Air New Zealand Announces First Half FY 2021 Statutory Loss of $185 Million
The carrier’s first half statutory loss of $185 million is calculated before other significant items and taxation, and is stated in compliance with NZ IFRS. Air New Zealand ended H1 FY 2021 on December 31, 2020, with $700 million in liquidity.
On Thursday (February 25, 2021), Air New Zealand reported their first half 2021 (H1) financial results for the six month period ending December 31, 2020. In compliance with NZ IFRS, the carrier reported a H1 statutory loss of $185 million (before other significant items and taxation). During the first half, the airlines’ domestic capacity reached 76 percent of pre-pandemic levels led by robust tourism and the return of business demand. Air New Zealand’s cargo revenue for the period increased 91 percent year-over-year, attributable to the Government’s Airfreight Capacity scheme (IAFC). As of February 23, 2021, the company had short-term liquidity of just over $700 million, with $170 million in cash and $550 million in undrawn funds from the Government standby loan facility (the Crown facility).
In Thursday’s announcement, Air New Zealand’s Chief Executive Officer, Greg Foran said,
“I could not be more proud of the way our team has gone about operating our airline in the midst of this crisis. They have dealt with each and every obstacle thrown their way with a huge degree of professionalism and frankly, we wouldn't be operating the level of domestic and cargo capacity we are without their extraordinary efforts. While we made significant changes to our business and cost base, and did this more quickly than most airlines, since the outbreak of the pandemic we have still burnt through over $1 billion in our own cash reserves - that's just huge. We have been fortunate to receive significant financial assistance from wage subsidies and the Government's aviation relief package throughout the first half of the financial year, as well as benefiting from lower fuel prices, however these benefits are not expected to extend into the second half of the financial year.
“From the start of this crisis we have had to make a lot of incredibly tough calls, especially where our people are concerned, and that is never something we would do lightly - but it has all been with the sole purpose of ensuring Air New Zealand's survival. The fact is, we must remain vigilant and disciplined in our approach to cost management and cash burn while borders remain closed. Although it is clear that Covid-19 will continue to impact the aviation industry for some time to come, we are thrilled to see such strong results from our domestic and cargo businesses. We are one of the few airlines globally that has seen this level of passenger recovery and we know that is driven by our core strength on the domestic market. We know this recovery would not be possible without the continued support of our customers and I want to thank each and every one of you for your support of our airline.
“For the six months to 31 December 2020, we operated 58,000 domestic flights, moving four million passengers around the country and saw strong signs of corporate demand recovery as the economy started to ramp up following the second lockdown in August 2020. Air New Zealand is a critical part of the country's infrastructure, connecting Kiwis within and around New Zealand and transporting crucial imports and exports. The airline's cargo operations, supported by the IAFC scheme, have also played a vital role in driving New Zealand's economic recovery, delivering vital medical supplies and PPE and transporting our precious export products around New Zealand and the world. As a result of these operations, cargo revenue has increased 91 percent to $373 million for the six-month period.
“Following the most challenging year in the airline's 80-year history, it has been incredibly satisfying for the team to see both the domestic and cargo businesses perform so well. In particular, the strong recovery in domestic travel has been really exciting because it shows that when people have confidence to travel, they will. With the roll out of the vaccines underway around the world and here in New Zealand, this has positive implications for our recovery when borders open.”
For the period from September 2020 through January 2021, the company’s monthly cash burn was reduced to an average o $79 million due to continued cost discipline. Air New Zealand expects to further reduce their cash burn for the remaining five months of the financial year to between $45-$55 million. The company’s focus for H2 will be maintaining their strong domestic and cargo performance, further cost discipline, and being operationally prepared in advance of border openings.
Also commenting on the company’s H1 results, Air New Zealand’s Chairman, Dame Therese Walsh, added,
“Since the initial travel restrictions were introduced in early 2020, Air New Zealand has taken significant actions to reduce its cost base. While some of these actions have taken time to implement, we are now seeing the benefits of these efforts flow through into our results. Compared to pre-Covid times, operating costs excluding fuel in the first half of this financial year declined more than 50 percent, and some of these are expected to be sustainable cost reductions moving forward.
“This will be pivotal as we enter recovery mode as it means we will not only be highly cost effective, but with the changes we have made to our fleet, we will also have one of the most modern, efficient fleets in the world. The Board and I know that the rapid implementation of these changes would not have been possible if it were not for the skill and determination of our people. I want to thank our team, who in the face of much adversity, change and uncertainty has been resolute in their focus on delivering for our customers.”
Air New Zealand is taking further steps to recapitalize their balance sheet, which is expected to be completed by June 30, 2021. The carrier is also providing even greater flexibility for guests, by extending the credit redemption deadline to June 20, 2022, and continuing to waive change fees for customers booked on international flights commencing before June 30, 2021.
Source: Air New Zealand