Air New Zealand is facing a significant challenge with its fleet of Boeing 787 Dreamliners as ongoing engine issues are expected to keep a number of these aircraft grounded throughout 2025. This situation, driven by a supply chain crisis affecting engine manufacturers, is causing operational disruptions for the airline and prompting adjustments to its network and fleet management strategies. The Boeing 787-9s, a key component of Air New Zealand’s long-haul operations, are powered by Rolls-Royce Trent 1000 engines, which have been plagued by durability problems for years. These issues, combined with maintenance woes affecting Pratt & Whitney engines on other aircraft in the fleet, such as the Airbus A320neo family, have led to a situation where the airline anticipates having up to 11 aircraft—roughly one-fifth of its fleet—out of service at times during the second half of 2025.
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The airline’s Chief Executive Officer, Greg Foran, has indicated that the problems will likely persist for another two to three years before the fleet returns to full capacity. This prolonged timeline stems from backlogs at engine manufacturers like Rolls-Royce and Pratt & Whitney, who are struggling to address maintenance demands and supply new components. For Air New Zealand, the impact is substantial, with an estimated NZ$150 million in annual costs tied to these disruptions. At any given time, the airline has around NZ$1 billion in capital sitting idle due to grounded aircraft, a figure that underscores the severity of the situation despite the carrier’s strong financial position as a Star Alliance member.
The grounding of the Boeing 787-9s has already forced Air New Zealand to make tough decisions regarding its international routes. Services to Chicago and Seoul have been suspended, with the Chicago route not expected to resume until the second half of 2025. These adjustments reflect the airline’s efforts to maintain reliability across the rest of its network while dealing with reduced capacity. To mitigate the shortfall, Air New Zealand has leased Boeing 777-300ERs to cover some of the gaps left by the grounded 787s. Additionally, the airline is awaiting the delivery of new Boeing 787s, expected in mid-2026, which should help ease the pressure once they enter service. However, delays in Boeing’s production schedule—currently averaging around six 787s per month—have further complicated the airline’s plans.
Despite these challenges, Air New Zealand is pressing ahead with a fleet renewal program. Fourteen of its Boeing 787-9s are slated for a nose-to-tail retrofit over the next two years, with the first aircraft already undergoing upgrades in Singapore. This $500 million project aims to modernize the interiors, introducing new seats, larger screens, and enhanced business class options. The retrofitted 787-9, registered as ZK-NZH, launched in mid-February 2025, marking a step forward even as the airline grapples with groundings. Meanwhile, six Boeing 787-10s remain on order, though their delivery timeline remains uncertain amid Boeing’s production constraints. Foran has acknowledged that the situation will likely worsen before it improves, with up to 5,000 seats potentially unavailable daily due to the grounded aircraft. This has led to a cautious outlook for the second half of the 2025 financial year, with the airline expecting performance to be significantly lower than the first half, despite a reported net profit of NZ$106 million for the six months ending December 31, 2024. Lower jet fuel prices—down 16% during that period—have offered some relief, but the costs of leasing aircraft, canceling services, and managing inefficiencies continue to weigh heavily. Air New Zealand’s leadership remains confident in its long-term strategy, bolstered by a robust balance sheet that recently supported a NZ$100 million share buyback and a modest dividend. Still, the road ahead remains turbulent as the airline navigates these persistent engine-related challenges.