Air New Zealand to draw into $900 million state loan
Air New Zealand has started tapping into a $900 million state standby loan from the government and has already drawn about $110 million for a necessary basis. The state loan helps the airline with liquidity support while the carrier is working on a plan of its future business strategy.
Therese Walsh, the Chair Damme of Air New Zealand, announced that the airline has started to use a part of the government loan and currently has a $1 billion in its reserves, local media reported.
Walsh revealed that the airline will continue to consume the government loan in small amounts on a needed basis. Walsh claimed that the loan provides the time needed for Air New Zealand to reposition its operations and to “facilitate the implementation of a long-term capital structure”. The carrier plans to review its financial structure by the beginning of 2021.
Currently, the airline’s management considers shrinking operations to become a small airline mostly focused on domestic routes in the future, stated Walsh.
The $900 million standby loan from the government was given to the airline earlier in March 2020 in order to keep the airline financially stable. By giving the loan, the government that currently owns 52% of the carrier, has secured the opportunity to turn the loan to equity if needed.
The airline has already made a loss of $454 million during the first six months of 2020. In comparison to 2019, the carrier has reported a $276 profit at the time. The restructuring costs when the airline laid off almost a third of its staff and the writedown of assets led to the major part of a counted loss. At the time, Air New Zealand was burning cash in the amount of $65 to $85 million a month.
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