Air New Zealand provides full year earnings guidance

Stock exchange listings: New Zealand (NZX: AIR) / Australia (ASX: AIZ) / ADR (OTC: ANZLY)


MARKET ANNOUNCEMENT

Air New Zealand postal address: Private Bag 92007, Auckland, 1142, New Zealand
Investor Relations email: investor@airnz.co.nz
Investor website: www.airnewzealand.co.nz/investor


16 April 2025

Air New Zealand provides full year earnings guidance

Air New Zealand has today provided a trading update on expected performance for the
second half of the 2025 financial year, reflecting a substantial reduction in the
compensation it anticipates receiving from engine manufacturers during the period,
despite an increased number of grounded aircraft.
Compensation
At the airline’s interim results announcement on 20 February 2025, the Company noted
that it was unable to provide full-year earnings guidance due to significant uncertainty
around the number of grounded aircraft and related compensation levels. These
groundings stem from global maintenance requirements on the Pratt & Whitney and
Rolls-Royce engines that power the airlines Airbus neo and Boeing 787 Dreamliner
fleets.
Since that announcement, engine maintenance timeframes provided by the
manufacturers remain unpredictable. As a result, current expectations are that 11 aircraft
are grounded, despite Air New Zealand securing seven additional leased engines and
one further owned spare engine to stabilise the number of grounded narrow body jets.
The airline is engaged in ongoing negotiations with engine manufacturers regarding
appropriate levels of compensation for unserviceable engines, and accurate timeframes
for engine returns. These discussions continue to be complicated, but Air New Zealand
is exploring all possible avenues to ensure a fair outcome.

In the first half, the compensation framework included flexibility that allowed certain
engines that were not able to be used in commercial service to be treated as
unserviceable for the purposes of compensation. This is despite the airline retaining them
‘on-wing’, to allow for things like repositioning of stored aircraft. That short-term flexibility
has now ended, and only engines that are ‘off-wing’ for maintenance trigger
compensation. Accordingly, decisions made by the airline to retain engines ‘on-wing’ for
the same reasons as in the first half, result in lower compensation in the second half. As
engine manufacturer compensation is based on the number of unserviceable engines,
rather than the number of grounded aircraft, compensation received may not directly
reflect the total number of aircraft on the ground.

Stock exchange listings: New Zealand (NZX: AIR) / Australia (ASX: AIZ) / ADR (OTC: ANZLY)


MARKET ANNOUNCEMENT

Air New Zealand postal address: Private Bag 92007, Auckland, 1142, New Zealand
Investor Relations email: investor@airnz.co.nz
Investor website: www.airnewzealand.co.nz/investor


Given the ongoing uncertainty, the airline currently expects compensation recognised in
the second half to be approximately $35 million to $40 million. This is substantially lower
than the $94 million recognised in the first half, noting that approximately $30 million of
the first half compensation related to a one-off settlement for other periods.

Overall trading conditions
While Air New Zealand is currently benefiting from lower fuel prices, its operations remain
configured to operate around 8 to 10 more jet aircraft than are presently available.
Adjusting the business to reflect fewer aircraft in the short-term introduces considerable
complexity, especially as engines begin returning to service and capacity ramps up
again.
The airline notes that recent US tariff announcements have also added uncertainty to the
broader demand environment. While no material changes in bookings or cargo have
been observed, the Company is closely monitoring the situation.
Outlook
Taking the above factors into account, Air New Zealand estimates earnings before
taxation for the 2025 financial year to be within the range of $150 million to $190 million.
Included in this range is the $35 million to $40 million in compensation noted above, as
well as $20 million of credit breakage expected to be recognised in the second half for
unused customer credits considered highly unlikely to be redeemed. The range also
assumes fuel at US $81 per barrel for the remainder of the financial year.

Ends.
This announcement is authorised for release on the NZX and ASX by Jennifer Page, General Counsel &
Company Secretary.

For investor relations queries, please contact: For media enquiries, please contact:
Kim Cootes, Head of Investor Relations Air New Zealand Communications
kim.cootes@airnz.co.nz media@airnz.co.nz
+64 272 970 244 +64 21 747 320