Air New Zealand Reports $40 Million First-Half Loss Amidst Engine Issues and Cost Pressures

Air New Zealand announced a net loss after tax of $40 million for the first half of the 2026 financial year, a significant decline from the $144 million profit reported in the same period the previous year. The loss before taxation reached $59 million, attributed to ongoing global engine maintenance delays, a slower-than-expected recovery in domestic demand, increasing aviation system costs, and a weaker New Zealand dollar .

Financial Performance Highlights

• Net Loss After Tax: $40 million
• Loss Before Taxation: $59 million
• EBITDA: $347 million
• Passenger Revenue: Increased 4% to $3 billion
• Fuel Costs: $774 million, a 4% increase

Impact of Engine Maintenance Issues

The airline highlighted the substantial impact of ongoing engine maintenance issues, estimating that an additional $90 million in earnings could have been realized had the fleet operated as intended. Air New Zealand is actively negotiating with engine manufacturers for improved return schedules and appropriate compensation, but the timing and amount of further compensation remain uncertain and could materially impact full-year earnings . The airline expects four grounded Airbus neo and Boeing 787 aircraft to return to service throughout the 2026 calendar year and will take delivery of two of ten new GE-powered 787s later in the financial year, supporting widebody capacity growth of approximately 20% to 25% over the next two years .

Strategic Review and Cost Pressures

A strategic review is underway, led by Chief Executive Officer Nikhil Ravishankar, to reset the business amid escalating costs across the aviation system and supply chain . Non-fuel operating cost inflation was approximately $75 million, driven by higher domestic passenger levies, engineering and maintenance costs, and airport landing charges. The weaker New Zealand dollar has also exacerbated cost pressures .

Dividend and Future Outlook

No interim dividend was declared, consistent with the airline’s Capital Management Framework. Based on current trading conditions and an assumed average jet fuel price of US$85 per barrel for the second half, Air New Zealand anticipates second-half earnings to be broadly in line with, or modestly below, the first half .

Industry Comparison: Qantas Performance

In contrast, Qantas, Australia’s largest airline, reported a $1.5 billion underlying pre-tax profit for the first half of the 2026 financial year, a 5% increase year-over-year . Yet, Qantas also noted increasing costs, particularly in airport charges and government fees, which rose at double the rate of inflation.

Political Response

ACT Leader David Seymour criticized Air New Zealand, urging the airline to focus on core business operations and reduce spending on initiatives like sustainable aviation fuel and electric planes, calling them “virtue-signalling fantasies” .