What is being expected from Air NZ’s FY22 earnings amid the on-and-off ‘travel bubble’?

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What is being expected from Air NZ’s FY22 earnings amid the on-and-off ‘travel bubble’?

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 What is being expected from Air NZ’s FY22 earnings amid the on-and-off ‘travel bubble’?
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Summary

  • Trans-Tasman bubble halt extended till 4 July 2021.
  • Air New Zealand expected earnings reflective of the current uncertainties.
  • Cargo and domestic business contributing to the airline’s recovery.

While COVID-19 had broken the backs of huge businesses in the past year, Air New Zealand, the official carrier for the country, was no different. Having suffered immensely at the hands of pandemic-related lockdowns, the company started witnessing recovery when the ambitious Trans-Tasman bubble was opened.

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Amidst all this, the Company has recently released its travel update, which informs about the fiscal events of last year. The cargo business and the domestic business have played a part in helping the business recover slowly but surely. Operating at 90% of the pre-COVID-19 levels domestically, the corporate demand for air travel is steady.

With the Tasman market functioning at 70% of pre-COVID-19 levels, uncertainty strikes when there are sudden halts announced in operations. Recent turn of events where there were cases of the virus discovered in Australia had led to the immediate suspension of non-quarantine flights. There is now testing being done for all the passengers coming to New Zealand from Australia. If all goes well, this ban is said to be lifted on 4 July 2021.

Read now : Trans-Tasman neighbours witnesses The Travel boom

Cargo Business, the current silver lining

The revenue base of the Company is being contributed to and maintained by the cargo business. The recently announced Maintaining International Air Connectivity scheme by the Government provides the support required by the airlines to be able to operate an average of at least 30 international flights every week. This shall be valid till the end of October. This is expected to be of a total contribution ranging between NZ$320million to NZ$340million in the total revenue earned through cargo.

As previously discussed in the interim results of 2021, the operating cash flow has witnessed benefit from the payment deferral of PAYE worth NZ$310million. The repayment of the same will commence in the financial year 2022.

Also read: Is Air New Zealand all set to regain its lost sheen?

Earnings Guidance

In the earnings update, the Company said it expected not more than NZ$450 million in terms of loss before tax and other significant items. While the financial outlook for 2022 remains uncertain at the moment, the Company is hopeful that the business will pick up in the months to come, depending upon currency and fuel price fluctuations and the losses will decrease, giving rise to a stronger position for the airline in the future.

Read now : Air New Zealand appoints Chief Digital Officer

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