Air New Zealand has once again shown that, in aviation as in life, stubborn resilience often trumps smooth skies. Despite grounded jets, surging costs, and a domestic market that refused to take off, the Kiwi flag carrier has delivered a $189 million earnings before taxation result for the 2025 financial year. Net profit after tax came in at $126 million, proving that even with fewer wings in the air, the airline’s balance sheet can still land on its feet.
Revenue, costs, and the squeeze in between
Passenger revenue slid a modest two percent to $5.9 billion, mainly because of a 4% reduction in network capacity. Up to six narrowbody and five widebody aircraft were benched at various times, caught in the global snarl of engine maintenance shortages — a headache afflicting carriers worldwide.
Yet there was a bright spot: fuel costs dropped 12%, saving Air New Zealand around $208 million, thanks to lower global oil prices and fewer litres burned. Unfortunately, any joy was quickly clipped by ballooning non-fuel operating costs, which surged by about $235 million — a painful 6% rise. Landing fees, labour, and spare parts demanded more of the airline’s wallet, running ahead of New Zealand’s modest Consumer Price Index.
Chair Dame Therese Walsh described the outcome as “a solid result in a year where the airline faced real operational and economic pressure,” adding that the balance sheet remains strong and the strategy clear. Shareholders will no doubt welcome the declared final dividend of 1.25 cents per share, plus the $38 million buyback conducted earlier this year.
Transformation pays off
Behind the numbers lies the airline’s Kia Mau transformation programme, contributing a tidy $100 million in benefits. From improved ancillary revenue streams (think clever seat upgrades and premium fares) to more innovative digital tools like live chat and automated rebooking, the airline leaned on innovation to squeeze more value from every seat sold.
Operational improvements helped too: on-time performance lifted six percentage points in the back half of the year, while disruption costs were reined in. This was no small feat in a world where punctuality has become an endangered species.
Greg Foran’s last hurrah
Air New Zealand CEO Greg Foran
For CEO Greg Foran, this year’s report carries an added weight — it is his final lap before he steps down later in 2025. Walsh offered fulsome praise, noting Foran “has led the business through an extraordinary period” and leaves the airline “in a position of real strength.”
Foran, in turn, gave a typically candid assessment. At one point, up to eleven aircraft were grounded. Compensation from engine makers such as Rolls-Royce and Pratt & Whitney amounted to $129 million. Still, Foran estimated earnings could have been $165 million higher if the whole fleet had flown as intended.
“We acted early and decisively, securing additional engines and aircraft, and optimising our schedule to keep customers moving,” he said. “It came at a significant cost, but it was the right decision.”
A touch of glamour
Lest investors think it was all doom and balance sheets, Air New Zealand still found time to flex its brand polish. Four fully retrofitted Boeing 787-9 Dreamliners rejoined the fleet with upgraded interiors. A new staff uniform was unveiled, while construction of a new international lounge at Auckland Airport is underway. On the engineering front, a new hangar is on track for late 2025, and the Christchurch Engine Centre expansion is making steady progress.
In a nod to the times, around 3,000 staff have been equipped with AI tools to speed up service and efficiency, a far cry from the airline’s earliest days when the most advanced tool was a well-sharpened pencil.
2026: turbulence remains
Looking ahead, the airline remains grounded by continuing engine woes. The following financial year will be as constrained as this one, with system-wide aviation costs expected to climb another $85 million due to higher navigation fees, passenger levies, and landing charges.
But there are glimmers of hope. By mid-2026, more than half of the Boeing 787 fleet will be flying with gleaming new interiors, and the first two new 787s with GE engines are scheduled for delivery. An additional A321neo and ATR will boost regional and trans-Tasman services, especially during the all-important southern summer.
“We know what needs to happen to lift our financial performance,” said Foran. “Good progress is underway, and it will become increasingly evident as the network scales back up.”
No guidance, but a clear message
Air New Zealand is cautious on forward guidance, noting that compensation talks with engine manufacturers remain unresolved. Combined with rising aviation charges and weak domestic demand, the first half of FY2026 will be tough, with earnings expected to be at or below the $34 million posted in the back half of FY2025.
Still, Walsh and Foran remain upbeat. The airline, they argue, has the strategy, the discipline, and the balance sheet to weather the storm and eventually emerge with stronger wings.
The verdict
One cannot help but admire the paradox: an airline flying fewer planes yet still flying high enough to return cash to shareholders. Air New Zealand has always been a pioneer and survivor; this year’s result underscores both. The engines may sputter, but the Kiwi spirit refuses to.
In aviation, as in life, the runway is never entirely clear. But if this year has proven anything, Air New Zealand can taxi through turbulence with a steady hand on the yoke and, crucially, keep its passengers, staff, and shareholders strapped in for the journey ahead.
By Michelle Warner
