The suspension of trans-Tasman quarantine-free travel for a period of eight weeks because of lockdowns in Sydney, Victoria, and now southeast Queensland, has seen Air New Zealand lift its estimated 2021-22 financial year loss by 20% to $NZ530 million from the expected loss for the year to June 30.
As a result, Air NZ said it will be forced to make a drawdown on funds from the standby facility established by the government. It has already drawn $NZ350 million from the $NZ1.5 billion facility.
In a statement to the stock exchanges on both sides of the Tasman on Wednesday the airline said it “continues to assess the impact of this temporary suspension on passenger demand, in conjunction with an expectation that demand on the Tasman may be slower to recover following the re-opening of a travel bubble and that there remains a risk of future suspensions.”
Air NZ said that its June 18 forecast for 2020-21 for the year to June, 2021 still stood with losses before other significant items and taxation expected “to be comparable to the 2021 financial year, being a loss not exceeding $450 million.”
That’s a two-year loss of nearly $NZ1 billion.
“Operating cashflow has reduced as a consequence of the temporary suspension of trans-Tasman travel,” the airline told the stick exchanges.
“This reduction in cashflow, in addition to planned cash payments relating to aircraft in the coming months, means the Company expects to draw down further on the Crown standby loan facility before the end of August 2021.”
Air NZ said operating cashflow “remains positive due to continued domestic performance and the revenue contribution from the Government’s Maintaining International Air Connectivity scheme which is currently in place until October 2021.”
“Air New Zealand has not drawn on the Facility since February 2021, therefore current drawings remain at $350 million. As disclosed previously, the total available amount under the Facility is $1.5 billion, and therefore the Company currently has remaining available funds of $1.15 billion under the Facility,” it added.
The statement made no mention of progress a proposed capital raising.
The June update noted “As previously announced to the market, the airline is targeting to undertake a capital raise before 30 September 2021, a portion of the proceeds from which will be used to repay any amounts drawn under the Facility.”
Wednesday’s statement was silent on that matter. Given the high uncertainty on trans-Tasman travel, the silence is understandable.
