Air New Zealand has announced a package it hopes will raise enough capital to pay back a loan from the Government which was used to keep the airline afloat during the Covid-19 pandemic.
Air New Zealand had taken an $850 million loan from the Government during the pandemic to keep itself in the air.
The national carrier announced on Wednesday a $2.2 billion "recapitalisation package" made up of a $1.2 billion pro rata rights offer, a $600 million issuance of redeemable shares to the Government, and a $400 million loan from the Government to replace the existing loan facility, which is available to the airline through until January 2026.
The rights offer will enable shareholders to purchase up to two new shares for every one share they own, at an offer price of 53 cents per share. It is a 61% discount on Air New Zealand's current share price of $1.38 per share.
The Government is continuing to support Air New Zealand as the majority shareholder by committing to participate in the national carrier’s proposal to raise capital and accelerate the recovery for the airline and the New Zealand economy.
"The Crown has pre-committed to participating in the $1.2 billion equity capital raise by purchasing the number of new shares necessary to retain its 51 percent holding, which is worth up to $602 million," Finance Minister Grant Robertson said.
"A portion of the capital raised will be used to repay loans it received from the Government during the pandemic."
Last year the airline reported a $289 million loss, as the ongoing impacts of the Covid-19 pandemic saw its revenue nearly halved.
The national carrier’s full year loss for the year to June 2021 was lower than that of the 2019/20 financial year, where it saw a $454 million loss because of asset write-offs and other one-off costs.
It reported a $2.5 billion operating revenue, down 48 per cent on the prior year.
Earlier on Wednesday, Air New Zealand announced Singapore was the latest destination to resume flights after they were halted at the start of the Covid-19 pandemic.
The airline also relaunched its Auckland-New York direct service last week, which were put on hold in 2020 due to the pandemic.
Forty per cent of Air New Zealand's international destinations are back up and running, the airline said.
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