Air New Zealand has reported a loss before taxation of $336 million for the financial year to 30 June, its first annual loss since the border closures of 2022, and the Prime Minister who used to run the airline has called the result very poor.
The result released on Friday morning compares with earnings before taxation of $164 million the year before, a swing of half a billion dollars in twelve months. The net loss after taxation was $242 million. Revenue was not the problem. Total revenue rose 3.9 per cent to $7 billion and passenger revenue rose 4.8 per cent to $6.1 billion. Operating costs rose 11.8 per cent, operating cash flow fell to $819 million from $940 million, and no final dividend was declared.
The airline put the loss down to four things, and says only some of them are within its control. The largest was fuel. The war in the Middle East added an estimated $328 million to the fuel bill compared with what the airline expected going into the second half of the year, and $205 million after hedging. Once fare rises and capacity cuts were counted, it put the hit to the pre-tax result at about $135 million. Jet fuel averaged US$111 a barrel across the year against US$88 the year before, and in the second half prices ran 58 per cent above the same months a year earlier.
The second was engines. Long-running problems with Rolls-Royce Trent 1000 and Pratt and Whitney PW1100 engines, which have grounded aircraft on and off since 2023, cost an estimated $190 million through lost capacity, extra lease and engine costs, lower fleet use and general inefficiency. Chief executive Nikhil Ravishankar said that chapter is closing. “Additionally, after several years of disruption, the engine challenges that have constrained our network are now substantially behind us,” he said. “There are still residual risks and costs to work through, but we enter 2027 in a considerably more reliable fleet position.”
The third was maintenance. The airline described 2026 as a peak aircraft maintenance year, $139 million more than 2025 once currency movements are stripped out, driven by scheduled lifecycle work and extra costs on leased engines.
The fourth is the one the airline is loudest about. Aviation system costs, meaning the landing charges, levies and fees that come with running flights through airports here and offshore, came to $1.2 billion, a price increase of $142 million on the year before. About $720 million of that was booked as a cost in the 2026 accounts, up roughly $83 million. Air New Zealand says New Zealand aviation costs have risen at more than twice the rate of inflation since 2019. Ravishankar told 1News the number deserves more attention than it gets. “To put that in context, that’s greater than the net impact of the fuel crisis that we’re dealing with, but solving it is worth our while. It’s good for New Zealand, particularly regional and domestic aviation.”
The contrast at the other end of the runway is stark. Eight days before the airline reported, Auckland Airport reported an underlying profit after tax of $309 million on revenue of $1.04 billion, with more than 19 million passengers through the terminals, and declared a final dividend of 6.75 cents a share to be paid on 2 October. The airline that carries the passengers lost money. The company that owns the tarmac they walk across did not.
Prime Minister Christopher Luxon, who was chief executive of Air New Zealand for almost seven years before he went into politics, was asked about the result at the Leaders of the Realm forum on Friday and did not soften it. “It’s clearly a very poor result. It’s clearly a very poor performance, even in the context of global aviation and other airlines as well,” he said. He added that it was “really up for them to explain what’s caused such a significant loss and also, more importantly, what are they going to do to build a better business?” Asked whether the Crown, which holds a majority stake, would step in, Luxon said the airline was on its own. “They’re a company that stands alone. We expect them to be commercial, we expect them to deal with their issues and to solve their challenges.”
Luxon was kinder about the man in his old office than about the accounts. “I know there’s a new CEO who’s doing a great job,” he said. “We expect them to very quickly turn it around and get the company growing again and performing strongly.”
Ravishankar, who took the job last October, did not push back. “The financial result is poor,” he told 1News. “The good thing is the operational performance in terms of delivering for our customers, getting our fleet back, and so being able to grow again is very promising. And when the operational performance improves, financial performance follows.” He also allowed himself one dry line about the timing. “It’s never a pleasant thing to go through, not least when you come in as a new CEO.”
The operational numbers do back him up. On-time performance lifted from 77.5 per cent in 2025 to 84 per cent in the second half of the year, which the airline credits to a rebuilt schedule and new digital tools for its operations teams. Nine of the 14 Boeing 787s have been refitted with new cabins and the rest are due by November. The airline banked $94 million of savings during the year and has found another $135 million in annualised savings that start flowing from 2027.
Chair Dame Therese Walsh framed the year as one of outside pressure rather than internal failure, and pointed to the strategy reset the airline launched in June under the name Te Pae Hou, which it translates as Our Future. “As the national airline, our success is closely connected to New Zealand’s success,” she said.
Investors were unmoved. Air New Zealand shares closed on Friday at 38.5 cents, the day’s low, after opening at 39 cents, valuing the whole airline at about $1.24 billion, well below its own stated net tangible assets of 52 cents a share. The last dividend shareholders actually received was 1.25 cents, paid on 25 September 2025.
The outlook is where the caution really shows. Air New Zealand says that before the Middle East conflict it would have expected to return to profit in 2027. It is now refusing to give any earnings guidance at all, with jet fuel sitting around US$150 a barrel against a normal price closer to US$85. It expects engine issues to still cost between $70 million and $90 million next year, maintenance to come in $50 million to $100 million lower, and airport charges to rise by upwards of 10 per cent at some ports. Flying has already been consolidated through to the end of October, and Ravishankar said more trimming could follow into November, December and January if fuel stays where it is, although peak season cuts would likely be smaller.
For travellers that means fewer seats and firmer fares for a while yet. For the country it is another line in a bill that keeps arriving. New Zealand’s fuel import bill has now hit $12.1 billion, and the disruption to shipping through the Strait of Hormuz is now well into its second half-year. The airline says forward bookings into New Zealand are strong, which is the one genuinely good sign in the whole release. Whether that is enough to outrun the price of a barrel of jet fuel is the question the 2027 accounts will answer.
What do you make of the result? Is the Prime Minister right that the airline needs to explain itself, or are landing charges and a Middle East war beyond any chief executive’s control? Leave a comment below and tell us what you think.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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