Air New Zealand has reported its first annual loss since 2002. The air carrier declared a pretax loss of €48.8 million (NZ$87 million). The airline expects to record a loss in 2021 as well.

Air New Zealand officially announced that despite reporting a strong interim profit of €111 million (NZ$198 million) for the first half of the financial year ended on June 30 and seeing positive demand on North American and regional routes early in 2020, strict travel restrictions resulted in a 74% drop in passenger revenue сompared  to 2019. According to the airline’s official press release, it is the most striking factor that drove company operating losses.

The financial result turned out to be better than the company had predicted. Instead of €48.8 million (NZ$87 million), the loss could reach €67,3 million (NZ$120 million), based on Air New Zealand press release. Therese Walsh, the Chairman Dame of Air New Zealand called the financial year of 2020  “a year of stark contrast”.

“Air New Zealand had a solid start to the year and was focused on driving profitable growth into the second half. Now, nearly six months following the declaration of a global pandemic, the NZ$87 million loss we are reporting today, our first loss in 18 years, reflects the quick and severe impact COVID-19 has had on our business”, Walsh stated in Air New Zealand’s press release.

The airline suffered an operating revenue gradual loss of 16% to €2.7 billion (NZ$4.8 billion) as total network capacity shrank by 21% as well as declared the monthly cash burn of €98 million (NZ$175 million) in a period from April to June 2020. According to the airline’s financial results, the company has recorded significant growth of cash burn in part due to higher than average refunds, redundancy payments and costs associated with closing out fuel hedges. However, the cash burn rate dropped in July 2020, to €47.8 million (NZ$85 million) and now it is expecting to stabilize in a €36-47.8 million (NZ$65-85 million) range for as long as travel restrictions worldwide remain.

The New Zealand’s flag carrier has secured €504 million (NZ$900 million) loan from the country's government to help the company through the pandemic. “Faced with such a swift decline in revenue as lockdown restrictions were implemented and borders were closed, we took immediate steps to secure $900 million in additional funding, and drastically reduced our cash burn in the knowledge that, for a time, we would be a much smaller business than we had been pre-Covid”, affirmed Walsh.

In the light of recording the first losses in 18 years, Air New Zealand slashed €112 million (NZ$200 million) from its aircraft expenditure budget for 2020-2022. As Flightglobal reports, the entire fleet of Boeing 777-200ERs would remain grounded at least until 2025. Also, the airline has deferred the delivery of five Airbus A321neos each by about a year. Now, the first of the remaining A321neo will arrive in 2021, while the last two will join the fleet in 2024.