Air New Zealand anticipates first-half loss amid rising costs

Air New Zealand now projects a loss before taxation for the first half of the 2026 financial year, ranging from $30m to $55m, assuming an average jet fuel price of US$85 per barrel. This is a significant revision from the August 2025 guidance, which anticipated earnings before taxation to be similar to or less than the $34m reported in the second half of FY25. The airline noted that an anticipated 2% to 3% uplift in Domestic and US-bound bookings has not materialized, impacting revenue by approximately $50m for the half, compounded by a subdued local economy.

Engine lease costs are expected to be approximately $20m higher due to end-of-lease obligations on two short-term aircraft, which were not previously included in the outlook. Additionally, financial obligations under CORSIA have increased by around $10m since the August outlook, contributing to higher fuel costs. Between 9 and 11 aircraft have remained grounded at times since the beginning of the 2026 financial year, with the timing and quantum of engine compensation remaining uncertain.

Despite these challenges, group capacity increased by 3.7% in September 2025 year-over-year, with Long Haul ASKs up 1.2%, Domestic 0.9%, and Short Haul International 10.2%. Group year-to-date underlying RASK improved 0.5% versus the prior year, primarily due to a shift in capacity mix towards higher-yield Short Haul routes. The airline plans additional capacity growth in the second half of FY26.