'Get on top of the fundamentals': Air NZ urged to drop 'excuses' after loss

The national carrier's latest financial results have surprised an industry expert, revealing a $40 million post-tax loss in the six months to December, compared to last year’s profit of $106 million. 

While the airline pointed to global engine maintenance delays and a sluggish domestic recovery as primary culprits, independent aviation commentator Irene King told rova the results were "absolutely surprising."

The airline confirmed the $59 million pre-tax loss was slightly outside its own guidance, partly due to headwind from higher-than-assumed fuel prices. 

However, King believes the airline needs to stop “looking for external excuses and start looking at its own operating model.”

"They know what their forward trading position is," King said, noting that the airline has visibility months in advance.

"I would have expected some really proactive response very early on and very quickly."

King suggested the airline has been too slow to react to an economic environment that has been visible for "quite some time".

"They need to get on top of the fundamental dynamics of the business."

Air New Zealand reported that non-fuel operating inflation hit approximately $75 million, driven by airport landing charges and passenger levies.

Despite these rising costs, King believes New Zealanders are no longer willing to accept the airline’s current pricing strategies.

"We actually read the domestic market very well through our hip pocket because we have to pay for it."

She added that the airline seems to be clinging to a "post-COVID recovery" recipe that no longer works.

King instead urged the carrier to rethink its revenue management. "Get the things that you can control under control and do that well," she said.

Air New Zealand CEO Nikhil Ravishankar announced the airline is undertaking a  "comprehensive review"  to reset the business. However, he warned that based on current trading conditions, the second-half earnings are expected to be "broadly in line with, or modestly below" the first half, citing "material uncertainty".

"When a business says 'material uncertainty,' that is indicating to me that they are not focusing on the things that will make fundamental changes to the business," King added.