Like Qantas, there was a big blob of red ink for Air New Zealand thanks to COVID-19 in the year to June, but unlike its other Australasian rival, Virgin Australia, the Kiwi carrier remains solvent and in business.
That survival, admittedly was due to a bailout by the majority shareholder, the NZ government and the airline revealed it remains in discussions with the government about future funding options.
In fact, the airline says it will start using the $NZ900 million standby loan from the government in the next day or so.
Air NZ yesterday revealed a $NZ454 million ($A416 million) net loss in the year to June 30 thanks to the COVID-19 pandemic.
The loss, after a $NZ276 million profit a year earlier, included a $NZ338 million write-down to the value of the airline’s long-haul Boeing 777 fleet, which will remain grounded for the foreseeable future. That write-down was revealed earlier in the year by the airline.
“It is clear that COVID-19 is unlike any other crisis the aviation industry has experienced,” Air New Zealand’s CEO Greg Foran said in a statement.
The airline reported an underlying loss before significant items and tax of $NZ87 million, compared to a profit of $NZ387 million in the prior year, reflecting a 74% drop in passenger revenue from April to June 30.
The underlying loss was smaller than the company forecast in June when it predicted a $NZ120 million loss, which Mr. Foran said was due to a strong rebound in domestic flights
Air New Zealand said its domestic capacity was back to 70% of pre-COVID levels in June and August, well ahead of Qantas is currently flying at around 20% of pre-COVID levels domestically.
However, Air New Zealand said it does not expect passenger demand to return to 2019 until 2023 at the earliest which means it will have to settle on new funding arrangements just in case the return to normal takes longer.
The airline had short-term liquidity of about $NZ1.1 billion, made up of cash, and a $NZ900m standby loan from the Government, which owns 52% of the airline. The airline expects to start drawing on the loan in the coming days.
The loan provides Air New Zealand with liquidity support while the airline worked towards a permanent solution, it said.
“Air New Zealand is engaging constructively with the Crown as it continues to assess its capital structure and funding needs,” the airline said on Thursday.
