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Highlights
- Air New Zealand plans a premium cabin revamp on long-haul flights.
- More premium economy and business class seats to be added by 2030.
- Targeting cargo growth and cost reduction for long-term stability.
Air New Zealand (ASX:AIZ) is set to upgrade its long-haul cabin services, drawing inspiration from Qantas' premium cabin strategy. The carrier plans to significantly enhance its business and premium economy offerings, reflecting a shift towards catering to high-value travelers amidst subdued domestic and corporate travel demand.
Air New Zealand announced its intention to retrofit its Boeing 787-9 Dreamliner aircraft by 2030. The modifications will reduce the aircraft's total seating capacity but increase business and premium economy seats by nearly a third. The move mirrors a growing industry focus on premium services as a means to counter fluctuating demand in other segments.
The airline recently reported plans to resume services to London’s Gatwick Airport, marking a return to a key international market. This follows the sale of its Heathrow slots during the pandemic to manage financial pressures. Despite these challenges, Air New Zealand declared that its loss-making streak has ended, signaling a recovery from a difficult 2023-24 period affected by delays in aircraft deliveries and engine supplies.
The company projects pre-tax earnings for the first half of the 2025 financial year to range between $NZ120 million and $NZ160 million. This includes compensation from Pratt & Whitney for delayed engines, gains from an aircraft sale and leaseback deal, and COVID-19-related credits. While Air New Zealand acknowledged uncertainties in its operating environment, some experts remain optimistic about its performance, citing favorable fuel cost trends as a positive factor.
Air New Zealand also aims to bolster its cargo revenue, targeting $NZ500 million by the 2028 financial year. The airline plans to optimize cargo exports while reducing costs through operational efficiencies such as lower fuel consumption, labor savings, and streamlined overheads. These efforts are designed to counter inflationary pressures and rising landing fees.
Meanwhile, Qantas (ASX:QAN) is advancing its Sunrise ultra-long-haul project, which is expected to generate significant earnings growth once operational. Air New Zealand’s strategic pivot, including premium cabin investments, positions it to compete effectively in a rapidly evolving aviation market.
Shares of Air New Zealand rose on the ASX following the announcement, marking a gradual recovery despite a challenging year.
