Air New Zealand faces major setbacks, leading to a sharp drop in its year-end profit forecast. The airline now expects pre-tax earnings between NZ$150 million and NZ$190 million, a steep decline from last year’s NZ$222 million. These challenges stem from engine issues, grounded aircraft, and a difficult global outlook.
The main problem for Air New Zealand lies in engine failures affecting two key aircraft types. The airline’s Airbus A320neo jets and Boeing 787 Dreamliners rely on engines from Pratt & Whitney and Rolls-Royce. These engines have shown poor reliability, grounding up to 11 planes. The airline has had to reduce its flight schedule. International flights dropped by 5%, and domestic services decreased by 2%.
Compounding the issue is shrinking compensation from the engine manufacturers. Air New Zealand previously received NZ$94 million in reimbursements. Now, with stricter eligibility rules, the airline expects just NZ$35–40 million in support.
However, Air New Zealand discovered an unexpected revenue source. The airline anticipates earning around NZ$20 million from unclaimed travel credits. These funds come from unused vouchers and prepaid bookings.
The airline also faces pressure from a volatile global travel market. Economic and geopolitical uncertainty has weakened consumer confidence, making demand harder to predict. In response, Air New Zealand urges passengers to use their outstanding credits before they expire.
Despite these setbacks, Air New Zealand stays focused on overcoming challenges and regaining financial stability.
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