Air New Zealand faces more bumps as the Delta strain spreads. Photo / Mark Mitchell.
Air New Zealand has announced a loss before other significant items and taxation of $440 million for the year to June 30 – its first full 12-month period of operation with Covid-19 related international travel restrictions.
Using the same metric, the company reported an $87m loss for the 2020 financial year.
Statutory losses before taxation, which include a $29m gain from other significant items, were $411m, compared to a loss of $628m last year.
This year's result is within analysts' forecasts and aligns with market guidance the airline gave.
Within that period the last financial year the airline benefited from about $450m of Government assistance including airfreight support schemes as well as further subsidies and initiatives that are not expected to be repeated to the same extent in the 2022 financial year.
Cargo revenue was up 71 per cent on the prior year.
It says the latest domestic nationwide lockdown was expected to negatively impact financial operating performance after a strong domestic recovery in the past 15 months. That part of the business had recovered to over 90 per cent of pre-Covid levels but has largely been shut down in alert level 4 with only essential workers able to travel on a handful of flights a day.
The airline has liquidity of $1.3 billion as at August 24, 2021, comprised of $183m cash and $1.15b of undrawn funds on the Government standby loan facility.
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It says dividends remain suspended and the planned capital raise deferred to first quarter of calendar year 2022.
Chairwoman Dame Therese Walsh says the 2021 financial result reflected the reality of a year in which the airline was unable to fly two-thirds of its passenger network.
"In a severely constrained environment, Air New Zealand maintained cost discipline, focusing on delivering with excellence in the areas in its control. The return of a strong domestic business and growth in the cargo services that underpin our key export markets was a reminder of the airline's crucial role in New Zealand's infrastructure."
Chief executive officer Greg Foran said the 2021 financial year was one in which the airline played the hand it was dealt, kept planes flying every day and took some important steps in the delivery of its refreshed strategy, Kia Mau.
"Our people developed new capabilities and dexterity, adapting quickly when conditions changed. Although the return of long-haul travel seems some time away, the changes the team made this year will serve us well when it returns."
Last year the airline slumped to a $454m loss, its first since 2002.
Today the airline said given the uncertainty surrounding the current national lockdown, ongoing international travel restrictions and uncertainty regarding the level of demand as these restrictions lift, it had suspended 2022 earnings guidance.
The Government owns 52 per cent of the airline and on August 13 Finance Minister Grant Robertson told the company the current environment is not sufficiently certain and stable to enable the Crown to provide a firm pre-commitment to support a planned equity raise at this time.
In this context, the airline has, in consultation with the Crown, decided to further defer its planned capital raise from September 30 this year until the first available window in the first quarter of calendar year 2022.
''Subject to Cabinet being satisfied with the terms of the airline's proposed capital raise at the relevant time, the Crown has again confirmed that it will participate in an equity capital raise by purchasing the number of new shares necessary to maintain a majority shareholding.''
On completion of the recapitalisation, Air New Zealand expects to repay all amounts drawn under the Government loan facility.
Until the capital raise is completed, the airline has access to sufficient liquidity under the facility, with $1.15 billion in remaining funds that allow it to continue operating and investing activities. Air New Zealand has drawn $350m on the facility as at August 25, 2021 and expects to draw down further in the coming months.
The airline's operating cashflow for the 2021 financial year benefited from the one-off deferral of around $254m in fringe benefit tax (FBT) and PAYE payments, which will start to be repaid in the 2022 calendar year.
An additional $60m of FBT and PAYE is expected to be deferred in the first quarter of the 2022 financial year and repaid before March 31, 2022.
Air New Zealand's board does not expect to consider payment of dividends before the airline's earnings and gearing substantially recover, and in the context of a supportive macroeconomic environment.
In the past year, Air NZ's share price has hit a high of $1.96 and a low of $1.30. Last night it closed at $1.53.
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