Air New Zealand anticipates generating $20 million in revenue over the next six months from unused travel credits. The airline disclosed to the NZX that its underlying profit for the full year is expected to decrease by up to a third compared to the previous year due to a significant reduction in anticipated compensation from engine manufacturers for its grounded aircraft.
For the 2025 financial year, the national carrier projects earnings before taxation to fall within the range of $150 million to $190 million, a decline from $222 million in the prior year.
Air New Zealand disclosed that it foresees earning $20 million from “credit breakage” in the latter half of the financial year. This revenue stems from prepaid airfares, travel vouchers, and other credits that customers have not utilized and are unlikely to do so in the future. The airline recognizes these credits as revenue when they believe they will not be redeemed or have expired.
Jeremy Sullivan, an investment adviser at Hamilton Hindin Greene, noted that the Covid-19 pandemic resulted in numerous cancellations, with many customers opting for credits instead of refunds. He highlighted that some individuals may have forgotten about these credits, relocated, or found their travel plans unfeasible, particularly with Air New Zealand’s reduced booking options.
Sullivan emphasized the importance of utilizing these credits promptly to avoid them expiring and becoming valueless. He stressed that the $20 million in projected credit breakage in the second half of the year represents a significant portion of consumer funds at risk of going unused.
Air New Zealand customers are reminded that credits issued during the lockdown period of the pandemic must be utilized for bookings by January 31 next year, with travel completed by the year’s end. Credits issued after October 1, 2022, have a 12-month window from the date of issue to make a booking, followed by travel completion within 355 days.
For further comments, Air New Zealand has been contacted for input on this matter.
