Air New Zealand plunges to $242 million loss as fuel and engine costs bite
The result reflected the significant external pressures the business had faced over the year, the company's chair says.
Air New Zealand reported a significant $242 million annual loss for the year ended June 30, 2026, as soaring fuel prices and engine issues eroded gains from stronger passenger revenue. The national carrier experienced a pre-tax loss of $336 million, compared to a restated profit of $164 million the previous year. Net losses widened to $242 million, down from $108 million in the 2025 financial year.
Despite a 3.9 percent revenue increase to $7 billion, passenger revenue rose 4.8 percent to $6.1 billion, driven by higher capacity, volumes, and yields. However, operating costs surged 11.8 percent, primarily due to fuel, maintenance, and aviation system charges. The Middle East conflict exacerbated fuel costs by an estimated $328 million, though Air New Zealand later reduced that estimate to $205 million after hedging.
Engine troubles with Rolls-Royce Trent 1000 and Pratt & Whitney PW1100 engines cost the airline an estimated $190 million through lost capacity, additional lease costs, operational inefficiencies, and lower fleet utilization. Maintenance expenses increased by about $139 million, excluding foreign exchange, driven by lifecycle maintenance and additional work on leased engines.
Chairman Dame Therese Walsh acknowledged the airline faced substantial external pressures, but stressed the board and management's plan to rebuild a financially resilient and commercially sustainable national airline. CEO Nikhil Ravishankar noted the company responded with fare adjustments and capacity reductions but conceded airlines globally struggled to recover fully from the fuel cost surge, as travelers are sensitive to higher prices.
While on-time performance improved to 84 percent in the second half of the year and customer satisfaction rose, the airline declared no final dividend, as it required a positive net profit before dividends could resume. The board anticipated a $70 million to $90 million hit in 2027 from ongoing engine lease commitments and reduced aircraft utilization due to the fuel crisis.
Aviation system costs were expected to rise well above inflation, with airport charges forecast to increase by more than 10 percent at some ports in 2027. The company continued to clash with Auckland Airport over airport charges, which were projected to surge substantially in 2028. Air New Zealand remains focused on executing its strategic priorities, improving financial performance, and positioning itself for long-term sustainable returns.
Written by urgent.news from RNZ Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
