Air New Zealand defers capital raise, loan facility expanded

Air New Zealand (NZ, Auckland Int’l) has opted to defer its planned equity capital raise by three months while also obtaining an increase in its government loan facility, both the airline and the government announced on April 9, citing evolving market circumstances. The loan facility made available to the carrier in March 2020 has been extended to a maximum of NZD1.5 billion New Zealand dollars (USD1.06 billion) – an additional NZD600 million (USD422 million) – available for an extra 16 months until September 27, 2023. Air New Zealand has deferred its proposed equity capital raise until later this year, now scheduled for September 30, a move designed to “give them more time to assess market conditions,” said Grant Robertson, minister of finance and deputy prime minister. He also reiterated the government’s desire – already its majority shareholder with a 52% stake – to participate. The flag carrier said it now had enough liquidity to take it through to the capital raise with the expanded loan facility. The airline’s chairman, Therese Walsh, elaborated that “we’ve seen some clearing of Covid-19 clouds recently, with the extension of the air freight capacity scheme, the rollout of the vaccine, and the opening of the trans-Tasman bubble on April 19.” The airline had already revealed that it would ramp up flights between Australia and New Zealand to at least 70% of pre-pandemic levels. “These developments are good news and fundamental to Air New Zealand’s return to success, but the storm hasn’t cleared yet. We have suspended our cash burn guidance while we take the time to see how these events might impact our outlook,” she explained. “There’s a huge amount of optimism in the airline as we look forward to trans-Tasman travel starting. After a few months of operating internationally again, we expect to have a clearer view of the recovery path for the airline and the long-term capital structure to suit our future business.”