Air New Zealand is said to have called in bankers and advisers to help look at its funding options amid increased speculation of a capital raise.
Last Friday the airline announced an 800-day plan to get it back to ''healthy profits'' by August 2022.
It has already slashed 4000 jobs from its workforce and plans to cut another $150 million from its wage bill.
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The Government has extended a $900m loan to the airline which it has yet to draw down on but analysts have been saying for weeks that the airline may need to raise more capital as it burns through cash to keep afloat.
According to the AFR's Street Talk column the airline has appointed KPMGs advisory team to consider options on deal size, structures and timing.
It also said that investment banks UBS and Forsyth Bar were "sticking close to the company."
In a statement to the NZX this morning Air New Zealand general counsel Jennifer Page noted the media speculation.
"Air New Zealand currently has a $900 million facility from the Crown which has yet to be drawn.
"The company continues to assess its capital structure and the options available to it, including taking advice from professional advisers as required."
Page said Air New Zealand would provide any further updates to the market as required in accordance with its continuous disclosure obligations.
One local fund manager told the Herald this morning that the question was not really if Air NZ would raise capital but when and how much.
"The company seems to be making some tough decisions to allow it to survive the current environment but ideally it needs additional equity.
"There has been an expectation of a raising for some time so it would not come as a total surprise."
Air New Zealand's share price has risen strongly in recent weeks, something the fund manager said would help play to the airlines advantage.
"Certainly the Air NZ stock price has been pumped up by speculators so it would not be the worst time to raise new equity."
Share markets have bounced back strongly and are trading around the same levels as before the coronavirus market crash in February and March making it easier for sensitive stocks like airlines to raise capital.
As to how much the airline could look to raise one analyst has suggested Air New Zealand will need to raise around $850m to $900m of new equity to repay the Government loan.
Finance Minister Grant Robertson's office declined to comment on how it might approach a future recapitalisation on Tuesday.
In a note released Tuesday and titled "Running on Empty" Wade Gardiner of Craigs Investment Partners, estimated a peak draw-down of the government loan at around $550-600m with uncertainty remaining over the level of refunds/credits the airline has on its books.
"Consequently we estimate AIR will need to raise around $850-900m of new equity to repay the loan, reinstate the targeted level of balance sheet cash, and leave debt/debt to equity near the bottom-end of the targeted band."
Gardiner said assuming the government wanted to retain its 51 per cent stake in Air NZ around 80 per cent of the loan would be converted to equity with an issue of new shares to minority shareholders of around $410-$430m.
He has a 12 month target price of 99c on the stock with an underweight rating. Air New Zealand shares closed on Wednesday at $1.86.