Air New Zealand has reported a $NZ104 million ($A97 million) half-year loss for the six months to the end of December and is looking to wrap up its refinancing deal with the government as quickly as it can.
The loss was of course always coming but nevertheless was a big slide from the $139 million profit in the December half of 2019.
On an underlying basis, stripping out a $NZ81 million gain from other significant items including foreign exchange gains on uncovered debt, the loss was $NZ185 million compared to a $NZ198 million profit in the prior period.
Revenue fell 59% to $NZ1.2 billion in the six months to December 31, with the dual ASX- and NZX-listed airline’s flying fell 65%.
Most of that reduction in flying was from the grounding of its international services, with domestic flying regaining 76% of pre-Covid levels by the end of the half.
That is well above Australia’s domestic market which was flying at only 40% capacity in December.
Cargo revenue grew 91% to more than $NZ 370 million, supported by a government scheme to ensure medical and other essential supplies got into and around the country even as commercial flights were grounded.
The company said there was too much uncertainty around when travel restrictions will be lifted for it to provide earnings guidance, other than it was on track for a “significant” full-year loss.
But it will need finance – the NZ government promised a $NZ900 million facility once the airline’s own cash had been used up. It has and the facility is now has $NZ770 left, so the need for a new financing and shareholding deal, plus an issue to shareholders is approaching rapidly.
The airline said in Thursday’s statement that it “has actively engaged with the Crown as the company has continued to assess its longer-term capital structure and funding needs. Air New Zealand has recently reconfirmed to the market and the Crown its intention to complete an equity capital raise before 30 June 2021.”
“Given the critical role the company has in New Zealand’s economy and society, the Crown has, in that context, confirmed in a letter to the Air New Zealand Chairman its longstanding commitment to maintaining a majority shareholding in Air New Zealand and that, subject to Cabinet being satisfied with the terms of Air New Zealand’s proposed equity capital raise, it would participate in that equity capital raise in order to maintain a majority shareholding in Air New Zealand,” the airline said.
NZ analysts say the shape of a deal should be clearer in the next month or to with some sort of new funding structure to be in place by the July 1 start of 2021-22.
