Table of Contents
What changed
Revenue was essentially flat at NZ$6,755m versus NZ$6,752m, but every line below it compressed. EBITDA eased 1.6% to NZ$926m, operating profit fell 11.6% to NZ$199m, PBT fell 14.9% to NZ$189m and NPAT fell 13.7% to NZ$126m. Passenger revenue declined 2% to NZ$5.9b on constrained capacity. Despite the weaker P&L, operating cash flow rose 16.0% to NZ$940m, cash on hand grew to NZ$1,436m and gross borrowings fell NZ$116m to NZ$1,277m, flipping the group from modest net debt of NZ$114m to a net cash position of NZ$159m. The declared final dividend was cut to 1.25cps from 1.5cps (–16.7%); combined with the 1.25cps interim, full-year dividends are 2.5cps.
What matters
- Second-half profit effectively disappeared. HY25 delivered NZ$106m of NPAT, implying only NZ$20m in H2 — about 16% of the full-year total on roughly half the revenue. The FY25 print is a weak-exit result, not a steady one.
- Cash quality improved even as accounting profit fell. OCF/EBITDA rose to 101.5% from 86.1%, and with capex easing slightly to NZ$780m, pre-lease free cash flow stepped up to c.NZ$160m from c.NZ$19m. The cut dividend is now covered c.3.9x by pre-lease FCF versus barely covered in FY24 (prior payout/FCF ratio 268.1%).
- Balance sheet direction is clearly strengthening — net cash, lower gross debt, higher liquidity — but equity fell NZ$64m to NZ$1,946m and ROE slipped to 6.5% from 7.3%, so the stronger balance sheet sits against deteriorating returns.
Expectations
Management states FY25 landed at the upper end of the April guidance range, and no quantified forward targets were supplied. The only shape context is HY25: on revenue the year was roughly even (H1 50.4%), but on NPAT the split was 84/16 in H1's favour, indicating a materially softer second half. The commentary that pricing pressure is "expected to persist" is consistent with that H2 shape and does not support an assumption that the FY25 run-rate automatically repeats in FY26. No stated EBITDA, capex or revenue target is available to test against.
Quality of result
Mixed. The NPAT decline is a real operating outcome — the effective tax rate barely moved (33.3% vs 34.2%) so there is no tax distortion masking the fall, and PBT fell harder (–14.9%) than NPAT. Reported EBITDA is struck "excluding items below" and the supplied materials do not reconcile those below-the-line adjustments, which limits confidence in comparability. The cash beat is partly genuine (higher OCF on stable capex) but partly working-capital-assisted risk: inventory rose NZ$34m (+26.0%) and operating working capital on the disclosed lines grew c.NZ$33m, so receivables and inventory moves flatter the cash line rather than dragging it. Payables were not supplied, so the working-capital picture is incomplete.
Unresolved
- What sits in the "items below" line bridging EBITDA of NZ$926m to operating profit of NZ$199m, and how much of the NZ$727m gap is depreciation/amortisation on lease assets versus discretionary adjustments?
- What drove the H2 profit collapse specifically — fuel, fares, capacity constraints from engine availability, or cost inflation — and which of those persist into FY26?
- Why was the final dividend cut 16.7% to 1.25cps when pre-lease FCF coverage improved so sharply and the group moved into net cash? This suggests management sees capital calls ahead that the release does not quantify.
- With capex still running at 11.5% of revenue and a stated intention that pricing pressure persists, what is the shape of fleet spend from here?
This briefing cannot assess fleet-renewal commitments, Rolls-Royce engine availability impacts, or any specific H2 operating drivers beyond what the supplied excerpts state.
Key metrics
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Revenue | $6755m | $6752m | flat |
| EBITDA | $926m | $941m | -1.6% ↓ |
| Net profit after tax | $126m | $146m | -13.7% ↓ |
| Net cash inflow from operating activities | $940m | $810m | +16.0% ↑ |
| Final dividend per share | 1.3c | 1.5c | -16.7% ↓ |
| Operating profit | $199m | $225m | -11.6% ↓ |
| Profit before tax | $189m | $222m | -14.9% ↓ |
| Cash and cash equivalents | $1436m | $1279m | +12.3% ↑ |
| Total assets | $8731m | $8548m | +2.1% ↑ |
Reference: annolyse.ai/briefings/air-fy25
Analytical metrics
| Metric | FY25 | FY24 | Context |
|---|---|---|---|
| PBT growth | -14.9% | — | — |
| Effective tax rate | 33.3% | 34.2% | — |
| OCF / EBITDA (cash conversion) | 101.5% | 86.1% | stable |
| FCF pre-lease | $160.0m | $19.0m | +$141.0m |
| FCF / NPAT | 127.0% | 13.0% | complementary conversion metric |
| Capex % revenue | 11.5% | 11.7% | — |
| Capex | −$780.0m | −$0.8m | −$779.2m |
| Debtor days | 0.3 | 0.4 | -0.1 days |
| Inventory days | 8.9 | 7.1 | +1.8 days |
| Operating working capital | $171.0m | $138.0m | +$33.0m absorbed |
| Trade debtors | $6.0m | $0.0m | +$6.0m |
| Net debt | −$159.0m | $114.0m | −$273.0m |
| Net debt / EBITDA | -0.20x | 0.10x | Strengthening |
| Gross borrowings | $1277.0m | $1.4m | +$1275.6m |
| Payout ratio vs NPAT | 32.9% | — | — |
| Payout ratio vs FCF pre-lease | 25.9% | — | covered |
| ROE (annualised) | 6.5% | 7.3% | Weakening |
| HY25 share of FY25 revenue | 50.4% | — | Other half was 49.6% |
| HY25 share of FY25 NPAT | 84.1% | — | Other half was 15.9% |
| Profit from continuing operations | $126.0m | — | — |
Reference: annolyse.ai/briefings/air-fy25
This analysis was generated using Annolyse, an AI-powered tool that analyses NZX company announcements. The analysis is based on available company filings and standard Annolyse calculations. This is general information only and does not constitute financial advice. The analysis may contain errors. Always read the original company filings and consult a licensed financial adviser before making investment decisions.