Air New Zealand is Struggling to Make a Profit

Air New Zealand is struggling to make a profit, according to just released research from Auckland-based financial services company Forsyth Barr.

The company’s head of research, Andy Bowley, and associate analyst Hugh Lockwood, authored the report entitled Stuck on the Tarmac. They claim Air New Zealand lost money in the first six months of 2025 and will struggle to make a profit in the 12 months to June 30, 2025.

“At best, management’s earnings guidance implies a small profit,” they wrote.

Air New Zealand is due to release its financial results for 12 months to June 30 later this month. In their last formal advisory in April, the airline forecasted a pre-tax profit of between NZD150 million (USD89 million) and NZD190 million (USD113 million) for the financial year. Bowley and Lockwood say the actual numbers are likely to be less.

As it is, Air New Zealand's official forecast is less than the NZD222 million (USD132 million) pre-tax profit reported for the 12 months to June 30, 2024. The previous year, Air New Zealand reported a pre-tax profit of NZD574 million (USD340 million).

The Forsyth Barr analysts say weakening demand and ongoing capacity issues stemming from engine issues are behind their forecast. The two factors, they say, “will take time to remedy.”

The impact of the flawed Rolls Royce and Pratt and Whitney engines powering Air New Zealand’s B787-9 and A321neo aircraft are widely known. Aircraft have gone out of service for lengthy periods while awaiting replacement engines.

At least five of their fourteen A321-200NXs, and one of the fourteen B787-9s are presently out-of-service because of engine issues. In response, Air New Zealand has leased additional aircraft and also cut some services.

Notably, the compensation that Air New Zealand has received from Rolls Royce and Pratt and Whitney was less than expected. It received compensation NZD94 million (USD56 million) in the six months to December 31, 2024. However, it expects to report only collecting between NZD35 million (USD21 million) and NZD40 million (USD24 million) in the six months to June 30.

The less than expected compensation will impact Air New Zealand’s upcoming annual profit result.

Less talked about is the weakening demand, particularly domestic demand. Air New Zealand operates an extensive domestic network, including jet services primarily focused on its Auckland (AKL), Wellington (WLG), and Christchurch (CHC) hubs. It (mostly) flies turboprops elsewhere.

Services to North America (Air New Zealand flies to Honolulu (HNL), New York (JFK), Houston (IAH), Los Angeles (LAX), San Francisco (SFO), and Vancouver (YVR)) have also been softer than hoped for over the past financial year.

The weaker demand is expected to cost the airline between NZD40 million (USD24 million) and NZD50 million (USD30 million) in lost revenues. It is one reason why Air New Zealand is struggling to make a profit.

Bowley and Lockwood expect the airline’s earnings and returns to improve over the medium term. However, they are less optimistic about the short term.

Meanwhile, in a piece of good news for Air New Zealand, it has received two new A321-200NXs this year, including one in recent weeks. Arriving with engines bearing a clean bill of health, the two aircraft are helping plug capacity gaps caused by the grounding of other planes.

Air New Zealand will release its FY 2025 annual results on August 28, 2025.

You can access the log in page for the Forsyth Barr research here.

Photo: Air New Zealand