Air NZ profit down, $100m share buy-back announced

Air New Zealand’s underlying profit for the first half of its 2025 financial year fell as the airline battled economic headwinds and engine problems.

Its earnings before tax were $155 million for the six months to December 31, down from $185m in the same prior period.

Its net profit also declined from $129m to $106m.

Chair Dame Therese Walsh said it was a strong result when considering headwinds the airline had been navigating for almost a year.

The underlying profit was near the top end of its $120m-$160m guidance range given last year.

The airline will pay a dividend of 1.25c per share down on last year’s 2c per share interim dividend but announced an up to $100m share buy-back.

Walsh said the buy-back reflected confidence in the airline’s long-term outlook.

“Air New Zealand’s strong balance sheet, liquidity and financial discipline provides us with the flexibility to successfully manage the short-term challenges we face, while also continuing to invest in our future and return capital to our shareholders.”

Chief executive Greg Foran said the significant challenges the airline faced including aircraft groundings associated with additional engine maintenance requirements impacting Pratt & Whitney and Rolls-Royce customers globally.

“Investment in modern, fuel-efficient aircraft is an important part of Air New Zealand’s fleet strategy. But with more than $1 billion worth of our newest, most efficient aircraft grounded at times, it’s been a tough year so far.”

Passenger revenue fell 5% to $2.9b driven by lower capacity due to fleet constraints and lower domestic demand from the corporate and government segments.

Customer credits

That also included $10m of credit breakages from unused customer credits – down from $45m in the same period last year.

Despite receiving $94m in compensation from engine manufacturers, the airline estimates its first-half earnings would have been approximately $40m higher had it been able to operate aircraft as intended.

“While compensation has played an important role in offsetting some of the financial impact of the delays, it falls well short of making the airline whole for the operational and economic losses sustained,” Foran said.

“We strive to deliver a reliable experience for our customers. However, with 4% less capacity available largely due to the engine maintenance delays, this has been a real challenge for the airline.”

Fuels prices were 16% lower for the period with fuel costs down $133m but non-fuel costs continue to weigh on the airline’s performance.

Foran said 2025 would be a challenging year financially as it would be the first full year hit by the engine problems, with up to 11 jets out of service at any one time.

The airline expects its performance for the second half of 2025 to be “significantly lower” than the first half.

But it did not provide guidance given the degree of uncertainty around the number of grounded aircraft and any potential compensation.

The airline is 52% owned by the taxpayer.