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Air New Zealand records NZ$185m loss before tax

written by Adam Thorn | February 25, 2021
An Air New Zealand Boeing 787-9 at Sydney Airport. (Seth Jaworski)
An Air New Zealand Boeing 787-9 at Sydney Airport. (Seth Jaworski)

Air New Zealand has announced a NZ$185 million loss before tax for the six-month period to 31 December, compared to a profit of NZ$198 million for the same period in 2019.

The business also revealed it has now drawn down NZ$350 million of its NZ$900 million government loan, but has reduced monthly cash burn from NZ$175 million to NZ$79 million per month.

Despite the losses, chief executive Greg Foran said he “could not be more proud” of how employees have dealt with the last 12 months.

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“They have dealt with each and every obstacle thrown their way with a huge degree of professionalism and frankly, we wouldn’t be operating the level of domestic and cargo capacity we are without their extraordinary efforts,” Foran said.

Thursday’s half-year results also revealed:

  • International travel restrictions to and from New Zealand saw the airline’s operating revenue decline 59 per cent to NZ$1.2 billion;
  • As of 23 February 2021, the airline has short-term available liquidity of just over NZ$700 million, consisting of cash of approximately NZ$170 million and NZ$550 million of undrawn funds on its government loan;
  • Domestic capacity is now 76 per cent of pre-COVID levels;
  • Cargo revenue is up 91 per cent on the same period last year.

The positive results come after a tough 12 months that saw the company cut around 4,000 jobs, or around 30 per cent of the company, in an attempt to reduce the wage bill by $150 million.

“While we made significant changes to our business and cost base, and did this more quickly than most airlines, since the outbreak of the pandemic we have still burnt through over NZ$1 billion in our own cash reserves – that’s just huge.

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“We have been fortunate to receive significant financial assistance from wage subsidies and the government’s aviation relief package throughout the first half of the financial year, as well as benefiting from lower fuel prices, however, these benefits are not expected to extend into the second half of the financial year.

“From the start of this crisis we have had to make a lot of incredibly tough calls, especially where our people are concerned, and that is never something we would do lightly – but it has all been with the sole purpose of ensuring Air New Zealand’s survival.

“The fact is, we must remain vigilant and disciplined in our approach to cost management and cash burn while borders remain closed.

“Although it is clear that COVID-19 will continue to impact the aviation industry for some time to come, we are thrilled to see such strong results from our domestic and cargo businesses.

“We are one of the few airlines globally that has seen this level of passenger recovery and we know that is driven by our core strength on the domestic market. We know this recovery would not be possible without the continued support of our customers and I want to thank each and every one of you for your support of our airline.

“For the six months to 31 December 2020, we operated 1,800 flights, moving 4 million passengers around the country and saw strong signs of corporate demand recovery as the economy started to ramp up following the second lockdown in August 2020.

“Following the most challenging year in the airline’s 80-year history, it has been incredibly satisfying for the team to see both the domestic and cargo businesses perform so well. In particular, the strong recovery in domestic travel has been really exciting because it shows that when people have confidence to travel, they will.

“With the roll-out of the vaccines underway around the world and here in New Zealand, this has positive implications for our recovery when borders open.”

The news comes after the business announced an enormous statutory loss before tax of NZ$575 million for the last full financial year.

Its results were also released on the same day as Qantas, which announced a $1.47 billion statutory loss before tax in the six months to 31 December.

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