Air New Zealand has reported a pre-tax profit of $189 million for the 2025 financial year, down from $222 million in 2024, as engine maintenance constraints and rising operating costs weighed on earnings.
The airline declared a final dividend of 1.25 cents per share and announced a $38 million share buyback, but analysts warn that shareholder returns may not be sustainable.
Net Profit and Dividend Policy Under Scrutiny
The carrier posted a net profit after taxation of $126 million. However, the dividend payout equates to 95.93% of annual earnings — well above its stated policy of distributing 40% to 70%. Air New Zealand acknowledged that the fall in earnings was driven by “a 4% reduction in available seat kilometres (ASK) caused by engine maintenance constraints” alongside higher non-fuel costs.
Dividend Volatility Raises Red Flags for Investors
The decision to maintain payouts despite weaker earnings has sparked questions about discipline. The airline’s dividend history emphasises this volatility: in 2015, shareholders received 0.0950 NZD per share, while by March 2025 the interim dividend had fallen to 0.0125 NZD, a 16.67% decline from the prior period.
Analyst Warnings on Payout Sustainability
Analysts argue the elevated payout ratio exposes fragility in the airline’s earnings base. If earnings before taxation fall to $34 million in the first half of 2026 as guided, maintaining the current dividend “would require a payout ratio exceeding 100%, which is unsustainable.”
Valuable Investments to Strengthen Outlook the Future
Air New Zealand is banking on a NZ$3.7 billion investment programme through 2030, including fleet renewal with new Boeing 787s and AI-driven operational tools.
A 12% reduction in fuel costs in 2025 provides some relief, and analysts expect profitability to improve from 2027 as supply chain issues ease.