Auckland, New Zealand: Air New Zealand has reported a $336 million loss before taxation for the 2026 financial year, reversing the $164 million in earnings before taxation recorded in the previous year. The airline said the result was driven largely by higher jet fuel prices, ongoing engine availability problems, increased aircraft maintenance costs and rising aviation system charges. The result was slightly better than the guidance range provided to the market in May 2026.
The airline recorded a net loss after taxation of $242 million, while total revenue increased 3.9% to $7.0 billion. Passenger revenue rose 4.8% to $6.1 billion, while operating cash flow declined to $819 million from $940 million in 2025. Network capacity, measured by available seat kilometres, increased 1.3% as aircraft returned to service, although this was partly offset by capacity reductions in response to elevated fuel prices. No final dividend was declared, in line with Air New Zealand’s Capital Management Framework.
Jet fuel prices were a major factor behind the loss. Air New Zealand said the Middle East conflict increased its fuel costs by an estimated $328 million compared with what it had expected at the beginning of the second half of the financial year. After hedging, the additional cost was $205 million, with the airline estimating a $135 million impact on the pre-tax result after fare adjustments and capacity reductions. Average jet fuel prices for the financial year were US$111 per barrel, compared with US$88 per barrel in 2025. Fuel prices had fallen 4% in the first half of the year but then increased 58% in the second half compared with the same period a year earlier.
Engine availability also continued to weigh on the airline. Air New Zealand estimated that ongoing issues involving Rolls-Royce Trent 1000 and Pratt & Whitney PW1100 engines affected the result by $190 million through lost capacity, additional lease and engine costs, lower fleet utilisation and operational inefficiencies. The airline said the engine challenges that had constrained its network for several years were now substantially behind it, with grounded aircraft returning to service earlier than expected through work with Rolls-Royce and Pratt & Whitney.
Aircraft maintenance was another significant cost. Air New Zealand said 2026 was a peak maintenance year, with maintenance costs increasing by $139 million, excluding foreign exchange effects, compared with 2025. The increase was attributed to lifecycle maintenance requirements and additional maintenance costs for leased engines.
Aviation system costs also increased substantially. Air New Zealand said aviation costs had risen at more than twice the rate of inflation since 2019. Its share, together with customers’ share, of aviation system charges across New Zealand and offshore ports served by the airline reached $1.2 billion in 2026, an increase of $142 million from 2025. Approximately $720 million was recognised as a cost in the financial statements, up about $83 million from the previous year.
Despite the financial pressure, the airline reported improvements in its operational performance. On-time performance increased from 77.5% in 2025 to 84.0% in the second half of the 2026 financial year, alongside an improvement in customer satisfaction. Air New Zealand said it had introduced new digital tools and undertaken a resilience-focused review of its schedule, with a goal of becoming one of the world’s five most reliable and punctual airlines.
Air New Zealand has also continued upgrading its Boeing 787 fleet. Nine of its 14 Boeing 787 aircraft have been retrofitted with the airline’s new interior, with the remaining fleet scheduled to complete the fit-out by November 2026, slightly ahead of schedule.
The airline said it delivered $94 million in incremental transformation benefits during 2026 and identified an additional $135 million in annualised savings from the 2027 financial year. The savings include direct and indirect costs and are intended to reduce the overall cost base and offset inflation. The programme includes the $100 million in savings previously disclosed in May.
Air New Zealand launched its new Te Pae Hou – Our Future strategy in June, with three strategic priorities: Customer First, Targeted Growth, and Resilient and Future Fit. The strategy focuses on reliable and punctual service, profitable network growth, loyalty-programme development, revenue diversification, continued cost transformation and a financially sustainable regional network.
Looking ahead, Air New Zealand said it had expected, before the Middle East conflict, to return to profitability in the 2027 financial year based on improvements in the underlying business. However, continuing uncertainty surrounding the conflict and volatile jet fuel prices mean the airline is not currently providing earnings guidance for 2027. Jet fuel prices were around US$150 per barrel at the time of the announcement.
The airline expects engine-related disruption to reduce substantially as more aircraft return to service, although it estimates a remaining financial impact of $70 million to $90 million in 2027 from continuing engine-related lease commitments and aircraft that cannot be fully utilised because of the fuel crisis. Aircraft maintenance costs are expected to be $50 million to $100 million lower than in 2026, while airport charges at some ports are expected to rise by more than 10% during the 2027 financial year.
Air New Zealand expects 2027 to be a transition and recovery year, with operational performance continuing to improve while elevated fuel prices weigh on profitability. The airline said it was seeing encouraging inbound demand and strong forward bookings to New Zealand, while its onboard product and Kiwi hospitality were expected to support international visitor growth. A more detailed update on its strategy and medium-term financial objectives is planned for an Investor Day later in 2026.
