Air New Zealand posted a net loss for fiscal 2026, turning away from last year’s profit as higher jet fuel costs linked to the Middle East conflict and continuing engine availability constraints weighed on results. While revenues rose, the airline said uncertainty over fuel price volatility and the operating impact of the conflict means it cannot yet provide earnings guidance for the 2027 financial year.
Key takeaways
- Loss widened: Net loss attributable to shareholders was NZ$242 million versus a NZ$108 million profit in fiscal 2025.
- Catalysts: The company blamed higher fuel prices, multi-year engine availability issues, and maintenance and aviation system costs.
- Revenue grew despite pressure: Total operating revenue increased 3.9% to NZ$7.02 billion, supported by higher passenger traffic.
- Capacity and demand diverged: Capacity rose 1.3% as grounded aircraft returned, though it was partly offset by fuel-driven reductions.
- Guidance withheld: Management cited continued geopolitical uncertainty and jet fuel volatility (noted at around $150 per barrel) and did not issue 2027 earnings guidance.
What drove the 2026 loss
Air New Zealand’s fiscal 2026 bottom line deteriorated primarily due to cost headwinds. The airline said increased fuel prices associated with the Middle East conflict were a major factor, alongside ongoing impacts from engine availability issues that have extended over multiple years. It also cited higher maintenance costs and expenses tied to aviation system costs as contributing pressures.
Despite those headwinds, the company recorded revenue growth, which helped cushion the financial impact. Management reported that total operating revenue climbed 3.9% to NZ$7.02 billion from NZ$6.76 billion a year earlier.
Top-line momentum: passengers up, cargo down
Passenger operations strengthened during the year. Passenger revenue rose to NZ$6.1 billion, up 4.8% year over year, supported by an increase in both passenger numbers and utilization. The airline carried 16.0 million passengers, up 0.6%, and reported a passenger load factor of 83.7%, higher by 0.3 percentage points versus 2025.
Cargo revenue moved in the opposite direction. Cargo revenue fell to NZ$484 million, down 0.6% from the prior year.
Efficiency and pricing indicators also improved. The airline said group revenue per available seat kilometre (RASK) increased 3.4% across the network, suggesting that demand strength and/or fare resilience helped offset part of the cost pressure.
Capacity constraints and fuel-driven adjustments
Air New Zealand said capacity across the network increased, but not uniformly. Available seat kilometres (ASK) grew 1.3% as previously grounded aircraft returned to service. That gain was partly offset by capacity reductions the airline implemented in response to “unprecedented, elevated” fuel prices during the second half of the year.
The company’s operational limitations were also tied to engine availability, which it described as a continuing issue. While grounded aircraft returned to service, the engine constraints appear to have limited how quickly the airline could normalize capacity and potentially manage costs more effectively.
Outlook for 2027: transition and recovery, but no guidance
Looking ahead, Air New Zealand characterized fiscal 2027 as a “transition and recovery” year. It said operational performance should continue improving even as elevated fuel prices remain a drag on profitability.
The airline added that, before the Middle East conflict, it would have expected to return to profitability in 2027, reflecting underlying improvements already in progress. However, it now says it is not in a position to provide earnings guidance at this time, pointing to ongoing uncertainty around the conflict and the volatility of jet fuel prices. The company referenced jet fuel around $150 per barrel.
Management also indicated that major factors affecting the 2026 result excluding fuel are expected to persist into 2027, though with less intensity.
Chief executive Nikhil Ravishankar said inbound demand is encouraging, with strong forward bookings into New Zealand—an improvement that could support tourism-linked routes and broader travel demand even if cost pressures remain.
Market reaction and what investors will watch next
In Australia, Air New Zealand shares closed Friday’s trading at A$0.3200, down 1.54%. The decline suggests investors weighed the widening loss and the lack of 2027 earnings guidance more heavily than the revenue and demand improvements.
Next, the key focus for investors will be whether fuel costs ease or remain volatile, how quickly engine availability improves, and how Air New Zealand’s capacity decisions evolve as management balances utilization against fuel-driven profitability. The airline plans to provide a more detailed update on its strategy and medium-term financial objectives at an Investor Day later this year.
