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Air New Zealand (NZX: AIR) has lowered its earnings forecast for fiscal year 2025 due to ongoing engine maintenance disruptions and a sharp drop in expected compensation from engine manufacturers. The airline now anticipates full-year earnings before taxation to range between NZ$150 million and NZ$190 million, down from NZ$222 million in the previous year.
The downgrade is primarily driven by a steep reduction in anticipated payments from engine suppliers Pratt & Whitney and Rolls-Royce. Compensation in the second half is now projected at NZ$35 million to NZ$40 million—less than half the NZ$94 million received in the first half. The airline explained that only engines officially removed for maintenance qualify for reimbursement, limiting recovery opportunities.
Despite efforts to stabilize operations through leasing and securing spare engines, 11 aircraft remain grounded due to a global backlog in engine servicing. This prolonged fleet shortage continues to create operational challenges and limits capacity flexibility.
While lower jet fuel prices have somewhat eased cost pressures, Air New Zealand said the reduced aircraft availability adds complexity to its operations and network planning. The airline also acknowledged potential downside risks from recent U.S. tariff announcements but stated that no major impact on demand has been observed so far.
Shares of Air New Zealand remained relatively stable following the earnings update, suggesting the market had largely priced in the ongoing challenges. As the national carrier navigates engine-related headwinds, investors will closely watch any future updates on compensation negotiations and fleet recovery timelines.
