Air New Zealand reduces earnings guidance amid engine compensation cut

Air New Zealand (NZX:AIR) announced today a revised earnings outlook for the 2025 financial year. The airline now anticipates earnings before taxation to fall within the range of NZD 150 million to NZD 190 million, impacted by significantly lower compensation from engine manufacturers. This reduction comes despite an increase in the number of grounded aircraft due to ongoing global maintenance requirements affecting Pratt & Whitney and Rolls-Royce engines. The airline expects to recognize only NZD 35 million to NZD 40 million in engine compensation for the second half of the year, substantially lower than the NZD 94 million recorded in the first half. The forecast includes NZD 20 million from breakage on unused customer credits and assumes fuel costs of USD 81 per barrel for the remainder of the year. While lower fuel prices are a tailwind, the airline continues to manage operational complexity due to the grounded fleet. The company is also closely monitoring the potential impact of recent US tariff announcements on bookings and cargo.