Air New Zealand is facing mounting financial pressure as soaring jet fuel prices threaten to push the airline into a projected pre-tax loss of between $340 million and $390 million for the 2026 financial year.
Chief executive Nikhil Ravishankar described the airline’s current situation as “a game of two halves”, saying the company was performing strongly operationally despite the growing fuel crisis, as reported by Stuff.
The airline has recently received international recognition for its on-time performance, economy class service and seven-star safety rating. Ravishankar said the return of most grounded aircraft from engine manufacturers after years of supply-chain disruptions was another positive sign for the airline, Stuff has reported.
“The things that we are in control of, the airline is performing at a world-class outcome,” Ravishankar told Stuff on Friday, as quoted by Stuff.
However, the sharp rise in jet fuel prices over the last 10 weeks has heavily impacted the airline’s outlook. Fuel prices surged from around US$85 a barrel to as high as US$230 a barrel.
“When your biggest cost item more than doubles, that hurts us, right? So, if you look at our underlying results, two-thirds of it is driven by the fuel crisis, by and large, and one third is driven by the underlying performance of the business,” Stuff has quoted.
Ravishankar said the airline was reviewing every area of spending to manage the pressure and was also seeking cost reductions from suppliers.
“The team have been quite literally going line by line on every cost item that we've got, and looking at ways we can reduce that.
“This is not just Air New Zealand's problem alone. It's an industry-wide issue, and so our teams are now going back to all of our major suppliers and saying you need to do your bit,” as quoted by Stuff.
He said customers were already under financial strain and further fare hikes would not be the solution.
“We need to try and reduce that, and that's what we're trying to do.”
The airline is also considering pausing some projects, which could lead to job losses. Ravishankar said any potential cuts would not affect customer-facing roles. Air New Zealand currently employs about 11,500 staff.
“We'll need fewer people to do some of that work, and so yes, it's inevitable that there's going to be an impact, and that's what we're working through between now and the end of June,” Stuff has quoted.
Air New Zealand has already reduced flights by 5% since March, but Ravishankar assured passengers they could still “book with confidence” as operations continue normally.
He said there would be no further fare increases or flight consolidations before the July school holidays, though additional schedule changes could happen later in the year.
“We are currently working on what happens post that, so August, September and October ... in certain markets we might have to go deeper, but it'll be in the range of 5 to 10% of flying.
“By and large, what you should expect to see is further consolidations, the price is what it is, and we know we're at the edge of what our customers can afford. We will review that, but really what we're trying to do is to do less flying where we can consolidate two flights and not fly two half flights, but fly a single flight so we halve the fuel bill,” Stuff has quoted.
The airline said it remained confident about jet fuel supplies through July. Ravishankar said the lack of visibility beyond that period was normal and not linked to global conflicts.
“At the moment, we're not seeing any supply issues.”
“No airline, not a single airline in the world, is immune to this issue, because all of us need fuel to fly aircraft, and we’re all exposed to it by and large the same way,” Ravishankar said, as quoted by Stuff.
Despite the financial uncertainty, he remained optimistic about New Zealand’s long-term tourism and aviation prospects.
“I wouldn't panic about the future of aviation connectivity into the country. We have an incredibly strong proposition. We've got great trade opportunities. We've got great tourism opportunities.
“I'm yet to meet a single human being when they ask me where I'm from and I say I'm from New Zealand, where they go ‘No interest in ever visiting there’. It's on everyone's bucket list, and given the way the world is today, I think our brand value has only gone up, not down,” as quoted by Stuff.
Ravishankar also praised airline staff for their resilience during the challenging period.
“I get to work with some incredible colleagues who are carrying this load with me and we all get paid to come and do hard stuff, and we like doing hard stuff. That’s why we work in this industry, a lot of complex problems to solve.
“We’re all in good shape and our culture hasn’t been stronger. We’ve all really come together, lots of camaraderie and goodwill in this company,” Stuff has quoted.
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