Air NZ announces $185 million loss, burns through $1 billion in cash reserves

Source: 1News

Air New Zealand has announced a loss of $185 million for the second half of 2020 and burned through $1 billion dollars in cash reserves as it continues to feel the impact of Covid-19 on global air travel.

Air NZ aircraft.

The result compares to earnings of $198 million for the same period the previous year.

The continued restrictions on international travel saw the airline’s operating revenue decline by 59 per cent to $1.2 billion in the first six months of the financial year, with the network's flying reduced by 65 per cent.

CEO Greg Foran said he was proud of the way the airline’s staff had handled the crisis.

“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,” he said.

“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.”

The airline had short-term liquidity of just over $700 million as at 23 February 2021, made up of approximately $170 million cash and $550 million undrawn funds on the Government standby loan facility.

Domestic capacity had returned to 76 per cent of pre-Covid levels as a result of domestic tourism and the return of business travellers following the Covid lockdown.

Cargo was a bright spot for the airline with revenue up 91 per cent on the same period the previous year as a result of support from the Government’s International Airfreight Capacity (IAFC) scheme.