Air NZ at whim of Rolls-Royce over engine issues, outgoing boss says

Thursday, 25 September 2025

Air New Zealand expects it will probably take another “two years of pain with Rolls-Royce to get those engines through a shop, dismantled and reassembled”.

Air New Zealand chief executive Greg Foran has left shareholders in no doubt about the difficulties the airline faces getting Rolls-Royce to do the right thing about its ongoing engine issues.

Air NZ will have up to 11 aircraft grounded at any time due to troubled engines fitted to its longhaul wide-body Boeing 787-9 Dreamliners, and its smaller A321neos that ply domestic routes and shorthaul international services.

Foran said the problem had “proven to be much deeper and more persistent as an issue than we, or frankly, the engine manufacturers themselves expected as recently as 12 months ago”.

The airline continued to work closely with Rolls-Royce and Pratt & Whitney and “compensation is a big part of those conversations”, he said.

“These things take time, and in the case of Rolls-Royce, the negotiations are done by basically sitting in rooms and arm wrestling them.”

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The engines were no longer under warranty when the engine problem arose. “They, in effect, don't have to do anything,” he said.

“We don't have any more of those engines on order, so it makes the negotiation even more difficult, but we do get compensation,” he said.

Air New Zealand chief executive Greg Foran says the airline’s Rolls-Royce engines were no longer under warranty when a global defect was discovered.

Rubbing salt into the wound, the affected airlines were also competing with Rolls-Royce’s production capacity, which was “working flat out” fitting engines on new planes.

“So you're competing with Rolls-Royce, who are making decisions about how many engines they want to repair, and how many they can sell for a bigger profit to go on a new plane,” he said.

Asked why the airline was not seeking full compensation from the engine makers, Foran said the “simple answer to that is, the warranty has run” for the Rolls-Royce engines.

Air New Zealand chose the engines about 2004 and the first one was fitted to an aircraft in 2014. The first engine blade fell off in 2017. “This is how long these things take in aviation.”

Foran assumed there would be no material improvement in the number of aircraft grounded for the 12 months. “And that's despite a significant list of actions we've undertaken and costs that we have borne to reduce the impact of those issues on our customers.”

The airline expected to start seeing a gradual recovery from the 2027 financial year and into 2028, supported by the arrival of two new A321neos and five new 787s by the end of the 2028 financial year.

“What that means for us, is low single digit capacity growth in FY26 followed by a more meaningful step up in FY27 and FY28 as the engine constraints ease,” Foran said.

Air New Zealand has opened a new 10,000m² timber arch facility at Auckland Airport. At 35 metres high and 98 metres wide, it is the largest single-span timber arch aircraft hangar in the southern hemisphere, big enough for a 787 and two A320s.

“We hope the improvement will be better than this, but we have to plan for what we believe, not what we hope for.”

Foran said there were three main jet engine makers around the world - Rolls-Royce, Pratt and Whitney and General Electric. “We happen to have the two most problematic variants in the world at the moment.

“Back in the early 2000s we made a decision to buy the (Rolls-Royce) Trent 1000 engine. It was being developed at that stage, and it was going to be a terrific engine. And it was going to be the most fuel efficient and the lightest, and all those things.”

But it had a problem with a blade in the engine that cracks.

A solution was found, but only approved by the United States Federal Aviation Authority about three months ago. The affected engines would now be shipped to a maintenance shop to be fitted with the improved blades, he said.

Foran estimated between 35 to 40 787s in the world were grounded due to the problem.

“You won't find that information on the internet or anywhere, because Rolls-Royce does not disclose it. But some of the airlines that are affected are Virgin Atlantic, Singapore Airlines through its discount subsidiary Scoot, ANA in Japan, and ourselves.”

Foran reiterated it would probably take another “two years of pain with Rolls-Royce to get those engines through a shop, dismantled and reassembled”.

Pratt & Whitney had 1200 engines queued up to go through a shop, he said.

Compensation from Pratt & Whitney was less than half what the groundings cost the airline, he said.