Air New Zealand has said it now expects to post a loss for the 2022 financial year of $530 million after predicting a $450m loss in June.
The national carrier said in a statement to the NZX the eight-week suspension of the quarantine-free travel bubble with Australia forced it to reassess earnings expectations.
It continued to assess the impact of the suspension, and said it now expected demand on the Tasman may be slower to recover and that there remained a risk of future suspensions.
Air NZ said operating cashflow had also been reduced by the bubble pause and it would draw down more of its loan facility from the government as a result before the end of August.
Current drawings on the loan facility were $350m.
“As disclosed previously, the total available amount under the facility is $1.5 billion, and therefore the company currently has remaining available funds of $1.15b,” it said.
The airline’s expected $530m loss assumed a fuel price of US$78 per barrel and a foreign exchange rate for NZ/US dollar of 70 cents.
Filling the tank
In June Air NZ said it was aiming to undertake a capital raise before Sept 30, a portion of the proceeds from which will be used to repay any amounts drawn under credit line from the government.
Aviation analyst David Mackenzie said today's announcement adds weight to the value in delaying the capital raise.
"It's not a great time to be going to shareholders now, whereas there may be some good news stories early next year."
It also announced in June it would reward staff for helping get the airline through covid-19 with $1,000 worth of shares.
Permanent staff employed by the company as at December 2020 were eligible.
The shares will be allocated in the fourth quarter of this calendar year. Air NZ said about 8,000 employees will be eligible.
Air NZ shares last traded at $1.49.
And showing the covid pain is not just being felt by airlines, this morning Jarden said Auckland International Airport's (AIA) operational and earnings outlook is inherently uncertain and downgraded its outlook for the main passenger gateway into NZ to "underweight".
"Despite this outlook and multiple years of lost or depressed earnings, AIA has consistently traded at a level over the last six months that implies an enterprise value broadly consistent with pre-covid levels. In the near term, we believe the pace and shape of recovery in passenger volumes remains the critical issue for AIA investors, including for the potential for further equity support."