Air New Zealand sees engine disruption easing, posts smaller loss than expected

Aug 28 (Reuters) - Air New Zealand ‌said on ​Friday disruption ​from engine shortages was easing as more aircraft returned to service, after high fuel costs and maintenance constraints pushed the carrier ‌to its largest annual loss in three years, though the result ⁠was narrower than expected.

The airline has been dealing with engine maintenance problems since 2023, when Pratt & ‌Whitney recalled more than 1,000 ‌engines used on Airbus aircraft for inspections, leading to intermittent groundings in subsequent years.

Engine availability issues cut profit by an estimated NZ$190 million ($113.15 million) for ​the year ended June 30, while the Middle East conflict added NZ$205 million to its fuel bill after hedging, versus expectations at the start ⁠of the second half of the year.

The disruption from engine issues is easing substantially, CEO Nikhil Ravishankar said, ​as Air New Zealand works with Rolls-Royce and Pratt & Whitney to return grounded aircraft to service ahead of schedule, improving ​fleet availability by the end of the financial ‌year.

"There are still residual risks and costs to work through, but we enter 2027 in a considerably more reliable fleet ⁠position," he said.

Air New Zealand swung to a loss before taxation of NZ$336 million, smaller than the NZ$356.5 million pretax loss forecast by Visible Alpha.

Shares of the airline climbed as ⁠much as 3.9% to NZ$0.40 by 2318 GMT and were headed for their best session ​since August 3, outperforming a 0.7% rise in the benchmark S&P/NZX 50 index.

Air New Zealand said it was not yet in a position to provide an earnings forecast for 2027, citing ‌volatile jet fuel prices and continued uncertainty around the Middle East conflict.

The airline expects fiscal 2027 to be a year ‌of transition and recovery, with operational performance improving even as elevated fuel prices weigh ⁠on profitability. Air New Zealand ‌did not declare a final ​dividend.

($1 = 1.6793 New Zealand dollars)

(Reporting by Anjali Singh and Jasmeen Ara Shaikh in Bengaluru; Editing by Leroy Leo, Joyjeet Das and ‌Subhranshu Sahu)

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