Air New Zealand's net profits dipped in its annual report, ending June 2025, as a result of the continued engine issues impacting the airline.
The company reported a net profit after tax of NZ$126 million ($74.4 million), down 14%. Earnings before taxation were down 15% to NZ$189 million ($111.6 million). Operating revenue was flat at NZ$5.9bn ($3.48bn) for the annual period.
For the second half of the annual period, the company had up to 11 aircraft grounded out of its 60 jet fleet as a result of its engine issues.
The company's capacity was down 4% due to the engine issues impacting its A321neo fleet and 787 fleet. Domestic capacity was down 3% as a result of the geared turbofan (GTF) engine issues on its A321neo fleet. International short-haul capacity dipped 0.8% due to a reduction in narrowbody flying partially offset by additional deployment of leased 777 aircraft. International long-haul capacity was down 5% due to a reduction in aircraft availability as a result of the Trent 1000 engine issues.
The company leased two A321neo aircraft (up to 12 year lease) to offset the capacity decline. Air New Zealand also invested in four additional short-term leased Pratt & Whitney engines to enable additional neo flying, taking a total pool of spares to 19.
The airline said it is renegotiating new compensation terms with both Rolls-Royce and Pratt & Whitney.
“Our negotiations with the engine manufacturers are ongoing, so we aren't in a position to provide much detail on the net impact of the 2026 financial year,” said Air New Zealand CEO Greg Foran.
Foran, who will be stepping down from his position in October this year, said softer domestic demand elevated cost pressures also impacted the company's results. He added: “Demand in the corporate and government sectors was also about the softest we have seen.”
The company said for the financial year ending June 2026, capacity will “still be very constrained” and doesn't expect a “big step change in availability in the first half”. However, with the delivery of the first of its new 787s arriving, along with its 787 retrofits returning to service, the company expects the “pressure to start to ease” in the second half.
The company ended the period with a net debt to EBITDA of 1.1x and a liquidity of NZ$1.7bn ($1bn).