SYDNEY (Reuters) – Air New Zealand Ltd <AIR.NZ> said on Friday it had begun to draw down on a NZ$900 million ($589.95 million) government debt facility that would give it time to review its capital structure and complete a capital raising by June 2021.
The airline said the New Zealand government had reaffirmed its commitment to maintaining a majority shareholding and its board was in constructive talks with the government about its capital structure and funding.
New Zealand is due to hold a national election on Oct. 17, with polls showing incumbent Prime Minister Jacinda Ardern is on track to win.
The airline had last month said it would need to draw down on the government loan to help it weather the severe loss in revenue during the coronavirus pandemic after it reported its first annual loss in nearly two decades.
Along with interest rates of 7-9%, the loan gives the government the right to seek repayment through a capital raising after six months or convert the loan to equity.
The loan also gives the government security over many of Air New Zealand’s aircraft, complicating its ability to get commercial funding until the loan is retired, Chief Financial Officer Jeff McDowall told Reuters last month.
Air New Zealand this month said it aims to cut up to 385 more cabin crew jobs due to the lack of long-haul international flying, which would take its COVID-19 related job losses to around 37% of its workforce.
In the domestic market, it expects capacity to return to nearly 85% of pre-COVID levels in October after a recent virus outbreak in Auckland was brought under control, leading to a lift in restrictions.
(Reporting by Jamie Freed; Editing by Himani Sarkar and Christopher Cushing)