Air Latest Zealand reported a net loss of $40 million for the first half of the 2026 financial year, according to an announcement released to the New Zealand Stock Exchange (NZX) today. The loss before taxation reached $59 million, a significant decline from the $144 million profit recorded in the same period last year.
The airline attributed the financial downturn to a combination of factors, including ongoing global engine maintenance delays, a slower-than-expected recovery in domestic travel demand, and increasing costs across the aviation sector. A weaker New Zealand dollar also contributed to the negative result, the company stated.
The $40 million loss slightly exceeded the previously provided guidance range of $30 to $55 million, with a $13 million impact attributed to higher-than-anticipated fuel prices in the second quarter. Fuel costs rose 4% to $774 million, while non-fuel operating costs increased by approximately $75 million, driven by higher passenger levies, engineering and maintenance expenses, and airport charges.
Despite the losses, Air New Zealand reported a 4% increase in passenger revenue to $3 billion, bolstered by increased capacity on routes across the Tasman Sea and to Pacific Islands, as well as a greater proportion of premium seats on long-haul international flights.
Nikhil Ravishankar, who assumed the role of Chief Executive Officer in October, has been tasked by the Board 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 challenges.
“With the support of the Board we are undertaking a comprehensive review of all aspects of the business, with the objective of returning the airline to sustained profitability through enhanced operational performance, growth and further cost transformation initiatives,” Ravishankar said in a statement.
The airline anticipates receiving compensation of $55 million from engine manufacturers for the first half, but estimates an additional $90 million in earnings could have been realized had the fleet operated as scheduled. Air New Zealand is currently negotiating with manufacturers to secure more reliable engine return schedules and appropriate compensation for disruptions.
Looking ahead, Air New Zealand expects four grounded Airbus neo and Boeing 787 aircraft to return to service throughout 2026. The airline also plans to take delivery of the first two of ten new GE-powered 787 aircraft later in the financial year, anticipating widebody capacity growth of 20% to 25% over the next two years.
Based on current trading conditions and an assumed average jet fuel price of US$85 per barrel for the second half of the year, the airline expects second-half earnings to be comparable to, or slightly below, the first half.
The Board has not declared an interim dividend.
Across the Tasman Sea, Qantas reported a first-half underlying pre-tax profit of $1.5 billion, a 5% increase year-on-year, highlighting a contrast in performance between the two national carriers.
ACT Leader David Seymour criticized Air New Zealand’s financial performance, calling for a shift away from “virtue-signalling fantasies” like electric planes and sustainable aviation fuel, and a renewed focus on core business operations, including route expansion and price optimization.
