Air NZ’s capital raise drifting beyond March

Air New Zealand’s twice-delayed capital raise is drifting beyond the end of the first quarter of this year although the airline says it still intends to launch the new equity offer “before the end of March 2022 or shortly thereafter, subject to market conditions".

The national carrier announced a $367 million loss for the six months to Dec 31, a dramatic deterioration on the $186m loss suffered in the same period a year earlier, and warned the second full year of trading under covid-19 was likely to produce a loss of more than $800m.

“It would be easy to think the first year of the pandemic had the biggest impact on Air New Zealand’s finances. However, only the final quarter of the 2020 financial year was impacted,” said chair Therese Walsh in a statement to the NZX.

“The 2022 financial year has and will continue to be much more heavily impacted, both by continued suppressed demand and rising costs.”

While there were encouraging signs internationally that travel across borders was resuming, the removal of self-isolation requirements at the NZ border was the crucial factor for a resurgence in international travel to and from NZ, the airline said. 

Air NZ chief executive Greg Foran told BusinessDesk in an interview last week he hoped self-isolation restrictions might be removed quickly once the peak of the current omicron outbreak passes, perhaps by Easter.

In the meantime, it had some $1.4 billion of available liquidity, comprising $170m in cash, $240m from a facility extended by the airline’s majority owner, the NZ government, and $1b of redeemable shares issued by the government.

Drawdown on the government loan facility rose by $215m between Dec 31 and Feb 23, with a total of $760m now drawn.

“Based on the current demand profile and noting the last of three PAYE repayments to the Crown of approximately $100 million due in March, the airline expects it will begin issuing redeemable shares in March 2022.

“The redeemable shares become available, and will be accessed incrementally, once $850 million has been drawn under the Crown Facility,” the airline said.