Air New Zealand's half year profit has taken a larger hit than expected, falling 33 percent amid slowing demand for air travel and increased costs.
Its net profit was $101 million in the six months ended December, compared with $150m the year before.
Costs rose due to price hikes for New Zealand airport charges, higher fuel costs, more maintenance work and a decline in cargo, as well as the purchase of its 14th Boeing 787-9 Dreamliner aircraft.
The airline's revenue rose about 2.9 percent, to $3 billion, due to increased capacity on its domestic and Pacific routes, with new services to Asia and North America also contributing.
"Our capacity discipline on existing routes, stimulation of leisure traffic with the domestic fare restructure and entrance into attractive new international markets has driven good revenue performance in the first half," chair Dame Therese Walsh said.
"Alongside our focus on profitable top-line growth, we are on track to deliver the long-term sustainable cost savings target from our business review initiatives."
The majority state-owned company had cut back local and international flights, now including to Japan, as it warns Covid-19 would wipe up to $75m from its full year underlying earnings.
"By proactively reducing these services we are better able to manage the cost implications of making late changes to our network and can redirect our most efficient aircraft, the Boeing 787 Dreamliner, to other parts of the network," new chief executive Greg Foran said.
He would spend his first 100 days in the job assessing its opportunities and risks to form a new business strategy.
"Air New Zealand holds a special place in the hearts of New Zealanders and we take that responsibility very seriously," Mr Foran said.
"As such, the diagnostic of the airline will look at how we can drive long-term sustainable outcomes for our customers, our staff, the broader community and our shareholders."
Mr Foran was unavailable for an interview with RNZ Business.
It was targeting full year underlying earnings of between $300m and $350m.