Air New Zealand has announced its financial results for the 2024 fiscal year, revealing a decline in earnings before taxation to $222 million, a notable decrease from the previous year’s $574 million. This downturn was anticipated following the extraordinary performance of 2023, fueled by the reopening of New Zealand’s borders. While the airline experienced a strong first half of the financial year, the latter half encountered significant challenges, primarily due to a confluence of operational and economic headwinds.
The economic climate in New Zealand, marked by a weakening domestic demand, particularly affected the corporate and government travel sectors, contributing to the overall financial downturn. Compounding these economic challenges were operational difficulties. Accelerated maintenance demands for Pratt & Whitney PW1100 engines led to the grounding of up to six Airbus neo aircraft at various times. Similarly, additional maintenance needs for the Trent 1000 engines powering the Boeing 787 Dreamliner fleet resulted in up to three Dreamliners being out of service. These operational disruptions, coupled with intense competition from US carriers and the ongoing effects of high inflation, significantly impacted the airline’s performance in 2024.
Despite these challenges, Air New Zealand achieved an 11 percent increase in passenger revenue, reaching $5.9 billion, driven by a 23 percent expansion in capacity, particularly in the international long-haul sector. However, this growth was offset by weakened demand and heightened competition. Included in the passenger revenue was $90 million attributed to unredeemed customer credits. While average jet fuel prices were slightly lower this year, total fuel costs rose by approximately $190 million, largely due to network expansion. Additionally, non-fuel operating costs outpaced revenue growth, driven by increased capacity and widespread inflation. Non-fuel cost inflation, amounting to around $225 million, significantly impacted the airline’s financial performance. Increases in landing charges, air navigation fees, and engineering materials led to a six percent rise in non-fuel operating costs, bringing the cumulative impact of inflation over the past five years to between 20 and 25 percent. Despite network growth providing some scale benefits, productivity remains below pre-Covid levels due to persistent supply chain disruptions.
In light of the airline’s balance sheet strength and the reported results, shareholders will receive a final unimputed ordinary dividend of 1.5 cents per share, bringing the total ordinary dividends for the year to 3.5 cents per share. The dividend is set to be paid on 26 September, with the record date being 13 September.
Chair Dame Therese Walsh expressed gratitude for the dedication and hard work of Air New Zealand’s 11,700 employees who navigated the numerous challenges faced this year. She acknowledged the significant impact of both macroeconomic and operational challenges on the airline’s financial performance, highlighting the airline’s resilience in navigating these issues.
Despite the current challenges, Air New Zealand remains committed to pursuing long-term opportunities to enhance financial returns. The company is dedicated to upholding its core values and continuing to deliver a world-class travel experience for its customers. The airline is focused on strategies that align with its culture and mission, ensuring that customer satisfaction remains at the forefront of its operations.
Amidst significant external disruptions, Chief Executive Officer Greg Foran expressed gratitude to both customers and Air New Zealand employees for their unwavering support. He acknowledged the resilience and commitment shown by the airline’s community during these challenging times, emphasizing that their ongoing loyalty has been crucial in navigating a complex and demanding environment.
Mr. Foran emphasized the airline’s commitment to delivering excellent customer service and a range of competitive fares, requiring ongoing discipline around its cost base. He highlighted targeted adjustments, including a 2 percent reduction in headcount, and ongoing pursuit of improvements in the controllable cost base.
Air New Zealand remains committed to investing in the future, with expected aircraft-related capital expenditure of $3.2 billion over the next five years. This includes a significant, multi-year interior retrofit program on its 14 existing Dreamliner aircraft. The airline anticipates delivery of the first new GE-powered Boeing 787-9 aircraft towards the end of the 2025 calendar year, providing options for continued growth, cost efficiencies, and network expansion opportunities.
While acknowledging the challenges, Mr. Foran emphasized Air New Zealand’s strong foundation and its commitment to delivering on its purpose. The airline remains focused on controlling what it can, relentlessly focusing on its customers and its people, and investing for the future.
Despite the challenging environment, Air New Zealand is focused on operating effectively through the current economic and operating conditions, which are expected to continue through the first half of the 2025 financial year.
