Air New Zealand says the country’s national government has reaffirmed that it will support the airline’s forthcoming capital raising to retain its majority stake.
Air NZ is looking at a share issue by mid-year to restructure its finances after they were ravaged by the pandemic and lockdowns.
The New Zealand government owns 52% of airline and gave it a $NZ900 million debt facility last year to help it survive the coronavirus crisis and give it time to review its capital structure and complete a fund raising by June this year.
The government will take part in the equity raising if it agrees with terms set by the airline, Air New Zealand said in a statement to the NZX on Friday.
Air New Zealand said in September it had begun to draw down on the $NZ900 million facility, which gave the government the right to seek repayment through a capital raising after six months or convert the loan to equity.
NZ Analysts say the airline may need to raise between $NZ1 billion to $NZ1.5 billion, but if border restrictions remain in place for longer, the amount could be even higher.
“I can confirm the Crown’s longstanding commitment to maintaining a majority shareholding in Air New Zealand given the critical role that the airline has in New Zealand’s economy and society,” Finance Minister Grant Robertson said in a letter sent on Friday to Air New Zealand chairwoman Dame Therese Walsh.
“Subject to Cabinet being satisfied with the terms of the company’s proposed equity capital raise, the Crown would participate in that capital raise in order to maintain a majority shareholding,” he said.
Robertson said the Government’s support was also linked to the airline’s commitment to environmental sustainability, its role as a good employer, and that it operates as a successful, sustainable business.
Air New Zealand is expected to report its first-half results on February 25.
A share sale will dilute existing shareholders (but not the government). The airline’s shares slipped 2% to $1.45 on the ASX on Friday and have slumped more than 45% in the past year.
