Air New Zealand has plunged to a $242 million annual loss, as soaring fuel prices and engine problems wiped out gains from stronger passenger revenue.Key numbers for the 12 months ended 30 June 2026 compared with a year ago: Net loss $242 million vs net profit $108 million Revenue $7.0 billion vs $6.8 billion Pre-tax loss $336 million vs pre-tax profit $164 million Passenger revenue $6.1 billion vs $5.9 billion No final dividend declaredThe national carrier reported a pre-tax loss of $336m for the year ended June, compared with a restated pre-tax profit of $164m the year before.Its net loss was $242m, compared with a restated net profit of $108m in the 2025 financial year.Air New Zealand said the previous year's numbers had been restated because of an accounting adjustment relating to maintenance provisions on leased aircraft, which had no cash impact.Costs overwhelm revenue growthRevenue rose 3.9 percent to $7 billion, while passenger revenue increased 4.8 percent to $6.1b, reflecting higher capacity, passenger volumes and yields.However, operating costs increased 11.8 percent, led by fuel, maintenance and aviation system charges.Fuel and engine problems biteThe airline estimated the Middle East conflict increased fuel costs by $328m compared with what it had expected going into the second half, but it reduced that to $205m after hedging.After fare increases and capacity reductions, Air New Zealand said the higher fuel price still had an estimated $135m impact on its pre-tax result.Ongoing Rolls-Royce Trent 1000 and Pratt & Whitney PW1100 engine issues cost the airline an estimated $190m through lost capacity, additional lease and engine costs, lower fleet utilisation and operational inefficiencies.Maintenance was also a major drag, with costs rising by about $139m excluding foreign exchange, because of lifecycle maintenance costs and additional maintenance on leased engines.Air New Zealand chair Dame Therese Walsh said the result reflected the significant external pressures the business had faced over the year."The board and management have a well-defined plan to rebuild a financially resilient and commercially sustainable national airline," Walsh said.Chief executive Nikhil Ravishankar said the airline had responded with fare adjustments and capacity reductions, but airlines globally had not been able to recover the full increase in fuel costs because air travellers were sensitive to higher prices."It's been a very challenging year for aviation, and our financial result reflects these challenges," Ravishankar said."However, we are making real progress on what we can control," he said, pointing to on-time performance improving to 84 percent in the second half of the financial year and higher customer satisfaction.It also delivered $94m in transformation benefits in the year and had identified a further $135m in annualised savings from the 2027 financial year.The board declared no final dividend, saying the airline's capital management framework required a positive net profit after tax before dividends could resume.No forward guidanceWith the Middle East conflict ongoing, jet fuel prices volatile and fuel currently around US$150 a barrel, the airline said it could not give earnings guidance for the 2027 financial year.Air New Zealand said although engine disruption was reducing substantially as aircraft returned to service, it still expected a $70m to $90m hit in 2027 from continuing lease commitments linked to engine issues and available aircraft not being fully used because of the fuel crisis.Maintenance costs were expected to be $50m to $100m lower than in 2026, however aviation system costs were still expected to rise well above inflation, with airport charges forecast to increase by more than 10 percent at some ports during 2027.The company continued to butt heads with Auckland Airport over airport costs, saying its charges were expected to rise "very substantially" in 2028 as part of its five-yearly price-setting process."We remain focused on executing our strategic priorities, improving financial performance and positioning the airline for long-term sustainable returns," Ravishankar said.It expected the 2027 financial year to be a transition and recovery year, with operational performance continuing to improve even as high fuel prices weighed on profitability.