Air New Zealand is moving towards a capital raising by the end of next June after it started drawing down from its $NZ 900 million government credit line.
In a statement to the New Zealand stock exchange on Friday afternoon Air New Zealand chairman Dame Therese Walsh said assuming “no further material adverse developments”, the company was expecting to complete a strategic capital structure review by early 2021 and be in a position to proceed with capital raising to be completed before June.
And despite silly speculation in NZ markets that the kiwi government might use the capital raising to lower its stake, Friday’ statement made it clear the government was not heading down that route.
“The New Zealand Government has recently reaffirmed its commitment to maintaining its majority shareholding in Air New Zealand, and the Board is engaging constructively with the Crown in its capital structure and funding discussions.
The capital raising can’t come too son – the airline has around $NZ200 million in cash on its books and is using between $NZ65 million to $NZ85 million a month as it gradually increases the frequency of domestic flights.
Reflecting the impact of the pandemic and border lockdowns, the share price has fallen nearly 60% from its January high, trading at $NZ1.31 on Friday.
In her short statement, Dame Walsh said the Government loan provided the company with necessary liquidity support as it worked on a plan for the future shape and size of its business post-Covid-19.
“The company continues to evaluate a range of scenarios on how the pandemic may develop and the subsequent impacts on its business operations, fleet, operating cost structure, and capital requirements.”
The Government owns 52% of the airline and has the ability to turn the loan to equity.