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Air NZ estimates lockdown impacts

On Friday, Air New Zealand provided an update on the impact of the New Zealand national lockdown and of the ongoing suspension of trans-Tasman Quarantine Free Travel on the company’s short-term financial performance.

The company previously suspended earnings guidance in August due to the uncertainty associated with the introduction of a nationwide Alert Level 4 in New Zealand and the duration of the suspension of trans-Tasman QFT. Following a month of constrained trading, it remains unclear how long the suspension will continue, as well as how demand will recover when the restrictions are lifted.

However, Air New Zealand noted that for so long as these travel restrictions remain in place, the estimated impact on the company’s financial performance is as follows:

• Monthly impact of nationwide New Zealand Level 3 or 4 travel restrictions is approximately $45 million to $55 million, including the benefit of any wage subsidies received;

• Monthly impact of an Auckland-only Level 3 or 4 travel restriction, with the rest of New Zealand operating at Level 1 or 2 is approximately $25 million to $35 million, including the benefit of any wage subsidy; and

• Monthly impact of the suspension of New Zealand to Australia travel is approximately $20 to $25 million.

Operation of cargo flights is continuing with approximately 50 flights per week and the company is observing strong demand for air travel across regions in New Zealand that is currently under Level 2 restrictions.

In its annual results released in August, Air New Zealand advised that the reduction in operating cash flow, together with planned cash payments relating to aircraft in coming months, means the company has begun to draw down further on its Crown standby loan facility. They recently requested additional drawdowns on the facility total $435 million. The company still has remaining available funds under the facility of $1.065 billion.

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