Air New Zealand Reports Financial Year 2020 Statutory Loss Before Taxes of $628 Million
Air New Zealand reported on Thursday a FY20 statutory pre-tax loss of $628 million, including $541 million of other significant items. Non-cash items include a $338 million impairment charge attributable to the grounding of the carrier’s Boeing 777-200ER fleet.
On Thursday (August 27, 2020), Air New Zealand reported their FY20 financial results including an $87 million loss before significant items and taxes, compared to earnings of $387 for FY19. The carrier reported a strong interim profit for the first six months of the financial year of $198 million with positive domestic and North American demand. However, COVID-19 related travel restrictions in the second half resulted in a 74% year-over-year decline in revenue between April and June. The carrier’s statutory pre-tax loss was $628 million, including $541 million in other significant items. Non-cash items totaled $453 million, largely attributable to an aircraft impairment charge of $338 million related to the grounding of the airline’s Boeing 777-200ER fleet until further notice. In Thursday’s announcement, Air New Zealand’s Chairman, Dame Therese Walsh said,
“The 2020 financial year has been a year of stark contrast. Air New Zealand had a solid start to the year and was focused on driving profitable growth into the second half. We were also preparing to launch the first ever non-stop link between New Zealand and New York and had announced several exciting innovations in the customer experience space. Now, nearly six months following the global pandemic, the $87 million loss we are reporting today, our first loss in 18 years, reflects the quick and severe impact Covid-19 had on our business. Faced with such a swift decline in revenue as lockdown restrictions were implemented and borders were closed, we took immediate steps to secure $900 million in additional funding, and drastically reduced our cash burn in the knowledge that, for a time, we would be a much smaller business than we had been pre-Covid. The Board and I are fully supportive of the new strategy that Greg [Air New Zealand CEO, Greg Foran] and his Executive team have been working on in parallel to dealing with this crisis. We have a clear focus on where our business is heading, and I am confident Air New Zealand will be ready when the recovery occurs.”
Air New Zealand acted promptly to the pandemic by securing additional liquidity, reducing their cost base and deferring non-essential CAPEX spending. As of August 25, 2020, the carrier’s short-term liquidity was approximately $1.1 billion, including an untapped $900 million standby loan facility from the New Zealand Government. Between April and June, the carrier’s monthly cash burn was around $175 million, including higher than average refunds, redundancy payments, and fuel hedge close costs. For July, the company managed to reduce their monthly cash burn to $85 million. Moving forward, providing international travel remains restricted and domestic travel resumes without social distancing restrictions, Air New Zealand expects their monthly cash burn to be in the range of $65-85 million.
Source: Air New Zealand