Air New Zealand announced a loss before taxation of $59 million for the first half of the 2026 financial year, compared with earnings before taxation of $144 million in the prior corresponding period. The net loss after taxation was $40 million. This result reflects the combined impact of ongoing fleet constraints, a slower recovery in domestic demand and rising costs, including persistently high aviation system inflation. Cost pressures have been further exacerbated by a weaker New Zealand dollar. The result is slightly outside the guidance range of a loss of $30 to $55 million provided to the market in October 2025, primarily reflecting a $13 million headwind from higher-than-assumed fuel prices in the second quarter.
While the airline received $55 million in compensation from engine manufacturers for the first half, it estimates an additional $90 million of earnings could have been included within the result had the fleet operated as intended. The airline is in ongoing negotiations with engine manufacturers to improve certainty around engine return schedules and appropriate compensation.
Chair Dame Therese Walsh said “given the ongoing volatility, including continued global engine maintenance impacts and a slower recovery in domestic demand, the Board and I asked Nikhil to undertake a full strategy review when he took up the Chief Executive Officer role in October. 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.”
Chief Executive Officer Nikhil Ravishankar went on to say that “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. At the same time, a number of performance and product improvements are already underway, including improvements in domestic punctuality and reliability, and a decision to upgrade the interiors of our existing 777 fleet, so our widebody product is consistent, modern and mission ready.
“While we are disappointed that the engine availability issues have taken longer than anticipated to resolve, 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 ten new 787 aircraft later in the financial year, providing widebody capacity growth of around 20 percent to 25 percent over the next two years,” Ravishankar said.
While capacity is expected to increase modestly in the second half, as aircraft return to service and new aircraft enter the fleet, the airline cautions that improvements in aircraft availability are unlikely to translate immediately into earnings uplift. This is because widebody capacity cannot be operationalised into the schedule and sold at short notice. The primary constraint is uncertainty in the timing of aircraft and engine returns, which limits the ability to plan and sell additional flying with confidence. Disruption-related costs and inefficiencies also take time to unwind, including the return of leased aircraft and engines.
Aviation system and supply chain cost pressures are expected to continue, reinforcing the importance of fit-for-purpose aviation sector settings that support sustainable connectivity and affordability for customers over time.
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