Air New Zealand Posts Multi Million Dollar Annual Loss

Auckland-based Air New Zealand reported an after-tax loss of US$201.1 million loss in the 12 months to June 30 on Thursday morning (New Zealand time). The airline attributes the loss to ongoing international border closures impacting its international network and local lockdowns, including a current countrywide lockdown.

Air New Zealand posted a US$306.2 million loss in the 12 months to June 30. Photo: Getty Images

“Air New Zealand showed agility during constantly changing operating conditions, managing reopenings, pauses and then closures while generating new revenue from additional cargo routes and increasing domestic and regional passenger capacity to match an increased demand for domestic leisure travel.,” said Air New Zealand Chair, Dame Therese Walsh.

Air New Zealand holding onto US$900 in available liquidity

Air New Zealand reported operating revenues of US$1.74 billion for the 12 month period, down 48% from the previous 12 months. Domestic capacity reached 93% of 2019 levels this July before lockdowns cut the ramp up short.

Supported by subsidies from both New Zealand and Australian Governments, cargo revenue was up 75% compared to the previous 12 month period. Cargo contributed US$535 million in revenue to the airline in the 2021 financial year.

Air New Zealand closed the financial year with liquidity of US$900 million. That includes US$127.4 million in cash and the remainder from undrawn funds on a New Zealand Government standby loan facility. The average monthly cash burn in the first half of this calendar year was US$6.26 million.

Border closures & travel restrictions continue to hamper Air New Zealand. Photo: Getty Images

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Air New Zealand’s international operations continue to drag

Before the COVID-19, Air New Zealand’s domestic business represented only one-third of Air New Zealand’s revenue base. Around 20% of that was driven by inbound tourists traveling on the domestic network.

“Without international passenger flying, there continues to be a significant gap in our earnings,” said Air New Zealand CEO Greg Foran in a briefing on Thursday. “While we have been fortunate to maintain a degree of international flying, in 2021 we still only flew around 55% of the network we operated prior to COVID-19.”

Air New Zealand CEO Greg Foran. Photo: Air New Zealand

Air New Zealand long-haul fleet exclusively 787s by 2027

Boeing 787s ordered and due to start landing at Air New Zealand in 2024 were originally intended to replace the airline’s 777-200 fleet. However, given the eight 777-200 aircraft are now permanently retired in 2020, the Dreamliners will replace Air New Zealand’s Boeing 777-300 fleet. The 777-300s are expected to be phased out later this decade.

Air New Zealand’s widebody fleet is down to 21 planes, including 14 Boeing 787 Dreamliners. On Thursday, Air New Zealand confirmed they would be refurbished sometime beyond 2023 but could not be more specific than that.

“We don’t have any committed aircraft orders beyond 2028,” says Richard Thompson, Chief Financial Officer at Air New Zealand. “We are set to have an all 787 fleet for our long-haul business by the end of 2027. Not only do these aircraft represent the best in currently available technology, they’ll also bring about significant simplicity benefits in all areas of our operations.”

CEO Greg Foran says Air New Zealand has a difficult road ahead. However, the vaccine rollout along with rebounding domestic demand in New Zealand and elsewhere, makes the CEO optimistic about the future of travel demand and his airline.