Air New Zealand Reports $40M Loss, Strategy Review Underway
Air New Zealand reported a net loss of $40 million for the first half of the 2026 financial year, a significant downturn from the $144 million profit recorded in the same period last year. The airline cited a confluence of challenges, including ongoing global engine maintenance issues, a slower-than-expected rebound in domestic travel and escalating costs across the aviation sector, as key drivers of the disappointing result.
The loss before taxation reached $59 million, according to an announcement released to the New Zealand Stock Exchange (NZX) on . This outcome slightly exceeded the previously communicated guidance range of a $30 to $55 million loss, with a $13 million impact attributed to higher-than-anticipated fuel prices in the second quarter.
Despite the losses, passenger revenue increased by 4% to $3 billion, bolstered by increased capacity on routes across the Tasman Sea and to Pacific Islands, and a greater proportion of premium seats on long-haul international flights. However, this revenue growth was insufficient to offset the mounting cost pressures.
Cost Pressures and Strategic Review
The airline highlighted a $75 million increase in non-fuel operating costs, primarily driven by higher mandated domestic passenger levies, engineering and maintenance expenses, and airport landing charges. A weaker New Zealand dollar further exacerbated these challenges. Air New Zealand also noted it received $55 million in compensation from engine manufacturers during the first half, but estimated an additional $90 million in earnings could have been realized had the fleet operated as intended.
In response to the challenging environment, the Board has tasked newly appointed Chief Executive Officer Nikhil Ravishankar, who assumed the role in , with undertaking a comprehensive strategic review of the business. Dame Therese Walsh, Air New Zealand’s board chairperson, stated the review aims to “reset the business” and ensure long-term profitability amidst escalating costs and supply chain disruptions.
“As New Zealand’s national airline we play an important role in supporting New Zealand, particularly as it relates to export and tourism. The strategy reset will allow us to be firmly focused on strengthening and growing our airline to deliver long term growth and prosperity for New Zealand,” Walsh said.
Ravishankar emphasized the need for enhanced operational performance, growth, and further cost transformation initiatives. He also pointed to ongoing improvements, including upgrades to the interiors of the existing 777 fleet to ensure a consistent and modern widebody product.
“We are pleased with recent progress and now expect a total of four grounded Airbus neo and Boeing 787 aircraft to return to service throughout the 2026 calendar year. We will also take delivery of two of 10 new 787 aircraft later in the financial year, providing widebody capacity growth of around 20% to 25% over the next two years,” Ravishankar stated.
Fleet Constraints and Future Outlook
The ongoing engine maintenance delays remain a significant headwind for Air New Zealand. The airline is actively engaged in negotiations with engine manufacturers to secure improved certainty around engine return schedules and appropriate compensation for disruptions.
Looking ahead, Air New Zealand anticipates second-half earnings to be broadly in line with, or modestly below, the first half, based on current trading conditions and an assumed average jet fuel price of US$85 per barrel. The Board has opted not to declare an interim dividend, consistent with the airline’s Capital Management Framework.
Contrasting Fortunes: Qantas Reports Strong Profit
The challenging conditions faced by Air New Zealand stand in stark contrast to the performance of its Australian counterpart, Qantas. Qantas reported a first-half underlying pre-tax profit of $1.5 billion, a roughly 5% increase year-over-year. The airline’s bottom-line result was $925 million for the six months ended , on revenue of $12.9 billion, which grew by just over 6%.
Qantas group chief executive Vanessa Hudson acknowledged increasing costs, particularly in airport charges and government fees, which have risen at double the rate of inflation over the past year. However, the airline’s domestic businesses continued to benefit from strong travel demand.
Calls for a Shift in Focus
The Air New Zealand results have prompted calls for a reassessment of the airline’s priorities. ACT Leader David Seymour urged the airline to move away from what he characterized as “virtue-signalling fantasies” such as electric planes and sustainable aviation fuel, and instead focus on core business objectives like expanding routes, lowering prices, and optimizing services.
“It’s not feasible to charge ordinary Kiwis that much to travel within our small country and still blame a weak domestic market for their problems,” Seymour stated. “My message to Air NZ is simple: take this loss as a wake up call, cut the greenwashing, and get back to core business – giving a good service to the Kiwis who collectively own your company.”