Air New Zealand has announced it will be welcoming two new ATR72-600 turboprop aircraft and two new Airbus A321 aircraft into its fleet from late 2024 adding 768,000 seats per year. In response to high demand across the airline’s regional network, these two additional 68-seat ATR aircraft will boost capacity by more than 5,700 seats per week and fly customers to regional destinations like Tauranga, Nelson and Gisborne.
The two new 214-seat Airbus A321neo aircraft will be configured for international flying and will serve Tasman and Pacific Island routes. They’ll add more than 9,000 seats per week to the network, ensuring the airline has more capacity across the Tasman than any other airline, giving customers great choice at competitive prices.
Air New Zealand Chief Executive Officer Greg Foran says the additional aircraft are another step to meet demand for travel, growing the airline’s domestic and short haul networks by adding capacity where it’s needed most. “Flying continues to be in high demand, both here and around the world and it means prices have been higher than usual. The most effective thing we can do to help customers is to welcome more aircraft into our fleet and put more seats in the sky. While adding more seats is an important part of working to reduce prices, like all New Zealand businesses our costs continue to rise significantly in many areas, and the reality is that airfares are unlikely to return to pre-pandemic levels. Our customers have supported us as we’ve rebuilt Air New Zealand and we know it’s important to offer a range of fares that are accessible to all New Zealanders. Investing in new aircraft means more seats available at more times and at reasonable prices. Domestically we’re almost back to pre-Covid capacity, flying an average of 425 flights per day to 20 destinations across Aotearoa. These new aircraft mean that our domestic airline will be the larger than it’s ever been. We also have two previously announced domestic A321neo aircraft due for delivery in the next 12 months. We’re pulling every lever we have to get more seats in the sky, as quickly and as safely possible.”
The A321neo aircraft are the most fuel efficient narrowbody aircraft available today while the ATR72-600 will be delivered with the most recent variant of the engine which has the potential to provide a 3% fuel burn improvement compared with the previous generation. Air New Zealand aircraft and crew will be returning to its Auckland-Perth route on 29 October after a period of operation in partnership with Spanish airline, Wamos Air. The airline will continue operating daily services to Perth, with more than 2,000 seats a week available.
These additional four aircraft mean the airline has a total of 16 aircraft joining the fleet including eight Boeing 787 Dreamliners, six Airbus A321 and two ATR72-600, all scheduled for delivery between 2024 – 2028. The airline will be soon announcing further details on a leased Boeing 777-300ER, which will add 3,000 more seats per week to its international network. This would bring the total 777-300 fleet to eight.
Air New Zealand’s result sets the airline up for a strong future
Demand for air travel that exceeded expectations has led to a rapid recovery for Air New Zealand, which today announced a profit that will help fund aircraft, digital investments and facilities, building a stronger airline for New Zealand. The financial year began as borders were still reopening and aircraft were stored in the desert, and ended with the airline at 94 percent of pre-Covid domestic capacity. Having restored its international network, the airline carried out the biggest recruitment drive in its history and returned all aircraft to the skies.
In line with market guidance provided in June 2023, Air New Zealand’s earnings before other significant items and taxation were $585 million for the 2023 financial year. Statutory earnings before taxation were $574 million, compared with a previous year loss of $810 million. In addition to introducing new aircraft, making digital enhancements for customers and staff, increasing wages for front line staff and starting work on a new engineering hangar, the airline will provide shareholders with a one-off, fully imputed special dividend of 6.0 cents per share2. The special nature of this dividend reflects the extraordinary 2023 operating environment, with strong pent-up levels of demand combined with industry-wide capacity constraints.
The Board has also reviewed the airline’s capital management settings and has today announced a revised capital management framework, effective from the 2024 financial year.
Air New Zealand Chair Therese Walsh says the result is an important one given the critical role the airline plays in New Zealand both socially and economically. “We are proud of the result Air New Zealand has delivered this financial year, and of the value we have created for our shareholders. This result would not have been possible without our remarkable team of Air New Zealanders. Their grit, determination and commitment to deliver exceptional service for our customers is second to none.”
Chief Executive Officer Greg Foran said the result follows a year in which the airline balanced customer, staff, community, and shareholder needs, while making investments for the years ahead. “A strong Air New Zealand is good for New Zealand. We have rehired and trained in a tight labour market, lifted the starting wage for the airport teams to $30 an hour and improved the way we work with digital systems on the ground and in the air. Restoring services to 500 flights a day is not only good for Kiwis who’ve been able to take that long planned holiday, but it has also brought tourist dollars back to the regions and supports exporters who rely on regular air freight. We know increased costs and high demand have made flying more expensive. In the past year we put more aircraft and seats in the air, so there are more choices for customers which helps alleviate the cost of flying. At the same time, our own costs continue to rise and the reality is that airfares are unlikely to return to pre-pandemic levels. After several volatile years it’s great to be back in the black and standing on our own two feet especially given we have more than $3.5 billion in aircraft investment coming over the next five years.”
The Board has also reviewed the airline’s capital management settings, with a particular focus on the appropriate liquidity and leverage targets that would enable the airline to maintain investment grade credit rating metrics, as well as consideration of future shareholder distribution parameters. The revised capital management framework is effective from the 2024 financial year and further information can be found here.
The airline notes that the 2023 financial year was particularly unique with significant customer demand, constrained market capacity and lower fuel prices in the second half, and as such, we believe the 2024 financial year will be more reflective of future financial performance. Looking ahead to the first half of the 2024 financial year, customer demand remains strong across our markets. We are mindful of the uncertain economic environment however and acknowledge a number of factors that may impact future customer demand and profitability. These factors include increased international competition, volatile fuel prices, a weaker New Zealand dollar, ongoing wage inflation and increased airport charges. Given the uncertainty and volatility of some of these macroeconomic factors, the airline will not be providing guidance at this time.
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