Air New Zealand is considering a capital raise before the end of the year so it does not have to use a government loan, according to an investment analyst.
Photo: Supplied / Air New Zealand
The airline has made a noncommittal statement in response to speculation in the Australian Financial Review that it has engaged advisers to look at options for injecting cash, including a possible share issue.
"The company continues to assess its capital structure and the options available to it, including taking advice from professional advisers as required," the carrier said in a stock exchange statement.
"Air New Zealand currently has a $900 million facility from the Crown which has yet to be drawn."
The airline has shed 4000 jobs across its business, and is looking at further possible redundancies as it looks to cut its wage bill by another $150m.
It's already laid up a portion of its long haul fleet, and last week said it was burning through $5m a day as it struggles in the face of a slump in air travel because of the Covid-19 pandemic.
Air New Zealand chief executive Greg Foran. Photo: Supplied / Air NZ / Bruce Jarvis
It has said it expected to be back into profitability by 2022, although it will only be about three-quarters of the size it was before the pandemic.
Greg Smith of investment firm Fat Prophets said it was almost certain the carrier would need a further injection of funds.
"I think that's something that's probably in the works as part of the recovery plan as it were.
"Given the big move up in the share price since those lows, it's not a bad time to be considering asking equity investors to chip in... Globally sentiment has got a lot more positive toward the airline sector and striking while the iron is hot with the share price it probably makes sense."
Smith said the raise would likely be in hundred of millions of dollars.
"You could well be looking at something in a similar order to that [government] facility, possibly a bit less."
He said if the raise went ahead this year the airline would be unlikely to draw down the government loan.
"That was really about getting the airline through to the other side so to speak, at the time the company was not really in a position to go to shareholders but it has a lot more flexibility and a lot more options now.
"That'll still be there as a bit of a safety net but will effectively rub a lot of that out."