Air New Zealand reports reduced earnings amid challenging economic conditions

Policy

David Morgan Chief Operational Integrity and Safety Officer | Air New Zealand

By Sky Industry News

Aug 29, 2024

Air New Zealand has released its financial results for the 2024 fiscal year, reporting earnings before taxation of $222 million, a decrease from the previous year's $574 million. The net profit after taxation was $146 million. The decline in earnings was anticipated following the reopening of New Zealand's border last year, which had resulted in one of the airline's highest performances.

The second half of the fiscal year presented significant challenges due to operational and economic headwinds. Domestic demand deteriorated, particularly affecting corporate and government segments. Maintenance requirements for Pratt & Whitney PW1100 engines led to several Airbus neo aircraft being grounded. Additionally, issues with Trent 1000 engines affected Boeing 787 Dreamliners, further impacting operations.

Passenger revenue increased by 11 percent to $5.9 billion, supported by a 23 percent increase in capacity mainly on international routes. However, weaker demand and heightened competition offset these gains. The airline also recognized $90 million from unused customer credits unlikely to be redeemed.

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Fuel costs rose by approximately $190 million due to network capacity growth despite slightly lower average jet fuel prices. Non-fuel operating costs also surged by about $225 million because of inflation across various expenses such as landing charges and engineering materials.

Shareholders will receive a final unimputed ordinary dividend of 1.5 cents per share, totaling 3.5 cents per share for the year. This decision reflects Air New Zealand's balance sheet strength despite ongoing challenges.

Chair Dame Therese Walsh expressed gratitude towards Air New Zealand employees: "It's been a difficult year managing both macroeconomic and operational challenges." She emphasized that while current difficulties have impacted financial performance, there remains focus on improving returns and maintaining service quality.

CEO Greg Foran acknowledged customer support amidst disruptions: "I want to acknowledge the understanding and loyalty of our customers who were impacted by unavoidable scheduling changes." He noted efforts made to minimize disruption included leasing additional aircraft and adjusting schedules for reliability.

Foran highlighted industry-wide challenges such as supply chain delays and labor shortages but affirmed Air New Zealand's strategic focus: "As we continue to navigate this difficult environment...our Kia Mau strategy continues to serve us well."

Looking ahead into 2025’s first half-year period amid persistent trading conditions similar those experienced during latter part FY24; company refrains from offering guidance due uncertainties surrounding future developments within aviation sector globally locally alike

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Air New Zealand

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