Air New Zealand expects to launch an equity capital raise by the end of March or early April as part of its steps to recapitalize its balance sheet. The airline is suffering from the ongoing travel restrictions on its international network, which resulted in a $376 million statutory loss before tax in the first six months of its FY22, the airline reported on February 24. Air New Zealand prepares for capital raise in March.
Until now, Air New Zealand has received government support in excess of $2.0 billion, of which $1.0 billion as a Crown Facility and the other $1.0 billion in non-voting redeemable shares. On February 23, it has drawn down $760 million from the credit facility. ANZ negotiated a revised support package of another $500 million in December.
Although the airline has now $1.4 billion in liquidity, it is in need of more. It will have to repay the last of three PAYE aid of around $100 million in March. It will then start issuing redeemable shares, which will become incrementally available once the Crown Facility reaches $850 million.
The New Zealand government will participate in the equity plan: “Given the critical role the company has in New Zealand’s economy and society, the Crown is supportive of this intention and has confirmed its longstanding commitment to maintaining a majority shareholding and, subject to Cabinet being satisfied with the terms of Air New Zealand’s proposed equity capital raise, it would participate in the equity capital raise in order to maintain a majority shareholding in Air New Zealand.”
Pre-tax loss of $376 million for HY1
The pre-tax statutory $376 million loss for HY1 compares to $-105 million in the same period of FY21. The net loss attributable to shareholders is $272 million compared to $-73 million. The loss before significant items was $367 million. ANZ produced an operating loss of $344 million versus $-372 million. Revenues were down to $1.125 billion from $1234 billion. The airline burnt some $51 million in cash per month. Net debt stood at $2.8 billion in December.
The results reflect the impact of 107 days of lockdowns in Auckland and the national alert level restrictions, which hurt both domestic and international operations. Until July, domestic had been strong, but the restrictions affected total capacity by 26 percent compared to FY21 and was even 84 percent down on 2019. After the end of lockdown in mid-December, results improved but demand remains subdued in February and March following the outbreak of Omicron. Combined, Air New Zealand carried 3.2 million passengers in HY1 compared to 4.0 million in the previous year with a load factor of 58.5 percent.
Air New Zealand’s international traffic was almost non-existent with just 27.000 passengers carried as travel restrictions dominated HY1, losing the airline the usual two-thirds of its revenues. Only after the recently announced phased relaxation for nationals, bookings have increased, but the country will remain closed to foreign visitors until October.
Cargo only partially compensated for the missed revenues. They improved to $482 million from $373 million, of which $194 million came from government-supported flights. In total, ANZ operated some 100 cargo flights each week and recently re-activated a Boeing 777-300ER for cargo-only services.
Short-term focus is on domestic recovery
Despite the uncertainty of when New Zealand will reach the inflection point and return to a trajectory of recovery, Air New Zealand has recalled 250 cockpit and cabin crew and started retraining them. The short-term focus is on growing its domestic market and returning to profitability here, before relaunching the international network. It expects self-isolation restrictions to continue to have an effect on HY2, resulting in an estimated pre-tax loss of $800 million for the full year.
On the fleet, the airliner reported that it has deferred the delivery of one Airbus A321neo from this year to 2023 when it expects to take delivery of four aircraft now. A fifth one will arrive in 2024, plus two in 2027. The delivery of one Boeing 787-10 has been rescheduled from 2027 to 2025, which means that it will get two in 2024 and one each in 2025 and 2026, plus more after 2026. The interior update of its fourteen 787-9s has been deferred beyond 2023 but no schedule has been confirmed.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.
