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Air New Zealand expects to complete a cash increase before June and has started to take advantage of a $ 900 million Covid-19 support loan from the Government.
In a statement sent to the New Zealand Stock Exchange on Friday afternoon, Air New Zealand President Dame Therese Walsh said that assuming “there are no further material adverse developments,” the company expected to complete a review of the strategic capital structure in early 2021 and be in a position to proceed. with the raising of capital that will be completed before June.
She said the government loan provided the company with necessary liquidity support as it worked on a plan for the future shape and size of its business after Covid-19.
“The company continues to assess a variety of scenarios on how the pandemic may unfold and the subsequent impacts on its business operations, fleet, operating cost structure and capital requirements.”
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The government loan, or Crown Standby Facility (CSF), was arranged just before closing in March and is made up of two services that carry interest rates of 7% to 9%.
“The CSF always had the intention of both parties to provide the necessary time for the airline to reposition its operations and facilitate the implementation of a long-term capital structure,” said Walsh.
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Air New Zealand expects to complete a review of the strategic capital structure in early 2021, after which it expects to complete a capital raise.
The government owns 52 percent of the airline and has the ability to convert the loan into equity.
The airline’s management is discussing its future capital structure and funding needs with the Government, and the Government recently reaffirmed its commitment to maintain the Crown’s majority stake in Air New Zealand.
An industry analyst recently said Stuff One of the reasons why Air New Zealand had not gone on the market already was due to politics, as the Government did not want it to be seen as a bailout for Air New Zealand before the elections.
Despite being independent from the government, the board was in a difficult position without the support of its majority shareholder, the analyst said.
But New Zealand’s first MP, Shane Jones, accused Air New Zealand’s board of directors of delaying the airline’s fundraiser, perhaps waiting to see who was next in power.
Air New Zealand is in survival mode as a result of Covid-19 with cash reserves falling to around $ 200 million and future monthly cash spending is expected to be $ 65 million to $ 85 million.
As part of extensive cost-cutting measures, they subleased their headquarters, signed up wide-body jets and laid off 4,300 employees with another 385 cabin crew jobs ready to begin.
In August, the airline posted its first loss in 18 years and its share price fell nearly 60 percent from its January high, trading at $ 1.31 on Friday.
