Air New Zealand has continued to deal with aircraft groundings amid persistent engine shortages, resulting in a net loss in H1 FY26.

Loss-making period

On February 26, 2026, Air New Zealand confirmed that it ended H1 FY26 with a net loss of NZ$40 million ($23.9 million), compared to a net profit of NZ$98 million ($58.6 million) in H1 FY25.

According to the airline, three factors resulted in the swing in profitability: ongoing fleet constraints, slower domestic demand recovery, and rising costs.

“Cost pressures have been further exacerbated by a weaker New Zealand dollar.”

The net loss was also impacted by a NZ$13 million ($7.7 million) headwind “from higher-than-assumed fuel prices in the second quarter” in FY26, it said.

During the six-month period, operating revenue increased by 1.2% year-on-year (YoY), yet operating costs grew by 8% YoY. Passenger revenues per available seat kilometer (RASK) and costs per ASK (CASK) were up 3% and 7.7% YoY, respectively. CASK excluding fuel (CASK-ex) surged 5.7% YoY.

Airbus A321neo and Boeing 787-9 engine constraints

A major pain point for Air New Zealand, as outlined by the airline, has been the “global engine issues” affecting its Airbus A320neo family and Boeing 787-9 fleets.

As a result, the airline’s capacity, measured in ASKs, was “relatively flat” in H1 FY26, “reflecting fleet constraints from the global accelerated engine maintenance requirements, which impacted both the international long-haul and domestic networks.”

Planespotters.net showed that Air New Zealand currently has three A321neo and 787-9s parked each.

While overall ASKs were flat YoY (up 0.3%), international long-haul and domestic ASKs were slightly lower than in H1 FY25. On its international long-haul network, the capacity decrease due to its 787-9s being parked “was only partly offset by the deployment of three leased widebody aircraft and a short-term wet-lease aircraft.”

“International long-haul RASK excluding foreign exchange and travel credit breakage increased 4.3%, driven by strong demand for premium products.”

Air New Zealand detailed that while it received NZ$55 million ($32.9 million) in compensation from engine manufacturers, it lost NZ$90 million ($53.8 million) of “earnings [that] could have been included within the result had the fleet operated as intended.”

The carrier’s negotiations with original equipment manufacturers (OEMs) are ongoing, it said.

Reviewing its strategy

Commenting on the results, Therese Walsh, the Chair of Air New Zealand, stated that amid the volatility, including issues related to aircraft engines, the airline’s board has asked Nikhil Ravishankar, the Chief Executive Officer (CEO) of the carrier, to “undertake a full strategy review” when he took the reins of the airline in October 2025.

“The strategy reset will allow us to be firmly focused on strengthening and growing our airline to deliver long-term growth and prosperity for New Zealand.”

Ravishankar added that with the support of the airline’s board, Air New Zealand has undertaken a “comprehensive review of all aspects of the business” in order to return to sustainable profitability.

“At the same time, a number of performance and product improvements are already underway, including improvements in domestic punctuality and reliability, and a decision to upgrade the interiors of our existing 777 fleet, so our widebody product is consistent, modern, and mission-ready.”

While engine availability issues have taken longer than expected, four A320neo family and 787-9 aircraft will return to service throughout 2026, while Air New Zealand will also take delivery of two new 787s.

Unlike its current Rolls-Royce Trent 1000-powered 787-9s, the incoming 787s, which will be a mix of 787-9 and 787-10 aircraft, will have GE Aerospace GEnx engines.

“While capacity is expected to increase modestly in the second half, as aircraft return to service and new aircraft enter the fleet, the airline cautions that improvements in aircraft availability are unlikely to translate immediately into earnings uplift.”