Air New Zealand Ltd (NZ:AIR) announced on Tuesday that it anticipates a decline in earnings for the 2025 fiscal year due to ongoing engine maintenance issues and reduced compensation from its engine suppliers.
The airline now expects its full-year earnings before taxation to fall between NZ$150 million ($89 million) and NZ$190 million, a drop from the NZ$222 million reported for the previous year.
The earnings downgrade is attributed to a significant reduction in expected compensation from engine manufacturers Pratt & Whitney and Rolls-Royce. The company forecasts second-half compensation payments to be between NZ$35 million and NZ$40 million—less than half the NZ$94 million it received during the first half.
Despite these challenges, Air New Zealand’s stock remained largely unchanged following the announcement.
A total of 11 of the airline’s aircraft remain grounded due to global maintenance backlogs. The company has been working to mitigate the issue by securing leased and spare engines, but the ongoing shortages continue to disrupt operations.
Furthermore, Air New Zealand emphasized that only engines officially removed for maintenance qualify for compensation, further limiting its recovery efforts in the second half of the year.
Although lower fuel prices have provided some financial relief, the airline continues to grapple with operational challenges arising from the reduced availability of its fleet.
In addition, the company noted the potential impact of recent U.S. tariff changes on its operations. However, it clarified that no significant shifts in demand have been observed so far.