Air New Zealand unveils first-half profit plunge, NZ$100m buyback

The news: Air New Zealand has reported a double-digit percentage fall in first-half profit, amid operational and economic headwinds, and announced a share buyback.

The numbers: Profit after tax came in at NZD106 million ($95.2 million), down from NZD129 million a year earlier. Earnings fell 16% to NZD155 million and it will pay an interim dividend of 1.25 NZ cents a share.

The airline also announced a share buyback up to NZD100 million.

The context: New Zealand’s flagship carrier said it continued to see significant operational and economic headwinds that have persisted since the second half of last year. These included aircraft groundings due to additional engine maintenance requirements and a drop in passenger revenue due to lower domestic demand. The airline expects the remaining part of the fiscal year to be “particularly challenging” as it navigates engine problems that will result in 11 of its Boeing 787-9 Dreamliners and Airbus A320 aircraft being out of action. The engine manufacturers have provided $94 million compensation to the carrier.

“This is a significant volume of aircraft to have on the ground, but we continue to take steps to build resilience into our operations through schedule adjustments, leasing additional engines, and prioritising customer experience improvements,” chief executive Greg Foran said.