Delta's $2.6m a day hit on Air NZ as airline taps further into Govt loan

Author
Grant Bradley, NZ Herald,
Publish Date
Fri, 17 Sep 2021, 5:23PM
Air NZ says regional travel is one bright spot. (Photo / Peter de Graaf)
Air NZ says regional travel is one bright spot. (Photo / Peter de Graaf)

Delta's $2.6m a day hit on Air NZ as airline taps further into Govt loan

Author
Grant Bradley, NZ Herald,
Publish Date
Fri, 17 Sep 2021, 5:23PM

Air New Zealand is drawing down further on the government loan as the cost of lockdowns and suspended transtasman travel mounts.

The airline says the monthly impact of nationwide New Zealand level 3 or 4 travel restrictions is about $45 million to $55m, including the benefit of any wage subsidies received.

The monthly impact of an Auckland-only Level 3 or 4 travel restriction, with the rest of New Zealand operating at level 1 or 2 is about $25m to $35m, including the wage
subsidy.

It says the monthly impact of the suspension of New Zealand to Australia travel is approximately $20m to $25m.

The highest impact of level 4 around the country and the suspended transtasman travel adds up to $80m a month or $2.6m a day.

The airline has drawn down a further $85m of the government standby loan facility, taking the total to $435m.

The remaining available funds under the facility are $1.065 billion.

During the latest Covid outbreak and lockdown the airline has been paid $17m in wage subsudies, on top of $111m during the past 18 months.

"Following a month of constrained trading it remains unclear how long these alert Levels, the suspension of transtasman quarantine free travel (QFT) and associated travel restrictions will continue, as well as how demand will recover when the restrictions are lifted," the airline said in a notice to the NZX.

Operation of cargo flights is continuing with approximately 50 flights per week and the Company is observing strong demand for air travel across regions in New Zealand that are currently under level 2 restrictions.

The airline had advised last month it would draw down on the loan because of the reduction in operating cash flow, together with planned cash payments relating to aircraft in the coming months.

In August Air NZ announced a loss before other significant items and taxation of $440m for the year to June 30 – its first full 12-month period of operation with Covid-19 related international travel restrictions.

Using the same metric, the company reported an $87m loss for the 2020 financial year.

Statutory losses before taxation, which include a $29m gain from other significant items, were $411m, compared to a loss of $628m last year.