Air NZ has reported a 65% drop in net profit for the 2024 financial year, with its earnings before tax plunging from $574 million for the same period last year to $222 million. Net profit after tax shrank to $146 million, compared with $412 million for the past period.
Competitive pressures from U.S. airlines, rising inflation, and the aircraft availability concerns are some of the reasons for the airline’s decline in financial performance.
“Accelerated maintenance requirements for Pratt & Whitney PW1100 engines worldwide have meant that up to six of the airline’s newest and most efficient Airbus neo aircraft have been out of service at times,” Air NZ said in its Thursday post.
“Ongoing additional maintenance requirements on the Trent 1000 engines that power the existing Boeing 787 Dreamliner fleet and reduced levels of spares in the market have meant that up to three Dreamliners are also on the ground at times.”
“Passenger revenue increased 11% to $5.9 billion, driven by a 23% ramp-up in capacity, primarily across the international long-haul network. This was partially offset by the weaker demand environment and higher levels of competition. Also included within passenger revenue is $90 million of credit breakage for unused customer credits that were considered highly unlikely to be redeemed.”
“While average jet fuel prices were slightly lower for the year, total fuel costs increased by around $190 million, driven by capacity growth across the network.
“With landing charges, air navigation fees, and engineering materials leading the increases, the non-fuel operating cost uplift of 6% for the year brings the cumulative impact of inflation across the past five years to 20% to 25%. While growth in the network has provided some scale benefits, productivity remains below the levels achieved pre-Covid as the airline carries extra costs to help manage ongoing disruptions in the supply chain.”
Air NZ chief executive officer Greg Foran thanked customers and staff for their continuous support, saying the challenges being faced today “are not unique to Air New Zealand.”
“I want to acknowledge the understanding and loyalty of our customers who were impacted by unavoidable scheduling changes while travelling with us this 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,” Foran stated.
He also noted that steps are taken to address the headwinds, such as “leasing three Boeing 777-300ERs, securing additional spare engines, and adjusting our network and schedule to deliver greater reliability.”
Chair Dame Therese Walsh also recognised the dedication and efforts of Air New Zealanders who have successfully navigated the numerous challenges faced by the airline.
“It’s been a difficult year managing both macroeconomic and operational challenges. I’d like to thank the Air New Zealand whānau, not only for navigating these issues with great skill and manaaki, but also for never losing sight of what the organisation needs to do to be a future-fit airline,” Walsh said.
Air New Zealand anticipates that the current trading conditions will persist throughout the first half of the 2025 financial year. Due to the prevailing uncertainty, the airline is refraining from offering any guidance at this time.