Air New Zealand posts third straight loss, sees rebound in 2023

Air New Zealand has posted its third straight annual loss after months of lockdowns and border closures earlier in the year pummelled travel.

But New Zealand’s flagship carrier signalled the worst of the losses are over, anticipating flying capacity to reach 75-80 percent of pre-pandemic levels for the 2023 financial year following the reopening of the country’s borders.

The airline suffered a 725 million New Zealand dollar ($450m) loss for fiscal 2022, compared with a 444 million New Zealand dollar  ($276m) loss a year earlier.

New Zealand earlier this month lifted its last pandemic border restrictions after welcoming the return of tourists from more than 50 countries, including the United States, Canada and the United Kingdom, in May.

Domestic air travel has also rebounded strongly after the lifting of COVID-19 curbs in the country. However, high rates of illness among staff during the southern winter season led the airline to limit capacity.

Air New Zealand said earlier this month it would operate its domestic and international schedule at 90 percent of pre-pandemic capacity for the next six months.

The airline did not provide an earnings forecast for 2023, pointing to uncertainties around inflationary cost pressures and volatility in jet fuel prices.

In March, the carrier raised $2.2 billion New Zealand dollars ($1.37bn) to shore up its pandemic-hit balance sheet and repay a government-liquidity package of $2 billion New Zealand dollars ($1.24bn).

“As we’ve been seeing overseas, travel demand is much stronger than anyone anticipated. But we’re operating in a very tight labour market with high fuel prices, tough economic conditions and the highest levels of employee sickness in more than a decade,” Air New Zealand Chief Executive Officer Greg Foran said.

“Our rehiring efforts and training capability have been excellent, as has work to get our Boeing 777-300ER aircraft back flying again, but the experience for some of our customers and the impact on our front-line staff this winter has been unacceptable, so we’ve adapted yet again.”

New Zealand used tough border controls to stay largely COVID-free throughout the pandemic until the arrival of the highly infectious Omicron variant in December led to mass infection in the country.

While New Zealand once boasted one of the lowest death tolls globally, the country’s isolation decimated industries such as tourism and left thousands of New Zealanders stranded overseas.