(Reuters) -Air New Zealand warned on Thursday of tougher trading conditions in the second half of the financial year, hurt by easing travel demand and higher cost pressures, while reporting a 38% fall in its first-half profit.
The carrier, which is majority government-owned, is facing "tougher forward trading conditions" as the rapid recovery in travel demand seen last year softens, with performance further dented by a tough economy.
"We are now leaning into the reality of a worsening revenue and cost environment, which is expected to have a significant adverse impact on performance in the second half," the company said in a statement.
It reiterated its fiscal year 2024 earnings before taxation to be in the range of NZ$200 million to NZ$240 million, lower than the NZ$574 million it clocked in fiscal year 2023.
The airline reported earnings before taxes of NZ$185 million ($114.18 million) for the six months ended Dec. 31, lower than the NZ$299 million reported a year earlier.
Air New Zealand's performance was hurt by inflationary pressures and ongoing supply-chain issues, primarily the Pratt & Whitney engine maintenance requirements for its A321neo fleet.
The company had warned last year that inspections of RTX's Pratt & Whitney engines would affect its flight services for up to two years.
It said it was currently reviewing pricing and capacity to reflect ongoing inflation pressures.
The carrier declared an ordinary interim dividend of 2.0 NZ cents per share.
($1 = 1.6202 New Zealand dollars)