Air New Zealand is expected to make a first half loss of up to $55 million amid weaker-than-expected passenger numbers and higher costs.
The national carrier's pre-tax loss was expected to land somewhere between $30m and $55m for the six months ending in December against an earlier forecast of a net profit of up to $34m.
The national carrier said it had hoped for an increase in domestic and US flights, which did not materialise, while ongoing problems with engine repairs would cost another $20m in addition to other costs.
The company said costs related to the mandatory Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) were up about $10m since the August outlook, which would result in increased fuel costs.
"The airline is driving further cost-saving and efficiency initiatives to mitigate these pressures, manage aviation system cost inflation and maintain balance sheet strength."
However, it said the second half of the financial year ending in June was expected to outperform the first with increased capacity coming onboard.
As a result, it said traditional comparisons between first- and second-half performance may be less indicative of full-year trends for the 2026 financial year.
"Air New Zealand 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," it said in an update to the market.
The airline said it continued to advocate for more "affordable" airport landing charges and other third-party aviation sector costs.
Air New Zealand said it was also negotiating with engine manufacturers regarding appropriate levels of compensation for unserviceable engines, as well as more 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 eleven aircraft have remained grounded, at times, since the beginning of the 2026 financial year."
Given the uncertainties, the airline said it would update the market as required.
