Air New Zealand has reported a loss before taxation of $336 million for the 2026 financial year, reversing $164 million in prior-year earnings, driven primarily by elevated fuel prices linked to the Middle East conflict, ongoing engine availability issues and rising aviation system costs.
Fuel and engine issues drive result
The airline said the Middle East conflict added an estimated $328 million to fuel costs compared with expectations, with an estimated $135 million net impact on the pre-tax result after fare adjustments and capacity reductions. Ongoing Rolls-Royce Trent 1000 and Pratt & Whitney PW1100 engine issues added an estimated further $190 million impact through lost capacity and additional lease and maintenance costs.
Total revenue rose 3.9 per cent to $7.0 billion, with passenger revenue up 4.8 per cent to $6.1 billion, as capacity increased 1.3 per cent across the network. No final dividend was declared, in line with the airline’s Capital Management Framework.
Operational performance improves despite financial pressure
Nikhil Ravishankar, Air New Zealand’s chief executive, said the airline improved on-time performance from 77.5 per cent in 2025 to 84.0 per cent in the second half of FY26, alongside improved customer satisfaction. “We continue to invest in this area with a goal of being one of the top 5 airlines in the world for reliable and punctual operations,” Ravishankar said.
The airline has retrofitted nine of its 14 Boeing 787 aircraft with a new cabin interior, with the remaining fit-out due for completion by November 2026, ahead of schedule. Engine availability has also improved, with the airline entering FY27 in what it describes as a considerably more reliable fleet position, though residual costs of an estimated $70 million to $90 million remain expected in FY27 related to ongoing lease commitments.
Outlook remains uncertain amid fuel price volatility
Air New Zealand said it is not providing FY27 earnings guidance given continued uncertainty around the Middle East conflict and jet fuel prices, currently around US$150 per barrel. The airline expects FY27 to be a transition and recovery year, with maintenance costs expected to fall by $50 million to $100 million compared with FY26, offset by continued above-inflation growth in airport charges.
Ravishankar said forward bookings into New Zealand remain strong.
“We are seeing encouraging inbound demand, with strong forward bookings into New Zealand. This is a positive signal for tourism and for the country more broadly,” he said.
The result signals continued operational improvement on reliability and product, alongside ongoing cost pressure that may influence fare levels and capacity decisions into 2027, while inbound demand into New Zealand appears to remain robust.
