Air New Zealand lost $40 million after tax in the first half of its financial year and says a “reset” is needed in the face of rising costs.

The airline lost $59m before tax in the six months to December 31.

It cited engine maintenance delays, sluggish domestic demand, increasing aviation system costs and a weaker New Zealand dollar.

There will be no interim dividend.

The airline said this morning that a strategic review was happening now.

That was intended “to reset the business amid continuing cost escalation across the aviation system and supply chain”.

It said the half-year result also reflected a “$13m headwind from higher-than-assumed fuel prices in the second quarter”.

It also said it would take delivery of two new General Electric-powered Boeing 787 Dreamliners at the end of the financial year.

Those aircraft should support widebody capacity growth of about 20% to 25% over the next two years.

The half-year result landed during reignited tension with airports over the costs they impose on airlines.

Air NZ said it would keep pushing for what it called “fit-for-purpose aviation sector settings that underpin connectivity and affordability”.

It said non-fuel operating cost inflation of about $75m was due mostly to higher mandated domestic passenger levies, engineering and maintenance costs, and airport landing charges.

“The airline’s concern is not only about the current level of these costs, but the future trajectory and potential for further increases over time, which would place additional pressure on the business, and the sustainability of regional connectivity.”

Today’s result is the first to be delivered under the leadership of new chief executive Nikhil Ravishankar.

He took over on October 20.

Ravishankar said the airline board and leadership were undertaking a comprehensive review of all aspects of the business.

That was intended to secure sustained profitability through better operational performance, growth and “further cost-transformation initiatives”.

He said it was disappointing that engine issues had taken longer than expected to resolve, but progress was underway.

The airline expected four grounded Airbus neo and Boeing 787 aircraft to return to service this calendar year.

Last week, Air NZ chairwoman Dame Therese Walsh said the airline was guiding the market to expect a loss of somewhere between $30m and $55m.

And in an investor update on February 13, the airline said group capacity decreased 1% in December compared to the same month a year before.

Qantas result

Meanwhile, Australian airline Qantas Airways posted a pre-tax underlying profit of A$1.456 billion ($1.73b) for the six months to December 31.

That was up 5.1% on the same time a year earlier.

Its net profit after tax was A$925m ($1.098b) up A$2m or just 0.2%. The airline will pay a dividend of A19.8c per share for the half.

Qantas Group CEO Vanessa Hudson said despite the strong performance it had seen a sharp increase in some costs such as airport charges and Government fees.

The airline said those costs had increased at double the rate of inflation over the past year.

“We are offsetting these where possible through transformation and we’re working across the industry to address what can be done to ensure this doesn’t impact the ongoing affordability of air travel in this country.”

The airline said it was expecting strong travel demand across its business but it would continue to monitor the evolving economic environment in the United States.

It forecast domestic revenue to be up 3% in the second half and international revenue to increase by 1 to 3%.

Its underlying earnings before interest and tax for its Qantas Loyalty division were expected to grow by 10-12% in FY26.