Air New Zealand gets further $180m taxpayer support from cargo scheme

Air New Zealand has won the bulk of funding from the Government's extension of the air cargo support scheme with a further $180 million boost for cargo revenue.

The announcement comes as the airline's deadline for a long-delayed capital raise nears. It has said that, depending on market conditions, it would go to the market around the end of this month and analysts expect it to seek around $1.2 billion.

Air New Zealand said today funding from the Maintaining International Air Capability scheme (MIAC) during the next 12 months would be around $180m, about $2m less than it got in the first half of the current financial year.

Under the most recent extension, the airline has been initially awarded support for around 60 flights per week to destinations including Los Angeles, Vancouver, Hong Kong, Shanghai and key Pacific island and Australian ports.

Although the scheme is tapering off as more commercially viable passenger flights resume, government support to keep airlines flying here by supporting freight operations will reach nearly $1 billion.

Belly freight is historically the cream on top of passenger operations for airlines but with some flights carrying just a handful of passengers during the pandemic, cargo has been the main income earner on many routes and critical for keeping New Zealand connected to the rest of the world.

This month the Government announced the extension of the MIAC scheme would be $250m.

The scheme was due to finish at the end of March after the Government had spent $730m on MIAC and its predecessor with Air New Zealand the biggest beneficiary.

Air New Zealand has won the bulk of work from the near-$1 billion freight scheme. Photo / Supplied

Transport Minister Michael Wood said the final extension of the scheme would provide much-needed certainty as passenger travel recovers, ensuring there are regular international flights for travellers and freight.

The Ministry of Transport is working with other airlines to confirm the routes and services that will be supported during the extension period.

Other airlines to have participated in the scheme previously include Emirates, Cathay Pacific, China Airlines, Malaysia Airlines, Air Tahiti Nui, Korean Air and Air Calin.

In spite of government support, the tight global freight market has resulted in charges for air cargo rates to and from New Zealand reaching three times what they were pre-Covid.

Air New Zealand shares closed on Friday at $1.39 and after trading at a month high of $1.55 earlier in March.