Air New Zealand (ASX:AIZ) expects pre-tax profit for the first half of FY25 to be between NZ$120 million and NZ$160 million, down from NZ$185 million in the same period last year. Despite the decline, the guidance is significantly higher than the pre-tax profit of NZ$37 million reported in the second half of FY24, indicating potential for recovery from recent challenges.

The company’s improved first-half outlook comes as it continues to face significant headwinds. Six Airbus Neos and four Boeing 787s, representing 16% of the airline’s jet fleet, were grounded due to global engine maintenance delays. These availability issues are expected to persist until early 2026, forcing airlines to consider leasing additional aircraft to increase capacity.

Expected revenues include a NZ$10 million cancellation of unused travel credits, a NZ$30 million compensation from the engine manufacturer and a NZ$20 million gain from the sale and leaseback of four A320 aircraft. This guidance assumes an average jet fuel price of US$91 per barrel.

The company also noted mixed demand trends. Corporate travel is starting to recover, but government travel remains depressed. Further relief could come from targeted reductions in the competitiveness of North American routes during the northern winter peak season.

Air New Zealand continues to focus on improving its operations, including updating its seat-to-suit service and introducing live chat functionality to improve customer service and efficiency. The company reiterated that, citing uncertainties in the trade and business environment, it will present full-year forecasts at the interim financial results announcement.

Air New Zealand’s share price rose following the announcement, reflecting optimism about the airline’s efforts. It is currently trading 2.11% higher at 48.5 cents.