Feb 26 - Air New Zealand said on Thursday it has begun a strategic review of its operations after reporting a worse-than-expected loss for the first half of its financial year, attributing the result to engine maintenance delays, weaker travel demand and higher operating costs.
The carrier reported a loss before tax of NZ$59 million for the six months ended December 31, compared with a profit of NZ$144 million in the same period a year earlier. The result was materially larger than the Visible Alpha consensus estimate of a NZ$21 million loss.
In explaining the deterioration, the airline cited sustaining earnings pressure over recent years as global engine maintenance issues have left some aircraft grounded. Management linked that operational disruption with a slower recovery in passenger demand and increased cost pressures as key drivers of the half-year deficit.
"We are undertaking a comprehensive review of all aspects of the business, with the objective of returning the airline to sustained profitability," said Chief Executive Officer Nikhil Ravishankar in his first results statement since taking the top role in October.
The company did not declare an interim dividend for the period. Looking ahead, Air New Zealand warned that it expects second-half earnings to be flat or weaker than the first half, and it flagged ongoing pressure stemming from aviation system and supply chain costs.
Financially, the NZ$59 million loss before tax equates to US$35.38 million using the company-provided conversion of $1 = 1.6675 New Zealand dollars.
The combination of grounded aircraft due to engine maintenance and a softer travel recovery contributed to a rare half-year loss - the first such result in four years for the carrier. Management has initiated a strategic review intended to assess the full business and identify paths back to durable profitability, though the company also cautioned that cost pressures from the aviation system and supply chain are likely to persist into the remainder of the year.
Summary
Air New Zealand posted a NZ$59 million pre-tax loss for the six months to December 31, missing consensus and reversing a prior-year NZ$144 million profit. Engine maintenance delays, weaker travel demand and higher costs prompted management to start a comprehensive strategic review, and the airline did not declare an interim dividend while forecasting second-half earnings to be flat or weaker.