Air New Zealand flags weaker second half, reports earnings drop

Reuters

Published Feb 21, 2024 02:43PM ET

Updated Feb 21, 2024 04:06PM ET

(Reuters) -Air New Zealand warned on Thursday of tougher trading conditions in the second half of the financial year, hurt by easing travel demand and higher cost pressures, while reporting a 38% fall in its first-half profit.

The carrier, which is majority government-owned, is facing "tougher forward trading conditions" as the rapid recovery in travel demand seen last year softens, with performance further dented by a tough economy.

"We are now leaning into the reality of a worsening revenue and cost environment, which is expected to have a significant adverse impact on performance in the second half," the company said in a statement.

It reiterated its fiscal year 2024 earnings before taxation to be in the range of NZ$200 million to NZ$240 million, lower than the NZ$574 million it clocked in fiscal year 2023.

The airline reported earnings before taxes of NZ$185 million ($114.18 million) for the six months ended Dec. 31, lower than the NZ$299 million reported a year earlier.

Air New Zealand's performance was hurt by inflationary pressures and ongoing supply-chain issues, primarily the Pratt & Whitney engine maintenance requirements for its A321neo fleet.

The company had warned last year that inspections of RTX's Pratt & Whitney engines would affect its flight services for up to two years.

It said it was currently reviewing pricing and capacity to reflect ongoing inflation pressures.