Air New Zealand has announced a decline in its forecasted earnings for the first half of the 2025 financial year, citing ongoing challenges with global engine maintenance. The airline revealed that engine availability issues have continued to affect its fleet, impacting operations and profitability. This shift could significantly impact Air New Zealand earnings.
The carrier expects earnings before taxation for the period ending December 31, 2024, to range between NZ$120 million ($70.15 million) and NZ$160 million, a decrease from the NZ$185 million it reported during the same period last year. Despite the forecasted drop, these figures represent an improvement compared to the pre-tax profit of NZ$37 million the airline posted in the second half of the 2024 financial year, showing a fluctuation in Air New Zealand earnings.
Shares of Air New Zealand rose 2.8% to NZ$0.550, their highest level since September 13, even as the broader NZ50 benchmark index showed modest growth of 0.3% as of 12:02 AM GMT. This positive market response could reflect investor confidence in future Air New Zealand earnings.
Fleet Availability Challenges Persist
The Auckland-based airline has faced substantial operational disruptions due to engine maintenance delays, which have affected 16% of its jet fleet. This includes six Airbus A320neo aircraft and up to four Boeing 787 aircraft.
Earlier this year, Air New Zealand flagged issues with Pratt & Whitney engines, which led to periods of inoperability for its Airbus neo aircraft. On November 13, 2024, the company reiterated that engine availability challenges will likely persist until 2026.
“Disappointing to read that engine availability issues are not expected to ease until 2026,” said Tom McBride, a financial adviser at Hamilton Hindin Greene. Many analysts are concerned about how these issues will continue to influence Air New Zealand earnings.
To address capacity constraints, the airline is exploring various measures, including leasing additional aircraft. However, the carrier has not yet confirmed details regarding these plans.
Impact on Domestic Travel and Passenger Trends
Domestic travel, which accounts for 65% of Air New Zealand’s passenger base, remains sluggish, further affecting the company’s overall performance. While international travel demand has shown resilience, the softness in domestic markets poses additional challenges for the carrier, potentially impacting Air New Zealand earnings.
Despite these headwinds, Air New Zealand continues to navigate its operational hurdles and focus on sustaining its services. The company remains committed to improving fleet availability and meeting passenger demand through strategic adjustments.
