Air New Zealand Posts Second Annual Loss, Suspends Guidance

(Bloomberg) -- Air New Zealand posted its second straight annual loss and suspended earnings guidance as the South Pacific nation grapples with a coronavirus outbreak that’s prompted a strict lockdown.

The airline announced a loss before significant items and tax of NZ$440 million ($307 million) for the year ended June 30, its first full 12-month period of operation with Covid-19 related international travel restrictions. Operating revenue of NZ$2.5 billion was down 48% on the prior year, the Auckland-based carrier said Thursday.

“Air New Zealand’s board does not expect to consider payment of dividends before the airline’s earnings and gearing substantially recover, and in the context of a supportive macroeconomic environment,” Air New Zealand said. While it suspended 2022 earnings guidance, citing uncertainty surrounding the current lockdown and ongoing international travel restrictions, in June it said it expected to post a third straight loss in the 2022 financial year. 

New Zealand plans to start gradually reopening its border from early next year, but it must first contain an outbreak of the infectious delta strain of the virus and step up a vaccination rollout that has been one of the slowest in the developed world. Air New Zealand said the government had advised it that the current environment is not sufficiently stable to raise equity, so it has further deferred a planned capital raise until the first available window in the first quarter of 2022.

The airline is 52% owned by the government.

“Given the critical role that the airline has in New Zealand’s economy and society, the Crown has again confirmed its longstanding commitment to maintaining a majority shareholding in Air New Zealand,” the carrier said. “Subject to Cabinet being satisfied with the terms of the airline’s proposed capital raise at the relevant time, the Crown has again confirmed that it will participate in an equity capital raise by purchasing the number of new shares necessary to maintain a majority shareholding.”

Until the capital raise is completed, the airline has access to NZ$1.15 billion in remaining funds from a NZ$1.5 billion government loan. Air New Zealand expects to draw down further on the facility in coming months, it said.

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