In light of ongoing uncertainty around Covid-19 Air New Zealand has revised its Crown loan agreement, resulting in an additional $500m in available funds, taking its overall support from the Government to $2 billion.
The national carrier told the New Zealand stock exchange on Tuesday morning the support now comprises a new agreement, which gave Air New Zealand the ability to issue up to $1b of non-voting redeemable shares to the Crown, which currently owns 52 per cent of the airline.
The support also includes a reduction in its existing secured facility from $1.5b to $1b, with an extended term to January 2026.
The airline is still targeting a capital raise for the first quarter of 2022, but a further delay could be considered if unexpected events were to occur in 2022 that required further support, it said.
As at December 14, the airline had drawn $505m of the existing Crown loan, it said.
It was estimated that drawings could be about $900m by late February or March 2022, it said.
The airline last announced it was deferring the capital raise before Auckland’s Delta outbreak on August 13.
Since that announcement, the airline had been impacted by domestic lockdowns and the ongoing Covid-related travel restrictions across its international network, it said.
The Government recently outlined a plan of phased reopening of borders from early 2022, which, in the airline’s view, provided an indicative pathway to reopening New Zealand for international travel, it said.
“However, the future impacts of Covid-19 remain uncertain and circumstances continue to change all over the world.”
While the airline, with the support of the Crown, remained focused on an ordinary equity raise, the airline had sufficient flexibility to withstand unforeseen delays without relying entirely on increasing debt levels, it said.
It was Air New Zealand’s intention that all amounts outstanding under the amended Crown loan and any issued redeemable shares would be repaid from the proceeds of the company’s proposed equity raise, together with an aligned debt capital markets transaction.
The Crown had confirmed to the airline that it shared this expectation, Air New Zealand said.