Air New Zealand sets date of 2021 for raising capital

Air New Zealand says it could raise additional capital in the first half of 2021.

The airline has begun using a $ 900 million government backing loan and said today that it continues to assess a variety of scenarios on how the pandemic could unfold and subsequent impacts on its business operations, fleet, operating cost structure and requirements for capital.

“Assuming no further material adverse developments, the company expects to complete the review of the strategic capital structure in early 2021 and be in a position to proceed with the capital raising to be completed by June 2021,” the airline said. to NZX.

“The New Zealand government has recently reaffirmed its commitment to maintain its majority stake in Air New Zealand, and the board is constructively engaging with the Crown in their capital structure and funding discussions.”

In recent weeks, Air New Zealand has started to resort to the “Crown Standby Facility”, which has high interest rates of between 7% and 9%. The loan can be converted into equity capital for the government, which already has a 52% stake in the airline.

The election has stalled any move to raise more capital, as other airlines such as Qantas and airports, including Auckland Airport, did in the early days of the Covid-19 crisis, which has wiped out most passenger revenue.

Air New Zealand’s delay in going to market will give the airline more time to restructure and assess the state of the industry. The airline had started the year with more than $ 1 billion in cash, but this figure dropped to $ 200 million in August.

It was burning cash at an average of $ 175 million a month from April to June and said last month that it expected future monthly average cash consumption to be between $ 65 million and $ 85 million.

More than 4,000 of its 12,500 employees have lost their jobs and it has grounded almost its entire Boeing 777 fleet, as it does not expect to resume international flights until the end of next year.