Air New Zealand updates financial outlook

Air New Zealand (ASX:AIZ) has issued earnings guidance for the first half of FY25, projecting pre-tax earnings between $120 million and $160 million. The airline faces aircraft availability issues affecting up to 16% of its jet fleet due to global engine maintenance delays, which are expected to persist until early 2026.

Outlook and strategic initiatives

Air New Zealand is navigating significant operational challenges, primarily due to aircraft availability issues impacting fleet capacity. Despite these hurdles, the airline is witnessing early signs of recovery in corporate travel, although government travel demand remains low. Financial projections for the first half of FY25 have been cautiously set between $120 million and $160 million pre-tax, influenced by compensation from engine manufacturers and gains from aircraft transactions. The company is focusing on innovation and customer service improvements, including updates to their Seats-to-Suit offering and the introduction of live chat capabilities. Air New Zealand plans to offer full-year guidance when there is more certainty, anticipated around the interim results.

Executive insights on financial guidance

The earnings guidance considers challenges such as aircraft availability issues and early recovery signs in corporate travel. The guidance also includes $10 million from unused travel credit breakage, $30 million compensation from engine manufacturers, and a $20 million gain from the sale and leaseback of four A320 aircraft, with an assumed average jet fuel price of US$91 per barrel for the first half.