Air New Zealand has just reported a pre-tax loss of $307 million and an after-tax loss amounting to $289 million for the financial year ending on June 30. This is based on operating revenues of NZ$2.5 billion that fell by 48% from the previous year. With this announcement came confirmation that the airline would not be considering payment of any dividends until earnings and gearing had substantially recovered.
This is the first full year period the airline has operated under pandemic conditions. These figures have added to the financial woes of the carrier that also reported a pre-tax loss of $87 million for the 2020 financial year. This may be partially attributed to the 36% drop in passenger numbers in 2021 as compared to the same period in the 2020 financial year.
Though the airline has had to contend with closed international borders, the domestic market did rebound somewhat towards the end of the financial year. Domestic capacity driven by heightened leisure travel and corporate clients had reached 93% of pre-pandemic levels in the 3 months leading up to July. This benefit has however come to a halt during the most recent strict lockdown.
With its second straight loss making year, the airline has also announced that it will suspend its earnings outlook for the 2022 financial year following uncertainty over the current lockdown and international travel restrictions. The airline had earlier in June said that it expected pre-tax loss figures in 2022 to be similar to what was experienced in fiscal 2021.
To help cope with pandemic restrictions that have negatively affected the travel industry, the government extended a $1.5 billion loan to the airline. The government is the majority shareholder of Air New Zealand, with a 52% shareholding. Thus far, the airline has drawn down $350 million in funding and expects to access even more in the coming months. The Crown is expected to participate in the upcoming equity capital raise to further secure its majority shareholding.
The company had intended to undertake a capital raise in the coming months but has opted to defer this until the first quarter of 2022. This follows advisement from the government and the instability of the current operating environment. The funds raised from recapitalisation were to be used to repay the government loan and other assistance. It is hoped that the government’s plan to gradually reopen borders from early 2022 will hold despite the emergence of the delta strain. The current lockdown and a more aggressive vaccine rollout are expected to support this effort.
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