Sunday, April 21, 2024

Air NZ loan inflated as travel bubble begins

The Crown loan facility has extended a debt facility of an additional $600 million to Air New Zealand for a further 16 months.

The extension will mean a loan of up to $1.5 billion is available to the airline until 27 September 2023, with the interest rate adjusted to reflect current market conditions.

Minister of Finance Grant Robertson said the amendment to the loan facility allowed Air New Zealand to benefit from the increased activity as borders re-open and travel and trade movements increased.

“The Crown’s role as majority shareholder has been a major source of stability for the national airline during a very difficult time,” Mr Robertson said.

“As a result, our national carrier is in a much stronger position than many airlines around the world. We need that strength to be retained because we need a national airline to support economic development and provide access to international markets, and to enable the international tourism we’re beginning to see emerge with the opening of the Trans-Tasman bubble.”

He said Air New Zealand had also decided to defer its planned equity capital raise until 30 September 2021 to give them more time to assess market conditions.

As previously stated, the Crown wants to remain a majority shareholder and will participate in the raise, subject to Cabinet approval of the terms, the Minister said.

“We also need a national airline to provide a domestic network that allows people to be where they want to be across New Zealand and gets goods where they are needed,” he said.

The Crown Standby Loan Facility agreed in March 2020 was a measure that provided the time for Air New Zealand to reposition its operations and facilitate the implementation of an optimal long-term capital structure.

Mr Robertson said the amended loan agreement retained this expectation and the provision of the conversion of the loan to equity at the request of the Crown.

“Air New Zealand’s intention is that all amounts outstanding under the facility will be repaid from the proceeds of its proposed capital raise,” he said.

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