- Air New Zealand provides an update on impact of lockdown on monthly earnings
- Auckland curbs lead to NZ$25m impact for the national carrier
Air New Zealand (NZX:AIR) said on Friday that it expects a monthly impact of up to NZ$45 million to its earnings till the current levels of COVID-19 countrywide restrictions remain.
New Zealand had extended the lockdown level-4 in its largest city, Auckland and continues to keep lockdowns in other cities as well due to the spread of Delta variant. The impact on its earnings from Auckland alone is NZ$25 million, as per the Company update.
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With these curbs in place, the national carrier which is already suffering due to restrictions on international travel, expects a monthly impact of between NZ$25 million and NZ$35 million, including the benefit of government wage subsidies, it said in a statement.
Impact of suspension of trans-Tasman
The Company statement said that a tighter nationwide lockdown could result in a monthly impact of between NZ$45 million to NZ$55 million, while the monthly impact from the suspension of the trans-Tasman curbs is estimated to be between NZ$20 million and NZ$25 million.
The Company stated that it still remains unclear for how long these alert level suspensions will be, but the suspension of trans-Tasman quarantine free travel and associated travel restrictions will continue, as well as how demand will recover when the restrictions are lifted.
Cargo is operational
The positives that the airlines spelled out were that the cargo flights were operational with 50 flights per week and the demand for air travel between across regions in New Zealand that are currently under lockdown-2 is strong.
As stated in Company’s annual results the carrier is witnessing a reduction in operating cash so it has begun to drawdown on government loan facility. It has begun drawing to the tune of NZ$435 million. The national carrier suspended its earnings and cash flow guidance.
On 17 September, the stock was trading down at NZ$ 1.530, at the time of writing.
Road Ahead: AIR New Zealand is feeling the heat of the lockdowns on its earnings and has begun to draw down on Crown’s loan facility.