Air New Zealand is reporting an underlying loss of $87 million for the 2020 financial year, compared to earnings of $387 million last year.
Covid-19 has wiped out its first half result and statutory losses before taxation, which include $541 million of other significant items, were $628m, compared to earnings of $382 million last year.
The after-tax loss was $454m and the airline is not making any guidance about the year to come although another loss is forecast.
Non-cash items of $453 million reflected most of the other significant items, including the $338 million aircraft impairment charge related to grounding of the Boeing 777-200ER fleet for the foreseeable future.
Chairwoman Dame Therese Walsh said the airline was acting with speed and agility to lower the cost base, and pivoting quickly to ramp up domestic and cargo services to help keep the New Zealand economy moving.
"Now, nearly 6 months following the declaration of a global pandemic, the $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."
Short-term liquidity as at August 25 was approximately $1.1 billion, made up of cash and the $900 million standby loan facility from the Government.
Due to the strong cash position pre-Covid-19, swift action taken by management to reduce cash burn and a better than expected return of domestic demand after the initial lockdown was lifted in New Zealand, the airline has not yet utilised the standby loan facility.
However, it expects to start drawing on these funds in the coming days.
Cash burn averaged approximately $175 million a month from April to June, including higher than average refunds, redundancy payments and fuel hedge close out costs, but this reduced to $85 million for July.
The airline is estimating the go forward average monthly cash burn to be in the range of $65 million to $85 million while international travel restrictions remain and assuming resumption of domestic travel with no social distancing requirements, as well as a continuation of government-supported cargo flights.
She said the Board is focused on preserving Air New Zealand's liquidity across a range of potential demand recovery scenarios.
Given current financial pressures as the airline manages the impact of Covid-19, the Board has determined that it will not declare a final dividend for the 2020 financial year.
The airline said the Government had recently reaffirmed the Crown's long-standing commitment to maintaining its majority shareholding in Air New Zealand, having regard to the unique and critical role the company has in New Zealand's economy and society.
This is reflected in the Crown loan facility that provides Air New Zealand with liquidity support whilst the airline works through to a permanent solution.
''Air New Zealand is engaging constructively with the Crown as it continues to assess its capital structure and funding needs.''
Chief executive Greg Foran said Covid-19 has highlighted once again that the core strength of the airline is its people and their ability to respond to change quickly.
"Whether it be volunteering to crew repatriation flights to unfamiliar ports, dealing with substantial increases in volume at the call centre, or our cargo team's efforts to keep New Zealand exporters connected to global markets, the response of our people has been nothing short of remarkable" he said.
He said it had been a particularly trying time for customers with the mass cancellation of flights and continuing uncertainty regarding international travel.
''I would like to apologise sincerely for the fact that we didn't live up to customers' expectations in the way we handled the processing of customer credits. I would also like to thank our customers for their ongoing support and patience" he said.
In June and July, the airline experienced heavy demand for domestic travel, particularly into leisure destinations such as Queenstown and was operating around 70 percent of its pre-Covid Domestic network but this had been dealt a blow by the re-implementation of alert levels.
"It has been great to see our domestic business perform well ahead of our expectations in June and July as the New Zealand public once again shows us that they have an innate love of travel. The recent resurgence of community transmission in New Zealand in August, has also reminded us that we cannot afford to be complacent."
He said his airline was better positioned for recovery than many of our airline peers.
''Given the uncertainty surrounding travel restrictions and the level of demand as these restrictions lift, Air New Zealand is currently not able to provide specific 2021 earnings guidance. However, each of the scenarios we are currently modelling suggest we will make a loss in 2021.''
Air New Zealand last recorded a full-year loss in 2002, in the wake of its near collapse.
It needed an $885m Government bailout after its disastrous investment in Ansett Australia and impact of the 9/11 terror attacks on air travel in 2001. It plunged to a $1.4 billion loss that year, a $318m loss the following year but turned that around to report a $165m profit in 2003.
Last week Qantas reported a full year A$2.7 billion ($2.9b) statutory loss before tax because of aircraft write downs and redundancy costs and a 91 per cent plunge in underlying pre-tax profit.
The airline said that in the second half of the financial year to June 30 it had suffered a A$4b drop in revenue because of the near total collapse in travel demand due to the Covid-19 crisis and associated border restrictions.
The airline predicts resuming international air travel in July 2021, with a transtasman bubble earlier if possible.
Underlying profit before tax sunk to A$124 million and this is forecast to fall deeply into the red next year.
The International Air Transport Association says airlines are expected to lose more than $130 billion this year due to the pandemic. Hundreds of thousands of jobs are at risk with American Airlines warning this week it will have to lay off 17,500 staff in October when federal aid runs out.