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Air New Zealand forecasts $30m-$55m first half loss

Author
Jamie Gray,
Publish Date
Wed, 22 Oct 2025, 2:17pm
Air NZ expects to report a first half loss. Photo / NZME
Air NZ expects to report a first half loss. Photo / NZME

Air New Zealand forecasts $30m-$55m first half loss

Author
Jamie Gray,
Publish Date
Wed, 22 Oct 2025, 2:17pm

Air New Zealand expects to report a first half pre-tax loss of $30-$55 million because of a subdued economy and several grounded aircraft.

In an update, Air NZ said it had earlier anticipated a 2% to 3% uplift in revenue across domestic and US-bound bookings.

“This has not materialised to date and is not yet evident in the current forward booking profile, the impact of which is approximately $50m for the half,” it said.

“The local economy remains subdued, with ongoing softness across business, government and leisure segments,” Air NZ said.

Between nine and 11 aircraft have remained grounded, at times, since the beginning of the 2026 financial year, it said.

In August, Air NZ said its earnings before taxation for the first half of the 2026 financial year were expected to be similar to or less than that reported in the second half of the 2025 financial year ($34m).

Engine lease costs for the first half are now expected to be approximately $20m higher, due to the recognition of end-of-lease obligations on two short-term aircraft leases not previously included in the outlook.

These costs were non-cash in the period and are not covered by existing compensation agreements, it said.

Air NZ also said its financial obligations under the mandatory Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) have increased by around $10m since the August outlook, which will result in increased fuel costs.

“Air New Zealand continues to prioritise medium to long-term growth, and is carrying the cost of additional fleet, a full workforce, and the infrastructure necessary to support recovery as aircraft availability improves,” it said.

The airline is driving further cost-saving and efficiency initiatives to mitigate these pressures and maintain balance sheet strength.

“These actions build on the momentum of the Kia Mau transformation programme outlined in November 2024, which remains on track to deliver both cost and revenue benefits in the 2026 financial year,” the company said.

Air NZ remained in active negotiations with engine manufacturers regarding appropriate levels of compensation for unserviceable engines, and accurate timeframes for engine returns.

“The timing and quantum of compensation remains uncertain, and today’s update does not include any material changes in expected compensation.”

The first half outlook assumes an average jet fuel price of US$85 per barrel for the period.

Air NZ cautioned against extrapolating first-half guidance across the full year, noting that additional capacity growth is planned for the second half.

“As a result, traditional comparisons between first- and second-half performance may be less indicative of full-year trends for the 2026 financial year,” it said.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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