Air New Zealand plans to raise NZ$1.2bn ($835mn) in equity, with the funds used to partly repay debts after receiving emergency state aid because of business disruptions caused by the Covid-19 pandemic.
But the New Zealand government will still participate in the equity rights offer to maintain its 51pc stake, the airline said. A further NZ$600mn of redeemable shares will be issued to the government under an existing agreement struck in December. A new committed unsecured four-year loan of NZ$400mn will be provided from the government, the airline said. Proceeds from the equity offer and the redeemable share issue will be used to repay the NZ$850mn outstanding under the existing government loan.
Air New Zealand's operations have been severely affected for the past two years, with international flights around 90pc below their pre-Covid-19 levels and domestic flights still yet to recover to pre-pandemic levels.
"While there will still be bumpy skies ahead over the next few years, the moment is right for Air New Zealand to raise equity, recapitalise its balance sheet and repay the loan it received from the crown during the Covid crisis," Air New Zealand chair Therese Walsh said.
The government provided NZ$900mn in emergency funding to the airline in March 2020 and a further NZ$500mn in funding was provided in December.
Air New Zealand now expects its 2021-22 full-year result to be a loss before other significant items and taxation of less than NZ$800mn.
Future fuel prices are uncertain, especially given the current conflict in Ukraine, the airline said. "Air New Zealand may be unable to offset fuel price increases through hedging, fare increases or adjustments to its network or cost structure, potentially impacting future profitability," it said.
