Air New Zealand posts $725 million loss, but expects significant improvement

Air New Zealand has deepened its full-year loss, however the airline is expecting a significant improvement as travel demand recovers.

Cargo and domestic travel revenues helped lift overall revenue by 9 percent, but the airline said high fuel prices and reduced flying over much of the year resulted in a loss for the period.

Its underlying loss of $725 million was better than expectations of about $750m.

Key numbers for the 12 months ended June compared to a year ago:

  • Net loss $591m vs $289m
  • Revenue $2.75b vs $2.52b
  • Underlying loss $725m vs $444m
  • No dividend

Chief executive Greg Foran said cargo revenue contented to be a major contributor to the company's performance, up 32 percent to $1 billion.

He said the airline was firmly in the "revive" phase of its "survive, revive, thrive" journey, and the current environment is one of strong bookings despite ongoing challenges.

Fuel continued to be headache for Air NZ as it recovered from a bruising period. Fuel expenditure for the year was $560m, 80 percent higher than $311m in 2021.

Foran said the airline continued to be guided by a clear strategy.

"For customers, we've been focused on restoring services, maintaining a choice of fares and launching innovations to improve their journey with us."

The airline said it was in a strong liquidity position, with $2.3b available, made up of $1.9b in cash and $400m from a standby loan facility with the Crown.

The company is forecasting total flying capacity for 2023 to be in the range of 75 percent to 80 percent of pre-Covid levels, and is expecting a much improved result compared to 2022.

The airline did not provide an earnings guidance, citing uncertainty and volatility around jet fuel prices and other economic factors.

Air NZ also said deliveries for its first two Boeing 787-10 Dreamliner aircraft were expected to be deferred from 2024 to 2025.

The first of the new Dreamliners with new seating configurations were initially meant to arrive around now, but the pandemic forced that date to be pushed out by two years.

The new deferrals were due to delays at the Boeing end, Foran said.

"We're pretty close to them, I'll in fact be up visiting them in just over a week's time. Still yet to be confirmed exactly when we will get the first of those but likely to be towards the end of 2024."

Forsyth Barr head of research Andy Bowley said the underlying loss was its largest in the airline's history, reflecting the challenges from border closures and other Covid-19 measures.

Cargo was again the highlight, and operating cashflows had improved materially through the year, he said.

Despite the strong cargo performance, Foran said the billion dollar revenue in the segment was "not likely" to be replicated again this year, as focus returned to passengers.