Air New Zealand has posted an after tax loss of $72 million for the six months to December 31.
Its loss before other significant items and taxation was $185m for the half year period compared to earnings of $198m for the same period last year, reflecting the significant impact of COVID-19 on the airline and global aviation industry.
Cargo
Cargo revenue was up 91% to $373m on the same period last year, supported by the Government’s International Airfreight Capacity scheme (IAFC). Cargo now equates to around 35% of its previous long-haul business.
Operating revenue was down 59% to $1.2 billion in the six-month period, as network flying was reduced by 65%.
The airline’s short-term liquidity was just over $700m as at February 23, made up of around $170m cash and $550m undrawn funds on the Government standby loan facility.
It has reduced cash burn to an average of $79m per month from September 2020 through January 2021. For the remaining five months of the financial year, average monthly cash burn is expected to be in the range of $45m to $55m.
‘Extraordinary efforts’
Chief Executive Officer Greg Foran says that the interim results are something the Air New Zealand whānau should be very proud of given the context of a global pandemic.
“They have dealt with each and every obstacle thrown their way with a huge degree of professionalism and frankly, we wouldn’t be operating the level of domestic and cargo capacity we are without their extraordinary efforts,” he says.
“While we made significant changes to our business and cost base, and did this more quickly than most airlines, since the outbreak of the pandemic we have still burnt through over $1 billion in our own cash reserves – that’s just huge.
“We have been fortunate to receive significant financial assistance from wage subsidies and the Government’s aviation relief package throughout the first half of the financial year, as well as benefiting from lower fuel prices, however these benefits are not expected to extend into the second half of the financial year.
“From the start of this crisis we have had to make a lot of incredibly tough calls, especially where our people are concerned, and that is never something we would do lightly – but it has all been with the sole purpose of ensuring Air New Zealand’s survival. The fact is, we must remain vigilant and disciplined in our approach to cost management and cash burn while borders remain closed,” Foran says.
“For the six months to 31 December 2020, we operated 1,800 flights, moving four million passengers around the country and saw strong signs of corporate demand recovery as the economy started to ramp up following the second lockdown in August 2020.
“Air New Zealand is a critical part of the country’s infrastructure, connecting Kiwis within and around New Zealand and transporting crucial imports and exports.
“The airline’s cargo operations, supported by the IAFC scheme, have also played a vital role in driving New Zealand’s economic recovery, delivering vital medical supplies and PPE and transporting our precious export products around New Zealand and the world.
“Following the most challenging year in the airline’s 80-year history, it has been incredibly satisfying for the team to see both the domestic and cargo businesses perform so well. In particular, the strong recovery in domestic travel has been really exciting because it shows that when people have confidence to travel, they will. With the roll out of the vaccines underway around the world and here in New Zealand, this has positive implications for our recovery when borders open” Foran says.
Outlook for 2021
The airline is not providing 2021 earnings guidance at this time as there is still a large degree of uncertainty surrounding the lifting of travel restrictions and the subsequent level of demand.
Despite strong domestic and cargo performance, it expects to make “a significant loss” in 2021.
