Air NZ expecting sizeable loss due to travel bubble interruptions

Air New Zealand is expecting a sizeable lift in its loss for the year ahead because of interruptions to the trans-Tasman travel bubble.

The carrier said its cashflow had been dented by the suspension and it now expected an operating loss of no more than $530 million before tax and one-off items, compared with its previous forecast loss of no more than $450m.

"The airline continues to assess the impact of this temporary suspension on passenger demand, in conjunction with an expectation that demand on the Tasman may be slower to recover following the re-opening of a travel bubble and that there remains a risk of future suspensions," it said in a statement.

The squeeze on its cashflow and some looming big expenses would require it to dip into the government standby finance facility, it said.

"This reduction in cashflow, in addition to planned cash payments relating to aircraft in the coming months, means the company expects to draw down further on the crown standby loan facility before the end of August 2021."

Its operating cashflow was positive because of strong domestic traffic, the revenue from air cargo supported by the government subsidy scheme, and $310m of deferred tax payments, which would have to start to be repaid in the current financial year, Air NZ said.

It said it had not drawn on the government loan since the start of the year, and had only borrowed $350m, leaving it $1.15 billion available.

Air New Zealand is expecting an operating loss of $450m for the just ended financial year, and is yet to give details on a capital raising to rebuild its finances after the impacts of Covid-19.

Comments

Let's hope the govt doesn't bail them out. Let market forces play out.

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