Air New Zealand is on the verge of launching its long awaited billion dollar capital raising, according to Australian media reports.
Photo: RNZ / Nate McKinnon
The Australian and Australian Financial Review have reported that the airline has hired UBS, Citi, and Forsyth Barr to organise the raising of nearly $1.3 billion by the end of the month after the government brought forward the opening of borders.
The two papers quoted a note by analysts at Macquarie that the raising was imminent.
"We believe a A$1.1b-1.2b capital raise ... is required to restore enough balance sheet flexibility, while other measures (debt liquidity, retained earnings) will supplement this over time," the Macquarie note to clients said.
"Air New Zealand previously targeted a raise by the end of March, and given recent reopening announcements, there [doesn't seem] to be a reason to delay this again."
Air NZ has twice deferred its equity raising last year as borders remained closed because of the pandemic, causing it to post massive losses.
The airline has been kept afloat through a government support facility, which has provided the necessary cash to cover large payments such as deferred tax payments and new plane costs.
The government has affirmed that it intends to maintain its majority shareholding.
Air New Zealand chief executive Greg Foran last month said the carrier had already started preparing for a rebound in global travel in the second half by bringing back about 250 cabin crew and pilots and firing up one of its grounded long haul Boeing 777-300 planes, while it aimed to increase flights to North America and start direct services to New York.
Macquarie said Air NZ's book value could fall a further 40 percent in the next 12 months, and it still regarded the airline as overvalued.
"We still see Air New Zealand as overvalued given dilution to come from the capital raise and material profitability not expected until 2HFY23 and FY24 on a full year basis," the client note said.