,” she said.

“As the national airline, our success is closely connected to New Zealand’s success. By strengthening our business and positioning Air New Zealand for sustainable growth, our strategy reset will enable us to play an even greater role in supporting tourism, exports and New Zealand’s long-term economic prosperity.”

Air New Zealand anticipates some recovery in the 2027 financial year as engine availability disruptions and high maintenance costs abate.