Air New Zealand expecting 'substantial' reduction in compensation from engine manufacturers

Air New Zealand provided (16-Apr-2025) a trading update for H2FY2025, reflecting a "substantial" reduction in the compensation it anticipates receiving from engine manufacturers, despite an increased number of grounded aircraft. Details include:

• Engine maintenance timeframes provided by the manufacturers "remain unpredictable". As a result, current expectations are that 11 aircraft will be grounded, despite Air New Zealand securing seven additional leased engines and one further owned spare engine to stabilise the number of grounded narrowbody aircraft;
• The airline is engaged in negotiations with engine manufacturers regarding appropriate levels of compensation for unserviceable engines, and accurate timeframes for engine returns;
• Given ongoing uncertainty, Air New Zealand expects compensation recognised in H2FY2025 to be approximately NZD35 million to NZD40 million. This is "substantially lower" than the NZD94 million recognised in H1FY2025, noting that approximately NZD30 million of the H1FY2025 compensation related to a one-off settlement for other periods;
• Air New Zealand is benefiting from lower fuel prices, but its operations remain configured to operate around eight to 10 more jet aircraft than are presently available;
• The carrier estimates earnings before taxation for FY2025 to be within the range of NZD150 million to NZD190 million. Included in this range is the NZD35 million to NZD40 million in compensation and NZD20 million of credit breakage expected to be recognised in H2FY2025 for unused customer credits considered "highly unlikely" to be redeemed. The range also assumes fuel at USD81 per barrel for the remainder of FY2025. [more - original PR]