Air New Zealand Says Airline Competition To Impact Profits

Daniel Fowkes
20 Feb 2024
· Aircraft 
· Airlines 
Air New Zealand has said competition from United Airlines, Airbus aircraft groundings and low demand will impact its profits for 2024.

Air New Zealand has said intense competition from other airlines in the industry, alongside the ongoing Pratt & Whitney engine crisis impacting its Airbus narrowbody jets will impact its financial performance for the first six months of 2024.

While these points remain a significant part of the focus for financial performance at the company, other factors are hurting the airline, such as inflation, low domestic demand and general maintenance of its network.

US Airlines Add Competition To Air New Zealand

International airlines, such as those within the United States, are specifically said to be hurting the New Zealand-based carrier as it battles with increased competition, pricing and more. Air New Zealand says that due to the added competition, its revenue performance for the remainder of the year will be impacted.

United Airlines has become one of the largest airlines serving the United States to the Oceania region, rapidly expanding towards critical markets. Now, the airline is the largest carrier between Australia and North America, overtaking Australian flag carrier Qantas.

United is, therefore, one of the many looking to take advantage of its substantial market share in the US and extend that. The carrier is now bringing its extensive fleet to more international markets, such as New Zealand and Australia.

United Airlines Boeing 777-200 at Munich Airport
Photo credit: Florian Klebl

However, for modest airlines like Air New Zealand, which hold their own in their home country, any added competition gives consumers another choice. United, among other airlines, can often become the more compelling option for travellers looking to book their next holiday.

Corporate Demand Issues

During the height of the pandemic, how corporate work was conducted dramatically changed, with businesses forced to improvise and move towards virtual meetings, and that has continued. Businesses have seen how costs have been cut without needing to fly employees worldwide.

In saying that, for some businesses, there remains a need for such type of travel. Still, Air New Zealand continues to see low demand levels for corporate domestic travel, which affects its financial performance.

While frustrating for Air New Zealand, they’ll seek comfort in knowing that they are far from the only airline seeing a similar trend worldwide as business travel recovers at a fraction of the leisure demand pace.

Pratt & Whitney Engine Crisis

Air New Zealand, off the back of the Rolls Royce Trent 1000 problems on the 787 in the late 2010s, is now feeling the effects of the Pratt & Whitney engine crisis, which has seen the company look towards leasing and network adjustments.

Additionally, the airline has been forced to park some of its modern fuel-efficient Airbus narrowbody jets recently delivered to enhance operations rather than be a burden.

Air New Zealand says it has incurred a 35 million dollar short-term cost concerning aircraft leasing alongside contact centre resources as it battles these engine difficulties.

While Pratt & Whitney is the centre of attention in the engine saga, the difficulty in acquiring aircraft also stretches to general manufacturing delays at leading companies such as Airbus and Boeing. Thus, airlines’ inability to acquire aircraft on time means they must head to the now under-pressure leasing market to mitigate losses.

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