Air New Zealand (ASX:A1Z) adds up costs after a flightless period

Company News

by Lauren Evans

Air New Zealand (ASX:AIZ) has provided an update on its financial performance despite suspending guidance last month after prolonged lockdowns.

In its latest update, the kiwi airline said that, after a month of constrained trading, it remains unclear how these travel restrictions, the suspension trans-Tasman flights and associated travel restrictions will continue, as well as how demand will recover when travel restrictions lift.

Yet the company did provide some numbers on the estimated impact on financial performance. Monthly impact of nationwide New Zealand Level 3 or 4 travel restrictions is around $45 million to $55 million, including the benefit of any wage subsidies received. 

Monthly impact of an Auckland-only Level 3 or 4 travel restriction, with the rest of New Zealand operating at Level 1 or 2, is around $25 million to $35 million, including the benefit of any wage subsidy. Monthly impact of suspension of New Zealand to Australia travel is approximately $20 to $25 million. 

The airline also said that the operation of cargo flights is continuing, with approximately 50 flights per week. The company is observing strong demand for air travel across regions in New Zealand that are currently under Level 2 restrictions.

The airline has had to draw down further on government loans to meet costs. The company recently requested additional drawdowns on the facility which, including those drawings, will total NZ$435 million.

Remaining available funds under the facility are $1.065 billion. Earnings and cash flow guidance remain suspended.

Shares in Air New Zealand (ASX:AIZ) are trading 0.3 per cent lower at $1.50. 

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