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Air New Zealand has seen its profit cut by more than half from the 2022-23 financial year.
The NZ flag carrier posted a NZ$222 million (AU$204 million) profit in FY2023–24, down from NZ$574 million (AU$530 million) in FY22–23, which it attributed to previously-forecast headwinds in the second half of the year.
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While passenger revenue increased 11 per cent to NZ$5.9 billion, the airline was weighed down by a tougher NZ economy, maintenance issues with Pratt & Whitney PW1100 and Trent 1000 engines on its Airbus neo and Boeing 787 aircraft, respectively, high inflation, and competition from US carriers.
Air New Zealand chair Dame Therese Walsh thanked the airline’s staff for rising to the challenge of a “difficult year managing both macroeconomic and operational challenges”.
“We know these challenges will pass, some faster than others, but they have had a significant impact on our financial performance this year,” she said.
“Today we announced earnings before taxation of $222 million and estimate earnings would have been around $100 million higher, net of compensation, had we been able to operate our aircraft and schedule as intended.
“Our balance sheet is robust, with capacity to prudently manage these headwinds while investing sensibly in the areas that matter for our people and our customers. We believe in the strength of our plan and our team and are excited about the opportunities ahead as we move out of this current cycle.”
CEO Greg Foran thanked passengers for their patience with “unavoidable scheduling changes” during the 2023-24 financial year.
“We do not take our customers’ choice to fly with Air New Zealand for granted and are grateful for the patience they have shown us,” he said.
“We took immediate action to minimise the disruption, leasing three Boeing 777-300ERs, securing additional spare engines and adjusting our network and schedule to deliver greater reliability. We are very proud of what our team managed to achieve, but we know it has been far from perfect for impacted customers.
“The challenges we are facing are not unique to Air New Zealand. Supply chain and aircraft delivery delays, growing costs and a shortage of labour in key areas like engineering are major issues facing many airlines across the global aviation industry. However, the reality is that while these issues continue to play out, Air New Zealand is expecting a challenging year ahead.”
Foran said the airline is “fundamentally well-positioned” and has “made considerable progress on many fronts” as it continues to invest in fleet renewal and expansion.
“A key priority for us continues to be delivering excellent customer service and a range of competitive fares. This requires ongoing discipline around our cost base, and you will see us make targeted adjustments, including around a 2 per cent reduction in headcount, as well as pursuing improvements in the controllable cost base,” he said.
“We remain committed to investing for the future, with expected aircraft-related capital expenditure of $3.2 billion over the next five years. This includes a significant, multi-year interior retrofit program on our 14 existing Dreamliner aircraft.
“We anticipate delivery of the first new GE-powered Boeing 787-9 aircraft towards the end of the 2025 calendar year, which will provide options for continued growth, cost efficiencies and network expansion opportunities.”
