Air New Zealand sees engine disruption easing, posts smaller loss than expected

Aug 28 (Reuters) – Air New Zealand said on Friday disruption from engine shortages was easing as more aircraft returned to service, after high fuel costs and maintenance constraints pushed ​the carrier to its largest annual loss in three years, ‌though the result was narrower than expected.

The airline has been dealing with engine maintenance problems since 2023, when Pratt & Whitney recalled more than 1,000 engines used on Airbus aircraft for inspections, leading to intermittent groundings in subsequent years.

Engine availability ‌issues ​cut profit by an estimated NZ$190 million ($113.15 ⁠million) for the year ended ⁠June 30, while the Middle East conflict added NZ$205 million to its fuel bill after hedging, versus expectations at the start of the second half of the year.

The disruption from engine ​issues is easing substantially, CEO Nikhil Ravishankar said, as Air New Zealand works with Rolls-Royce and Pratt & Whitney to return grounded aircraft ⁠to service ahead of schedule, improving ⁠fleet availability by the end of the financial year.

“There ​are still residual risks and costs to work through, but we ​enter 2027 in a considerably more reliable fleet position,” he ‌said.

Air New Zealand swung to a loss before taxation of NZ$336 million, smaller than the NZ$356.5 million pretax loss forecast by Visible Alpha.

Shares of the airline climbed as much as 3.9% to NZ$0.40 by 2318 ⁠GMT and were headed for their best session since August 3, outperforming a 0.7% rise in the benchmark S&P/NZX 50 index.

Air New Zealand said it ⁠was not yet in ‌a position to provide an earnings forecast for ⁠2027, citing volatile jet fuel prices and continued ​uncertainty ‌around the Middle East conflict.

The airline expects fiscal ​2027 to ⁠be a year of transition and recovery, with operational performance improving even as elevated fuel prices weigh on profitability. Air New Zealand did not declare a final dividend.

($1 = 1.6793 New Zealand dollars)

(Reporting by Anjali Singh and Jasmeen Ara Shaikh in Bengaluru; Editing by Leroy Leo, Joyjeet Das ​and Subhranshu Sahu)