Air New Zealand gets more government aid

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(PHOTO: Shutterstock)

San-MarinoAir New Zealand announced Tuesday (14 December) it was receiving an additional NZ$500 million of additional liquidity from the government to “better position the airline during the period up to its recapitalisation, including an ordinary equity raising”. The revised package, with overall liquidity support available increased to NZ$2 billion, includes a new agreement that gives Air New Zealand the ability to issue up to NZ$1 billion of non-voting redeemable shares to the government and a reduction in the existing secured facility from NZ$1.5 billion to NZ$1 billion, with an extended term to January 2026.

On 13 August 2021, Air New Zealand announced a further deferral of its planned equity raise until the first quarter of 2022. Since that announcement, the airline has been impacted by the recent domestic lockdowns and the ongoing Covid-related travel restrictions across its international network. The government has recently outlined a plan of phased reopening of borders from early 2022, which, in the airline’s view, provides an indicative pathway to reopening New Zealand for international travel. However, the future impacts of Covid remain uncertain and circumstances continue to change all over the world.

In that context, the airline has been considering its financial support requirements during the period up to a planned equity raising, which the airline is still targeting for the first quarter of 2022, together with what further support and flexibility may be needed if material and unexpected events were to occur in 2022 such that it becomes prudent to consider a further delay to the planned capital raise.

As of 14 December 2021, the airline has drawn NZ$505 million of the existing government loan. It is currently estimated that drawings could be approximately NZ$900 million by late February or March 2022. This reflects the estimated cash flow impact of ongoing travel restrictions including as set out in the airline’s announcement on 17 September 2021.

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