(Reuters) -Air New Zealand ( ANZFF ) posted a smaller-than-expected fall in annual earnings on Thursday as global engine maintenance issues continued to weigh on the bottom line, and warned of a weak start to the 2026 financial year.

New Zealand's flagship carrier reported earnings before taxation of NZ$189 million ($110.96 million) for the year ended June 30, compared with NZ$222 million a year earlier.

That compares with the Visible Alpha consensus estimate of NZ$178.6 million.

The airline said that uncertainty related to engine maintenance issues, sharp increases in aviation sector levies and other charges, and subdued domestic demand are "expected to adversely impact the airline's financial performance in the first half".

For the first half of 2026, the company anticipates its pretax profit to be similar to or less than that reported in the second half of the 2025 financial year.

It declared a final dividend of 1.25 New Zealand cents per share, same as last year. 

($1 = 1.7033 New Zealand dollars)