iscover
The New Zealand government has confirmed it will support plans by Air New Zealand to raise equity capital by selling shares.
Deputy Prime Minister Grant Robertson said it would aim to maintain its majority ownership, which now stands at 52 per cent.
The business has already cut around 4,000 jobs, or around 30 per cent of the company, and posted an enormous statutory loss before tax of $575 million for the last financial year.
News of the government’s support is significant given it also loaned Air New Zealand $824 million (NZ$900 million) last year, which has the potential to be turned into equity.
“The Crown has today confirmed in a letter to Air New Zealand chairman Dame Therese Walsh that subject to cabinet being satisfied with the terms of Air New Zealand’s proposed equity capital raise to be completed by 30 June 2021, it would participate in that equity capital raise in order to maintain a majority shareholding in Air New Zealand,” said the business in a statement.
“Dame Therese said she was delighted with the confirmation of support from the Crown and the continued positive engagement. We are grateful for the loan arranged with the Crown in May last year, but that was always a temporary measure.
“The ability to raise equity will help set the airline up for recovery from the impacts of COVID-19 and to continue to fulfil its purpose of connecting New Zealanders to each other and New Zealand to the world.”
The news of the equity capital raise comes after chief executive Greg Foran revealed the airline was is burning through up to $85 million per month in November.
Speaking at a tourism summit in Wellington, Foran said, “If nothing changes between when we started to draw down the loan around August, in about 12 months’ time you have got a bit of a problem.” It also emerged in November that 385 international cabin crew were to be made redundant in addition to 550 furloughed staff who have not worked since July.
The month prior, Air New Zealand’s current chief financial officer, Jeff McDowall, revealed he would leave the company in the middle of 2021 after he helped oversee the planned capital raise.
