Air New Zealand earnings down in a soft domestic market as engine dramas linger

Air New Zealand has made a $126 million net profit after tax, down from $146m the year before.

The airline said its 2025 financial year results reflected a sluggish domestic market, global engine maintenance challenges and significant cost inflation.

Earnings before tax were $189m, compared with $222m the year before.

“Passenger revenue declined by 2% to $5.9 billion, driven by a 4% reduction in overall network capacity from engine availability constraints.”

Non-fuel operating cost inflation was about $235m, driven mostly by higher landing charges, labour costs and engineering materials.

The airline said that was a year-on-year increase of about 6%, as system-wide aviation costs rose faster than the Consumers Price Index.

“This pricing pressure is expected to persist,” the airline said this morning.

Available seat kilometre (ASK) capacity was down 4%.

The airline attributed that to having six narrowbody and five widebody jets grounded because of global engine maintenance requirements.

Chief executive Greg Foran said Air New Zealand carefully managed engine-related disruptions throughout the year.

He said the airline was focused on what it could control.

“We acted early and decisively, securing additional engines and aircraft, and optimising our schedule to keep customers moving,” he added.

“While this came at a significant cost, it was the right decision to deliver for our customers and maintain network stability.”

Foran said the airline was working closely with Rolls-Royce and Pratt & Whitney on compensation arrangements.

He said the airline was also trying to get a more reliable picture of when engines would return to service.

The issues related to Rolls-Royce Trent 1000 engines Air New Zealand used on Boeing 787 Dreamliners.

Air New Zealand CEO Greg Foran on a retrofitted Boeing 787-9 Dreamliner. Photo / Michael Craig

A need to check Pratt & Whitney’s PW1100G engines for microscopic cracks threw maintenance schedules for those engines into disarray.

Foran said the airline responded by leasing three widebody Boeing 777-300ERs, securing additional spare engines and adjusting its network and schedule.

“This is a solid result in a year where the airline faced real operational and economic pressure,” chair Dame Therese Walsh said.

The airline said groundings related to engine availability constraints would continue into 2026, but signs of gradual improvement were beginning to emerge.

More refurbished Dreamliners would be flying in the year ahead, Air New Zealand said.

The airline said it would also get planes including an additional A321neo narrowbody twinjet to support more capacity within New Zealand, across the Tasman and to North America, espeically during summer.

John Weekes is a business journalist covering aviation and courts. He has previously covered consumer affairs, crime, politics and courts.