Air New Zealand chairwoman Dame Therese Walsh says the airline is feeling "balanced excitement" about the rebuilding this year as it is prepared for more Covid curveballs and competition that may act unpredictably.
The airline is midway through a $1.2 billion capital raise, part of a $2.2b debt and equity restructure to pay back loans to the Government and "refuel" its re-entry into international markets.
Walsh has said the capital raise was ''progressing as we would have expected'' and said some confusion over the two for one rights offer was partly because of ''inherent complexity".
The timing of the offer came just before more flights resumed across the
Tasman as Australians skip self-isolation, the move to the domestic orange traffic light setting and the removal of mandate requirements on domestic flights.
From last week passengers no longer had to show proof of vaccination or a negative test to fly domestically and, from May 1 the airline will remove its no jab, no fly vaccination policy for international customers.
It has added an extra 96 transtasman flights over the next three months to keep up with strong demand: 11 flights from Australia one day just before Easter were full. During March, the Omicron outbreak's peak in New Zealand, domestic demand was running at 64 per cent compared to the same month in 2019.
The carrier's long-haul international network is expanding with a return to US destinations it flew to pre-pandemic later in the year and its Auckland-New York service launches in September.
''We never say never with Omicron and Covid - we've been down this road so it's sort of balanced excitement, there's a cautious optimism.''
The Government owns 51 per cent of the airline and, asked whether it provides advance information on changes to Covid restrictions she said: ''Sometimes we'll have a small amount of time, but it will be very small. It might be on one specific issue related to the airline.''
However, the airline had to steer its own course irrespective of Government decisions given it can take months to reboot international routes.
''We have to make our own decisions about what we think is going to happen and we're doing that at the moment. We've had 700 pilots and crew come back already. We're going to progressively probably bring back more as we open up.
"So some of that is quite difficult in terms of some of these [Government] announcements,'' said Walsh, who became chairwoman of the airline in 2019.
The airline faces an around $800m loss this year after posting heavy losses since the pandemic hit, leading to a third of its staff losing their jobs.
The Government will participate in the capital raise to retain its majority stake by buying up to $602m in shares and has provided a further $400m back-up standby facility if required.
This comes on top of extensive investment to keep the airline flying during the past two years.
The airline set out in detail the support it had received in its rights offer document:
• Negotiated $2b liquidity comprised of a Crown loan and redeemable shares
• Obtained confirmation of Crown's participation in current rights offer
• Was awarded Government-supported cargo contracts worth $620m in revenue since May 2020
• Got wage subsidy support of about $170m
• Received about $85m in support under the aviation relief package
• Got tax-related relief of $65m and used IRD-approved PAYE deferrals
Finance Minister and shareholding minister Grant Robertson a year ago explicitly spelled out his expectations of the airline. As a national carrier, it was expected to maintain a comprehensive domestic network, to remain committed to environmental sustainability, and to continue acting as a responsible corporate citizen while being commercially sustainable.
With the level of Government/taxpayer support during the pandemic, does this change the approach of the airline?
''The key principle is that with this recapitalisation, from a balance sheet perspective, we are a balanced commercial entity with the right mix of debt and equity - 51 per cent is a good place for the Government to be and then for the rest of the market to own the rest of the company,'' said Walsh.
''We are clear that we continue to be a completely commercial organisation. And the thing for us is that growing domestic is in our best interest. What's in the best interest of Kiwis and central government is growing domestic - so everyone's aligned in that regard.''
She said there will always be ''points of difference'' between communities, stakeholders, the media and Government about domestic fares and routes. The airline's domestic operation contributed about a third of revenue before the pandemic and had at times been running at near capacity during the past two years.
Walsh said the long Auckland lockdown last year had provided useful insight into how new routes could work. Flights bypassing Auckland into Northland from Wellington had proved popular and an indication of routes was on the drawing board as the airline looks to increase domestic coverage and frequency.
The domestic network can be highly profitable - when corporate travel recovers from Covid speed humps - and there were signs this was under way. More visitors from Australia would also bolster the internal network.
Airlines in other parts of the world are bouncing back quickly. Eurocontrol figures show 81 per cent of pre-pandemic flying has been restored and some airports around the world area suffering familiar problems - congestion. A slew of new airlines have been launched during the past 18 months and Walsh says Air New Zealand is preparing for a changed competitive landscape.
Pre-pandemic, 29 international airlines operated at Auckland Airport, connecting to 45 destinations. As at the end of March this year, 14 airlines fly internationally to 25 destinations but more are returning. Walsh said Air New Zealand was counting on strong competition.
''We're not sure where the competition is going to come from as it shakes out because some won't return, some will double down. There'll be new players that try different things,'' she said.
"We're not taking any of it for granted and I mean, we were going to have to price competitively but we've got plans around our products and services and we need to execute well.''
She said it was hard to know where competition would come from and how airlines would approach the New Zealand market.
''There will be some irrational behaviour in the market. We don't know what everyone's strategies are and not every player in the aviation industry has ever been totally rational.''
Group invested billions in new aircraft, infrastructure and technology.