Air New Zealand Begins Drawing Down On Government Debt Facility
Air New Zealand Ltd has said that it has begun to draw down on a NZ$900 million government debt facility that will give it time to review its capital structure and complete a capital raising by June 2021.
The airline said that the New Zealand government has reaffirmed its commitment to maintaining a majority shareholding, and its board is in constructive talks with the government about its capital structure and funding.
Last month, the airline said that it would need to draw down on the government loan to help it weather the severe loss in revenue during the coronavirus pandemic after it reported its first annual loss in nearly two decades.
Along with interest rates of 7%-9%, the loan gives the government the right to seek repayment through a capital raising after six months or to convert the loan to equity.
The loan also gives the government security over many of Air New Zealand's aircraft, complicating its ability to get commercial funding until the loan is retired, chief financial officer Jeff McDowall told Reuters last month.
Job Cuts And Capacity Expectation
This month, Air New Zealand said that it is aiming to cut up to 385 more cabin crew jobs due to the lack of long-haul international flying, which would take its COVID-19 related job losses to approximately 37% of its workforce.
In the domestic market, it expects capacity to return to nearly 85% of pre-COVID levels in October after a recent virus outbreak in Auckland was brought under control, leading to a lift in restrictions.