Losses but Air NZ ready for reopening
AIR New Zealand has revealed a $72 million net loss for the six months to December 31 as it remains pinned down by travel restrictions in response to Covid19.
The result follows a $454 million loss for the 2019 financial year, which included a $338 million writedown to the value of its longhaul fleet, and a $101 million profit for the same sixmonth period a year ago.
The airline reported an underlying loss before significant items of $185 million for the first half of this financial year, compared to $198 million in the previous corresponding period. Analysts were expecting an underlying loss of about $220 million for the halfyear.
Chairwoman Dame Therese Walsh said while the results from the first half were ‘‘still significantly subdued’’, she was optimistic that the changes made to the business over the past year or so have set up the airline well for when borders reopened and the airline raised capital.
Shortterm liquidity as at February 23 just topped $700 million, consisting of cash of approximately $170 million and $550 million of undrawn funds on its $900 million Government loan. The total amount drawn on the Crown facility was $350 million.
Air New Zealand has said it would raise equity before June 30 with the Government confirming it would retain its majority stake in the national carrier by participating in the capitalraising.
The Government owns 52% of the airline. The airline is burning through between $65 million and $85 million in cash a month and has said it wants to minimise its reliance on the taxpayer loan — with interest rates of up to 9%.
The New Zealand Herald reported last week that Air New Zealand would need to raise as much as $1.5 billion to repay the Government loan, top up working capital and cover the cash it needed to keep going until the border reopened.
Dame Therese said the airline was having benefits from a lower cost base.
‘‘Since the initial travel restrictions were introduced in early 2020, Air New Zealand has taken significant actions to reduce its cost base. While some of these actions have taken time to implement, we are now seeing the benefits of these efforts flow through into our results. Compared to preCovid times, operating costs excluding fuel in the first half of this financial year declined more than 50%, and some of these are expected to be sustainable cost reductions moving forward.
‘‘This will be pivotal as we enter recovery mode as it means we will not only be highly costeffective, but with the changes we have made to our fleet, we will also have one of the most modern, efficient fleets in the world.
‘‘The board and I know that the rapid implementation of these changes would not have been possible if it were not for the skill and determination of our people. I want to thank our team, who, in the face of much adversity, change and uncertainty, has been resolute in their focus on delivering for our customers,’’ Dame Therese said.
Air New Zealand’s operating revenue declined 59% to $1.2 billion in the first six months as network flying was substantially reduced by 65%.
Chief executive Greg Foran said the interim results should be read in context of the global Covid19 pandemic that had virtually suspended international air travel. — The New Zealand Herald