Air New Zealand puts 2021 date on capital raising

Air New Zealand has already started drawing down a Government loan. Photo / Brett Phibbs

Air New Zealand says it could raise extra capital in the first half of 2021.

The airline has started drawing down on a $900 million Government backstop loan and today said it continued to evaluate a range of scenarios on how the pandemic might develop and the subsequent impacts on its business operations, fleet, operating cost structure, and capital requirements.

"Assuming there are no further material adverse developments, the company is expecting to complete the strategic capital structure review by early 2021 and be in a position to proceed with capital raising to be completed before June 2021," the airline told the NZX.

"The New Zealand Government has recently reaffirmed its commitment to maintaining its majority shareholding in Air New Zealand, and the board is engaging constructively with the Crown in its capital structure and funding discussions."

In the past few weeks, Air New Zealand has started to draw on the "Crown Standby Facility" which has high interest rates of between 7 per cent and 9 per cent. The loan can be converted to equity for the Government, which already has a 52 per cent stake in the airline.

The election has stalled any moves to raise more capital as other airlines including Qantas and airports including Auckland Airport did early in the Covid-19 crisis which has wiped out most passenger revenue.

Air New Zealand's delay in going to the market will give the airline more time to restructure and assess the state of the industry. The airline had started the year with more than $1 billion in cash but this had fallen to $200m by August.

It was burning cash at an average of $175m a month from April to June and said last month it expected future average monthly cash burn to be between $65m and $85m.

More than 4000 of its 12,500 staff have lost their jobs and it has grounded nearly all of its Boeing 777 fleet as it doesn't expect to resume international flying until late next year.