AIR New Zealand said on Thursday it was carrying out a strategic review of its business after reporting a worse-than-expected first-half loss due to engine maintenance delays, weak travel demand and higher costs.

The flag carrier’s earnings have shrunk substantially over the past few years as global engine maintenance issues kept its aircraft grounded.

This, along with a weaker recovery in travel demand and higher costs, drove the carrier to post a half-year loss for the first time in four years.

“We are undertaking a comprehensive review of all aspects of the business, with the objective of returning the airline to sustained profitability,” said chief executive officer Nikhil Ravishankar in his first results announcement since taking the helm in October.

The carrier has also continued to grapple with global supply chain disruptions. The 2025 financial year marked its first full year affected by additional maintenance requirements on Pratt & Whitney and Rolls-Royce engines.

The airline flagged uncertainty in its compensation discussions with manufacturers on the engine shortage impact. Although it received a NZ$55 million compensation during the period, Air NZ estimated that an additional NZ$90 million could have been included within the result had its fleet operated as intended.

The carrier forecast second-half earnings to be flat or weaker than the first half, predicting continued pressure from supply chain and aviation system costs.

For the six months ended Dec 31, Air New Zealand reported a loss before tax of NZ$59 million (S$44.7 million), significantly wider than the Visible Alpha consensus estimate of a loss of NZ$21 million.

That compared with a profit of NZ$144 million a year ago.

The airline did not declare an interim dividend. It had declared an interim dividend of 1.25 New Zealand cents per share a year ago. REUTERS