By Stephen Wright
WELLINGTON, New Zealand--Air New Zealand Ltd. said its losses over two financial years will reach about 900 million New Zealand dollars ($630 million) as the pandemic prevents a meaningful recovery in long-haul international travel in the next 12 months.
The airline on Friday also said it has delayed the first delivery of eight Boeing 787 Dreamliner aircraft it has on order until its 2024 financial year from 2023. It has contractual rights to defer other deliveries scheduled for 2024 onward if needed.
Air New Zealand, which is half-owned by the government, expects a loss before significant items and tax of NZ$450 million for its current financial year and a comparable loss in the subsequent financial year ending June 2022.
"The airline is not expecting any meaningful recovery in long-haul demand in the 2022 financial year notwithstanding the rollout of global vaccination programs and the potential for long-haul borders to begin reopening progressively in the second half of the financial year," it said.
However, the company's trading update characterized the airline as moving out of "survival" mode into a "revival" phase. It said staff salary cuts would be ended from the start of its next financial year on July 1 and all permanent staff would be given NZ$1,000 of the airline's shares in the October-December quarter of this year.
The national carrier said cash into the business from operations has exceeded outgoings since the October-December quarter, helped by New Zealand government backing for international cargo flights and other relief such as wage subsidies, an aviation support package and deferral of tax payments.
Consequently, Air New Zealand's total drawdown of a NZ$1.5 billion government credit facility remains at NZ$350 million. The company said it still expects to raise equity capital before the end of September.
Government financial support for cargo flights is expected to contribute NZ$320 million-NZ$340 million of revenue in the financial year ending June 2021, it said.
New Zealand's success in limiting the spread of Covid-19 within its borders has allowed the airline's domestic capacity and passenger numbers to return to about 90% of pre-pandemic levels.
Quarantine-free travel between Australia and New Zealand since April has resulted in a flight schedule of about 70% of its pre-pandemic level. Long-haul passenger numbers remain at less than 5.0% of normal due to border closures.
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(END) Dow Jones Newswires
June 17, 2021 18:08 ET (22:08 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.