Our national airline is now forecasting a pre-tax loss of perhaps as much as $55 million for the first half of the 2026 financial year and says the NZ economy remains subdued 'with ongoing softness' across various travel segments

Air New Zealand (AIR) is reporting that an expected uplift in domestic and US-bound bookings has not materialised and it is now forecasting a pre-tax loss of up to $55 million for the first half of the 2026 financial year.

Back in late August when it reported a pre-tax profit of $189 million for the year to June 30, 2025, our national carrier forecast pre-tax earnings for the first half of the 2026 year of about $34 million.

However, in an update posted to NZX on Wednesday the airline said it had anticipated a 2% to 3% uplift in revenue across domestic and US-bound bookings.

"This has not materialised to date and is not yet evident in the current forward booking profile, the impact of which is approximately $50 million for the half," Air New Zealand said.

"The local economy remains subdued, with ongoing softness across business, government and leisure segments."

The airline, which has been hit by ongoing engine maintenance requirement, is now expecting a loss before taxation for the first half of the 2026 financial year in the range of $30 million to $55 million. This assumes an average jet fuel price of US$85 per barrel for the period.

"The airline cautions against extrapolating first-half guidance across the full year, noting that additional capacity growth is planned for the second half. As a result, traditional comparisons between first- and second-half performance may be less indicative of full-year trends for the 2026 financial year," the company said.

"Given the ongoing uncertainties, the airline will update the market as required."

Air New Zealand said engine lease costs for the first half are now expected to be approximately $20 million higher, due to the recognition of end-of-lease obligations on two short-term aircraft leases not previously included in the outlook. These costs are non-cash in the period and are not covered by existing compensation agreements.

"Of further note, the airline’s financial obligations under the mandatory Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) have increased by around $10 million since the August outlook, which will result in increased fuel costs."

Air New Zealand said it continues to prioritise medium to long-term growth, "and is carrying the cost of additional fleet, a full workforce, and the infrastructure necessary to support recovery as aircraft availability improves".

The airline is "driving further cost-saving and efficiency initiatives to mitigate these pressures, manage aviation system cost inflation and maintain balance sheet strength".

Air New Zealand says it remains in active negotiations with engine manufacturers regarding appropriate levels of compensation for unserviceable engines, and accurate timeframes for engine returns.

"The timing and quantum of compensation remains uncertain, and today’s update does not include any material changes in expected compensation. Between nine and 11 aircraft have remained grounded, at times, since the beginning of the 2026 financial year."