Air New Zealand announced earnings before taxation of $189 million for the 2025 financial year, compared with $222 million in the prior year. The result reflects resilience despite ongoing global engine maintenance challenges, significant cost inflation and a soft domestic market.
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Passenger revenue declined by two percent to $5.9 billion, driven by a four percent reduction in overall network capacity from engine availability constraints
Fuel costs improved 12 percent, or $208 million, reflecting a decline in average jet fuel prices and lower volumes of fuel consumption in line with constrained capacity.
The airline’s Kia Mau transformation initiatives delivered approximately $100 million in benefits, driven by stronger ancillary revenue from improved product offerings, ongoing premium demand and digital self-service initiatives such as live chat and automated passenger rebooking. Operational improvements also contributed, reducing disruption costs and lifting on-time performance by six percentage points in the second half. Together these benefits helped partially offset inflation while laying foundations for stronger long-term financial performance.
On the financial result, Chief Executive Officer Greg Foran said Air New Zealand carefully managed engine-related disruptions throughout the year, with up to six narrowbody and five widebody aircraft out of service at times. While the airline received $129 million in compensation from engine manufacturers, it estimates earnings before taxation of $189 million could have been approximately $165 million higher had the fleet operated as intended.
The airline continues to work closely with both Rolls-Royce and Pratt & Whitney on compensation arrangements, and to secure a more reliable picture of when engines will return to service.
Despite the challenges, we have delivered meaningful progress this year, with four fully retrofitted Boeing 787-9 Dreamliners returning to service, the unveiling of a new uniform, and the announcement of plans for a new international lounge at Auckland Airport. Investments in infrastructure and digital capability were also made, with a new engineering hangar on track to open later in 2025, the Christchurch Engine Centre expansion progressing well, and around 3,000 staff equipped with AI tools to improve service, speed, and efficiency.
2026 outlook
While groundings related to engine availability constraints will continue into 2026, the airline notes signs of gradual improvement are beginning to emerge.
In the year ahead, more than half of the airline’s existing Boeing 787 fleet is expected to be flying with fully modernised, premium-focussed interiors. Air New Zealand will also take delivery of its first two new Boeing 787s fitted with GE-powered engines, a major milestone in the long-term fleet renewal strategy. These aircraft, alongside an additional A321neo and ATR, will support increased capacity within New Zealand, across the Tasman and to North America, particularly during the peak summer period.
Guidance
The outcome and timing of compensation discussions with engine manufacturers remain uncertain, making it challenging for the airline to provide earnings guidance for the full year.
In the near term, that uncertainty, combined with sharp recent increases in aviation sector levies and other charges, all set against the backdrop of subdued domestic demand, is expected to adversely impact the airline’s financial performance in the first half. As such, the airline expects earnings before taxation for the first half of the 2026 financial year to be similar to or less than that reported in the second half of the 2025 financial year ($34 million).
The airline is well-positioned for recovery when the engine challenges and economic conditions start to alleviate, but these issues continue to have a significant impact on current financial performance.