Grounded Air New Zealand Flags Big Loss

By Glenn Dyer | More Articles by Glenn Dyer

Air New Zealand has forecast a loss of around $NZ830 million ($A783 million) for the year to June as it battles to survive the COVID-19 pandemic.

The airline said on Thursday that it is expecting an underlying loss of up to $NZ120 million for the 2019-20 year ($A113 million), with an extra $NZ715 million ($A670 million) in write-downs and other significant but one-off costs for the financial year that ends on June 30.

The impact of the pandemic and these costs forced thew airline to ask the NZ government for a bailout, which happened.

In its latest financial update to stock exchanges on both sides of the Tasman, the airline said that it had suspended earlier guidance “due to the significant uncertainty surrounding the duration, scale, and impact of the Covid-19 pandemic”.

The airline is slowly re-starting its domestic network but says revenue and earnings for the 2020 year will be ‘’significantly lower than expected” prior to the outbreak of Covid-19.

Air New Zealand is laying off about a third of its workers – or 3500 people – and says it expects to still be around 30% smaller than it was before the pandemic in two years’ time.

In addition to the loss, the airline said there will be gains and losses on several significant items. Most were unchanged from its May update but it noted a $NZ70 million non-cash gain had been made on unhedged foreign currency debt.

Other significant items were $NZ140 million to $NZ160 million in restructuring costs, a $NZ 85 million to $NZ105 million loss on the de-designation of hedges; and a $NZ350 million to $NZ450 million non-cash charge for aircraft impairments.

The airline reconfirmed it had made a $NZ 21 million gain on the sale of some of its slots at airports.

A $NZ46 million non-cash charge to reflect the disestablishment in fair value hedges had been booked in the airline’s first half.

Air NZ shares fell 4.6% yesterday to $1.45 in Australia.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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