Air NZ unveils giant $2.2 billion fundraising plan

Air New Zealand has announced a package it hopes will raise enough capital to repay a government loan that was used to keep the airline afloat during the Covid-19 pandemic.

Air New Zealand had taken out an $850 million loan from the government during the pandemic to keep itself in the air.

The national carrier on Wednesday announced a $2.2 billion “recapitalization package” consisting of a $1.2 billion prorated rights offering, a $600 million redeemable stock offering to the government and a $400 million government loan to replace the existing loan facility, which is available to the airline until January 2026.

The rights offering will allow shareholders to purchase up to two new shares for each share they own, at an offering price of 53 cents per share. This is a 61% discount on Air New Zealand’s current share price of $1.38 per share.

The government continues to support Air New Zealand as majority shareholder by pledging to participate in the flag carrier’s proposal to raise capital and accelerate the recovery of the airline and the New Zealand economy.

“The Crown has pre-committed to participate in the $1.2 billion capital raise by purchasing the number of new shares necessary to maintain its 51% stake, which is worth up to $602 million” said Finance Minister Grant Robertson.

“Part of the capital raised will be used to repay the loans he received from the government during the pandemic.”

Last year, the airline recorded a loss of $289 million as the continued impacts of the Covid-19 pandemic saw its revenue nearly halved.

The flag carrier’s full-year loss for the year to June 2021 was lower than in fiscal year 2019/20, where it posted a loss of $454 million due to asset write-offs and other one-time costs.

It reported operating revenue of $2.5 billion, down 48% from a year earlier.

Earlier on Wednesday, Air New Zealand announced that 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 direct Auckland-New York route last week, which had been suspended in 2020 due to the pandemic.

Forty per cent of Air New Zealand’s international destinations are operational again, the airline said.

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