Demand driving recovery: Air New Zealand’s 1H23 results are in

Air New Zealand Boeing 787-9, photographed on 20 September 2014 from Wolfe Air Aviation's Learjet 25B.

By Zach Havard

Air New Zealand has posted a staggering NZD$675 million (AUD$617m) dollar turnaround compared to the equivalent six month period the year previous, and, like many in the travel game, the airline is expecting more growth in the months to come.

Following three years of COVID-related losses, Air New Zealand’s interim result reflects sustained demand strength, particularly across the summer peak period, a return in business travel and overseas tourists, as well as cargo revenues above pre-COVID levels.

Dame Therese Walsh, chair, Air New Zealand, said she is extremely proud of the Air New Zealand whānau’s (family) determination considering the challenges endured restarting an airline during COVID.

“Today’s result reflects an important milestone in our recovery and places us in a strong position to deliver on our strategy,” Walsh said.

“When New Zealand’s borders reopened much earlier than expected, our people rose to the occasion, moving swiftly to return aircraft to service, relaunch 29 routes and onboard more than 3,000 employees to support the eight million customers we flew between July and December – the busiest period we’ve seen in over three years.”

Air NZ posted an operating revenue of NZD$3.1 billion, and flew 8 million passengers, compared to 3 million in the prior corresponding period. Domestic travel has returned to 94 per cent of pre-COVID numbers and international has seen a 60 per cent bounce back.

Air NZ also embarked on the biggest recruitment drive in the history of the company, employing 3,000 people since January 2022, 2,000 of which were recruited in the six months to December 31, though the airline says there is still room for improvement.

“Our recovery is well underway and operating performance is improving steadily, but like most airlines globally, we continue to experience challenges that make it hard at times for our fantastic team to deliver the level of service we expect of ourselves, and our customers expect of us,” CEO, Air NZ, Greg Foran, said.

“We know we have more work to do to tackle customer concerns like long wait times at our call centres, getting planes to depart and arrive on time, lost baggage and getting refunds back in a timely manner.

“We want to thank customers for bearing with us through these and other challenges since we restarted flying.

“We’re very aware that flying is not currently the pain-free experience it should be and getting back into shape is a key priority.

“On top of this, air fares are higher than they were pre-COVID. Like many businesses, we’re facing a high inflation environment with increased fuel, labour and other supplier costs at a time when more customers are wanting to travel, and that flows through to ticket prices.

“A key focus for the team has been bringing back much needed capacity to minimise the impact of higher prices on customers. With six Boeing 777-300ER widebody aircraft now returned into service, three new domestically configured A321neo aircraft delivered and a fully crewed leased aircraft to serve the Auckland-Perth route, we are adding capacity back at pace.”

Air NZ 1H2023 reporting. (Supplied)

Looking to the future, and the remainder of the financial year, Air NZ said it is optimistic about the levels of demand they are continuing to observe, however it is also aware of significant uncertainty regarding the overall economic outlook both domestically and internationally.

Against this backdrop and based on the assumption of an average jet fuel price of US$105 per barrel for the second half of the financial year, 2023 earnings before other significant items and taxation are expected to be in the range of NZD$450-530 million (AUD$411.1-484.2 million). This guidance includes a preliminary estimate of the impact of the Auckland floods and Cyclone Gabrielle.

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1H23 air new zealand Therese Walsh