Air NZ reports $129 million first-half profit, down 39%

Thursday, 22 February 2024

Air New Zealand has reported earnings of $185 million before tax for the first half of the 2024 financial year.

Air New Zealand has reported a first-half profit of $129 million after tax, down 39% on the same period last year.

In an announcement to the NZX on Thursday, the national carrier said the drop in profit was “expected” after it recorded one of its highest-ever results following the return of air travel when borders reopened.

Passenger revenue for the airline was up 21% to $3.1 billion, driven by a significant increase in international capacity. Overall capacity was up 29% on the first half of the 2023 financial year and demand was stable in most markets.

However, the airline’s operating costs, including fuel, had risen by 21% due to the increase in long-haul flights.

A look at what it takes to clean each aircraft between flights (video published December 2022).

Non-fuel operating costs were up about 5% or $100 million, on top of a 15% to 20% increase over the last four years.

The continuing increases were impacting the cost of running flights and the airline was reviewing fares and capacity.

Chairwoman Dame Therese Walsh said despite the short-term challenges, the airline was in a “fundamentally strong” position, and would pay a dividend of 2 cents per share for the first half.

“While we have reported a solid first half result, it is against the backdrop of significant ongoing supply chain issues, particularly the additional Pratt & Whitney engine maintenance requirements on our A321neo fleet, which will see up to five of our newest and most efficient aircraft out of service at any one time across the next 18 months at least.”

Chief executive Greg Foran said Air New Zealand had made schedule changes and leased additional aircraft to help manage the temporary loss of the A321neo planes.

Boeing had also confirmed delivery of the first of the new 787 Dreamliners until at least mid-2025. The interior retrofit of the current 787 fleet remained on track.

“To mitigate these challenges, we introduced a dry lease 777-300ER in November. A second dry lease 777-300ER will enter the fleet mid-year and we are well advanced on negotiations for a third,” Foran said.

On top of the operational challenges, the airline also faced a deteriorating revenue and cost environment, and expected its performance for the second half of the 2024 financial year to be “markedly lower”.