Air New Zealand announced Thursday (25 August) the airline posted a loss before other significant items and taxation of NZ$725 million for the 2022 financial year, consistent with guidance provided to the market in June. The statutory loss before taxation was $810 million. Although the financial year ended strongly following the phased reopening of New Zealand’s borders from March, the airline’s operating revenue of $2.7 billion was significantly impacted by pandemic related travel restrictions. Cargo and domestic revenues helped lift overall revenue by 9 percent, however high fuel prices and reduced flying over much of the year resulted in a loss for the period.
Air New Zealand Chief Executive Officer Greg Foran said the airline continued to be guided by a clear strategy, moving deftly to address continued change by focusing on doing the right thing for its stakeholders. “For customers, we’ve been focused on restoring services, maintaining a choice of fares and launching innovations to improve their journey with us. For our amazing staff we have provided one-off awards to acknowledge their continued extra mahi, and for our communities we’ve been obsessed with operational performance, which drives the reliable services they depend on. For our shareholders, whose support has refuelled the business for future growth, we’ve completed a successful recapitalisation that was structured to be fair to our shareholders, including those that didn’t take up the rights offer.”
Foran said cargo revenue continued to be a major contributor to the company’s performance, up 32 percent to $1.0 billion. Additional flying under the New Zealand and Australian government airfreight schemes contributed $403 million of that revenue. With borders now largely reopened, the Australian scheme has ended, and the New Zealand scheme is tapering off and will cease by the end of March 2023.
When travel restrictions began to lift in March the company recorded a very strong recovery in bookings and revenues. This trend continues, with high booking levels through July and August. Corporate bookings are also encouraging and are trending closely towards pre-COVID levels.
Foran referred to the airline’s mid-August schedule changes, which reduced seats by 1.5 percent through to the end of March 2023, as another example of doing the right thing for stakeholders. “As we’ve been seeing overseas, travel demand is much stronger than anyone anticipated. But we’re operating in a very tight labour market with high fuel prices, tough economic conditions and the highest levels of employee sickness in more than a decade. Our rehiring efforts and training capability have been excellent, as has work to get our Boeing 777-300ER aircraft back flying again, but the experience for some of our customers and the impact on our front-line staff this winter has been unacceptable, so we’ve adapted yet again. Having adjusted our schedule to provide customers with increased surety over their travel plans for the coming spring and summer, I am hugely appreciative of the work the Air New Zealand whānau has done to deliver more than 25,000 flights across June and July alone.”
The airline also made investment decisions in support of its Kia Mau strategy. These include the plan to move the Auckland workforce to its airport campus, investment in a new hangar at Auckland airport and the decision to close its Gas Turbines business unit by the middle of the 2023 calendar year.
As at 23 August 2022, the airline has available liquidity of $2.3 billion, consisting of approximately $1.9 billion in cash and $400 million of available funds on the unsecured standby loan facility with the Crown. The cash balance includes $200 million of issued redeemable shares which the airline intends to redeem once our recovery is further progressed. The Board does not expect to consider payment of dividends before the airline’s earnings substantially recover, and in the context of a supportive and sustained broader economic environment and recovery.
With borders now open to the majority of the airline’s markets, Air New Zealand expects the 2023 financial year to represent the first full year of uninterrupted passenger flying since the beginning of the pandemic. Total flying capacity for the 2023 financial year is expected to be in the range of 75 percent to 80 percent of pre-COVID levels. On this basis, the airline anticipates a significant improvement in financial performance relative to financial year 2022. Given the degree of uncertainty regarding volatility in jet fuel prices, the risk of a global recession, and other macroeconomic factors including inflationary pressures on costs, no earnings guidance will be provided at this time.
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