Air New Zealand said on Wednesday (4 August) that it was anticipating a larger loss for the 2022 financial year because of the suspension of the trans-Tasman air bubble with Australia due to ongoing COVID-19 infections.
The New Zealand government announced on 23 July the suspension of trans-Tasman quarantine-free travel for a period of eight weeks and the airline said it “continues to assess the impact of this temporary suspension on passenger demand, in conjunction with an expectation that demand on the Tasman may be slower to recover following the re-opening of a travel bubble and that there remains a risk of future suspensions”
The airline said it currently expects losses before other significant items and taxation will not exceed NZ$530 million for the 2022 financial year, assuming a fuel price of US$78 per barrel and an NZD/USD foreign exchange rate of 0.70. The company previously stated on 18 June 2021 that it expected losses before other significant items and taxation to be comparable to the 2021 financial year, being a loss not exceeding NZ$450 million.
Air New Zealand also said operating cashflow has been reduced as a consequence of the suspension of trans-Tasman travel. This reduction in cashflow, in addition to planned cash payments relating to aircraft in the coming months, means the company expects to draw down further on the government standby loan facility before the end of August 2021.
The company’s operating cashflow remains positive due to continued domestic performance and the revenue contribution from the Government’s Maintaining International Air Connectivity scheme that is currently in place until October 2021. As discussed at the 2021 interim results, operating cashflow has also benefitted from the one-off deferral of around NZ$310 million in PAYE payments in the 2021 and early 2022 financial years, which will start to be repaid in the 2022 financial year.
Air New Zealand has not drawn on the Facility since February 2021, therefore current drawings remain at NZ$350 million. As disclosed previously, the total available amount under the facility is NZ$1.5 billion, and therefore the company currently has remaining available funds of $1.15 billion under the facility.