Burning $85M a month, Air New Zealand awards CEO by $2M in shares
Air New Zealand burns up to $85 million per month, speaking to local media announced Greg Foran, the CEO of the airline. Despite the cash burn, the flag carrier of the country awarded its CEO with a $2 million bonus in the airline’s shares.
Speaking to local media on November 17, 2020, the CEO of Air New Zealand reportedly announced that the air carrier burns from $65 million to $85 million per month while having received a $900 million bailout from the government of the country earlier in March 2020.
“If nothing changes between when we started to draw down the loan around August, in about 12 months you have got a bit of a problem,” warned Foran.
The airline has already made a loss of $454 million during the first six months of 2020, the financial results of the company showed. In comparison to 2019, the carrier reported a $276 profit at the time. The restructuring costs when the airline laid off almost 4,000 employees ‒ a third of its staff ‒ and the writedown of its assets led to the major part of a counted loss, announced the airline in the financial results of H1 2020.
Despite dealing with financial challenges, Air New Zealand awarded its CEO around $2 million in shares, showed a disclosure notice posted to the New Zealand stock exchange. While the airline’s share price has dropped in half since the beginning of the COVID-19 in early spring 2020, the notice outlined that Foran was awarded almost 1.4 million rights convertible to shares at $1.46 for each share that resulted in up to a $2 million bonus in Air New Zealand’s shares for its CEO.
Meanwhile, six other members of Foran’s team were also awarded the airline’s shares. However, the exact quantity of rights issued was not made public.
At the end of September 2020, Air New Zealand started tapping into a $900 million state standby loan that was given by the government of the country in March 2020. The airline announced that it already drew about $110 million. The state loan should help the airline with liquidity support while the carrier was busy working on a plan of its future business strategy.
At the time, the airline announced that it would continue to consume the government loan in small amounts on a needed basis while the management of Air New Zealand considered to shrink its operations and become a small airline mostly focused on domestic routes in the future.
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