Air New Zealand plans to raise capital by the end of next month through the issue new shares as its losses continue to mount during the pandemic.
The Auckland-based national carrier on Thursday predicted a record full-year pretax loss of more than NZ$800 million ($540 million), after reporting loss of NZ$367 million in the six months ended Dec. 31. It intends to launch an equity capital raise before the end of March or shortly thereafter, subject to market conditions, it said.
The airline, just over half-owned by the New Zealand government, has been kept alive by Crown support of NZ$2 billion comprising a NZ$1 billion loan facility and up to NZ$1 billion in non-voting redeemable shares. The capital raise will allow the airline to begin to exit those arrangements, which carry considerable financing costs.
As at Feb. 23, the company has drawn down NZ$760 million of the Crown facility. When the drawdown gets to NZ$850 million it intends to begin issuing redeemable shares to the Crown, and this is expected in March, the airline said.
The government backs the planned capital raise and would participate in it to maintain a majority shareholding, Air New Zealand said. It didn’t say how much it intends to raise.
The stock fell 1.6% to NZ$1.565 at 10:25 a.m. in Wellington.
Chief Executive Officer Greg Foran said limited international travel on top of local lockdowns in the first half of the financial year had a huge impact on the interim result.
“The airline has typically derived two-thirds of its revenue from its international passenger network and much of that was effectively grounded for the majority of the first half,” he said.
However, there was light at the end of the tunnel as New Zealand begins a phased reopening of its border and international travel starts to pick up again.
“Looking further out to the end of this calendar year, we will be ramping up more passenger flights to North America and looking forward to starting up our direct service to New York City,” Foran said.
