Air New Zealand (NZ) announced financial year 2025 results showing resilience despite ongoing global engine maintenance challenges. 

Summarized FY 2025

Air New Zealand made meaningful progress with the return to service of four fully retrofitted Boeing 787-9 Dreamliner aircraft, the introduction of a new uniform, and plans for a new international lounge at Auckland Airport (AKL).

The airline has made essential investments in infrastructure and digital development, including a new engineering hangar set to open by the end of 2025, the expansion of the Christchurch Engine Centre, and the equipping of around 3,000 staff members with new Artificial Intelligence (AI) tools to improve service, speed, and efficiency.

"This is a solid result in a year where the airline faced real operational and economic pressure. It speaks to the team's capability, the business's robustness, and the financial discipline that Greg has instilled during his tenure as CEO. While near-term challenges remain, our balance sheet is strong, and our strategy is clear,” summarized FY2025 results Chair Dame Therese Walsh.

Revenue and Profit

Air New Zealand reported earnings of $189 million before taxation, compared to $222 million in 2024. The net profit is $126 million, which represents the upper end of the Market guidance range provided in April of this year.

Passenger revenue decreased by 2% to $5.9 million, primarily due to a 4% reduction in ASK capacity resulting from engine availability constraints. 

"Based on the result announced today, and reflecting that confidence, the Board has declared a final unimputed ordinary dividend of 1.25 cents per share, payable on 25 September 2025 to shareholders on record as at 12 September 2025. During the year, Air New Zealand was also pleased to return $38 million to shareholders through the share buyback programme announced in February," said Dame Therese

Costs

Fuel costs improved by 12%, highlighting a reduction in average fuel prices and lower fuel consumption due to reduced ASK.

Non-fuel operational costs inflation of approximately $235 million was driven by increased landing charges, labour costs, and engineering materials, representing a 6% year-on-year increase.

System-wide aviation costs continue to rise faster than the New Zealand consumer price index, introducing pricing pressure that is expected to persist.

The airline maintained focus on strict cost control, including renegotiating supplier contracts, reprioritising investment spend, and embedding procurement discipline to deliver greater value.

Kia Mau Transformation Initiative

The Air New Zealand Kia Mau initiative delivered US$100 million in benefits, driven by substantial ancillary revenue from an improved product offering, ongoing premium demand, and digital service initiatives.

Operational improvements, including reduced disruption costs and better on-time performance, which together with ancillary revenue, partially offset inflation and lay the foundations for stronger long-term financial performance.

Engine Maintenance Challenges 

The airline continues to work with Rolls-Royce and Pratt & Whitney on compensation arrangements and gaining more clarity about when the engines will return to service.

During FY 2025, up to six narrow-body and five wide-body aircraft were out of service at times as a result of engine issues. The airline’s CEO said that the airline remained focused on what it could control, making strategic decisions to support customers and maintain the best possible schedule reliability.

The airline received US$129 million in compensation from engine manufacturers, according to NZ’s CEO. Estimated earnings before taxes could have been approximately US$165 million higher if the fleet had operated without engine availability constraints. 

"We acted early and decisively, securing additional engines and aircraft, and optimising our schedule to keep customers moving. While this came at a significant cost, it was the right decision to make, as it delivered for our customers and maintained network stability. We are confident in the medium-term recovery path, but note that the next year will likely be just as constrained as the last. Unfortunately, there are no quick fixes, and navigating the next two years will require the same focus and discipline we've shown to date," said Chief Executive Officer Greg Foran. 

CEO Stepping Down

Dame Theresa also took the opportunity to express gratitude to Air New Zealand CEO Greg Foran, who will step down from his role later this year. 

"Greg has led the business through an extraordinary period. He's been clear, considered, and focused, and leaves Air New Zealand in a position of real strength. On behalf of the Board, I want to thank him for his leadership," said Dame Theresa

2026 Outlook

Despite engine availability-related constraints that will persist in 2026, airlines have noted signs of gradual improvement.

"While we're not through it yet, we are seeing early signs that the most acute phase of disruption will be behind us within the year. The path to recovery won't be linear, but we're approaching it with focus and discipline," said Mr Foran.

In 2026, the airline's existing 787 Dreamliner fleet is scheduled to fly with fully modernised cabins featuring premium-focused interiors. New 787s with GE-powered engines are set to arrive next year, marking the airline’s dedication to a long-term fleet renewal strategy. 

New 787s, along with A321neo and ATRs, will support increased capacity in New Zealand, across the Tasman, and to North America, especially during the peak summer season. NZ’s CEO said these are essential steps, not just to restore capacity, but to position the airline for the future.

"We know what needs to happen to lift our financial performance. Good progress is already underway, and it will become increasingly evident as the network scales back up and our transformation work continues. While we aren't yet seeing signs of recovery in the local economy, we remain confident that demand will return, and that we're well placed to respond when it does,” said Mr Foran.

The CEO added that the year ahead would still have its challenges. “System-wide aviation costs will be around US$85 million higher, driven by increased air navigation fees, passenger levies, and landing charges. Engine constraints will also continue to be a factor. But we've got the right strategy, a strong balance sheet, and a team that continues to deliver with heart, and that gives us real confidence in what lies ahead."

Guidance

Outlooks related to compensation from engine manufacturers remain uncertain, making it challenging to provide accurate earnings guidance.

In the near future, engine compensation uncertainty, combined with cost inflation in the aviation sector and reduced domestic demand, is expected to adversely impact airlines' financial performance in the first half of 2026. Earnings before taxation are expected to be approximately US$34 million for H1 2026.

Air New Zealand is well-positioned for recovery as the engine issues and economic challenges start to improve. However, these issues will still have a significant impact on the airline's current financial performance.