The travel bubble proposal between Australia and New Zealand has seen a delay to Air New Zealand’s recapitalisation with the national government temporarily boosting the size of its loan facility and extending the timing of the support until late 2023.
Air New Zealand revealed on Friday that it had increased its loan facility with the NZ government by another $NZ600 million ($A553 million) and deferred its planned capital raise as it considers a number of recent developments around global travel.
The airline said the Crown loan facility made available in March last year had been increased to $NZ1.5 billion ($A1.38 billion), while the interest rate has also been lowered from 9% a year to 5% to reflect “current market conditions”.
Air New Zealand said the extended loan would give it enough liquidity to push the deadline on its planned capital raising by three months, out to September this year while the government support package would remain in place out to September 2023, 16 months longer than originally planned.
It cited evolving circumstances related to the Covid-19 pandemic for the changed timeline.
These included the NZ Government’s announcement of the Maintaining International Air Connectivity scheme, the March 2021 public announcements on vaccination program timing, and the announcement of the Trans-Tasman quarantine free travel bubble to commence next week were all fundamental to its financial performance.
“Consequently, the Company and the Crown have signed a binding term sheet to amend the existing Crown standby loan facility (“the facility”) which, together with the deferral, the Company considers to be in its best interests in order to ensure sufficient liquidity through to completion of that capital raise,” Air NZ told the ASX.
Air New Zealand said its board is assessing the airline’s capital structure and longer-term funding needs and expects the structure, once finalised, “will have components of both debt and equity.”
With the revised timing “and given the critical role the Company has in New Zealand’s economy and society, the Crown has reconfirmed its longstanding commitment to maintaining a majority shareholding in the airline, and subject to Cabinet being satisfied with the terms of the proposed capital raise, the Crown would participate in the equity capital raise in order to maintain a majority shareholding.
“The Crown intends to participate by purchasing the number of new shares necessary to maintain a majority shareholding,“ Air New Zealand said.
“The facility will now be available through to September 2023 which is an extension of 16 months,” Friday’s statement said.
