Air NZ reluctant to signal return to profit after big loss
Rising fuel costs cost the airline NZ$135 million (US$80 million) even after fare increases
Air New Zealand (Air NZ) disclosed a smaller-than-anticipated loss of NZ$336 million (US$200 million) for the 12 months ending June 30, despite high fuel costs and engine maintenance issues. The company, however, refrained from confirming a swift return to profitability. Air NZ's pretax loss for the period was higher than the initially expected NZ$390 million.
The escalation in fuel costs due to the Middle East conflict led to a loss of NZ$135 million, while engine maintenance costs added NZ$190 million. The airline responded by cutting costs, delaying new aircraft deliveries and taking a disciplined approach to both costs and capital expenditure. CEO Nikhil Ravishankar attributed the challenging year to "very challenging circumstances in aviation" and emphasized the company's capacity cuts and disciplined cost management.
Although Air NZ anticipated profitability by 2027 in its central case, the Middle East conflict's fallout is expected to persist into 2027. The airline expects 2027 to be a transition and recovery year with improved operational performance, despite persisting elevated fuel prices. Analysts estimate that profit recovery might not occur until 2028, unless jet fuel prices stabilize in a higher range, requiring fare and capacity adjustments.
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