Air New Zealand (NZX:AIR) denies reports of merger talks

Highlights

• Air NZ said today that it was not in merger talks with any party
• A section of the media had reported that it was talking to Virgin
• The airline said it was complying with NZX disclosure obligations

Air New Zealand (NZX: AIR), the national carrier of New Zealand, confirmed on Friday that it was not in talks with any party for a potential merger transaction. It denied media speculation that Air NZ and Virgin Australia had held discussions recently to discuss a possible merger.

The news had appeared in some sections of the media that there were discussions between the two airlines for a possible merger, but no deal had been struck.

However, in a short statement released on the NZX on Friday, Air New Zealand chairman, Dame Therese Walsh, said that it had not been approached and was not in discussions with any party.

The airline said it was complying with NZX disclosure obligations.

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Virgin is owned by a private equity firm, Bain Capital. The airline had been bought for NZ$3.9 billion.

On 15 September, in its operational update, the airline announced that the number of passengers had increased by 21.6% in July, revenue passenger was up 43.9% and the passenger load factor was 17 pts.

FY22 performance

Earlier, while announcing its full-year FY22 results, the company said that it had made a loss before significant other items and taxation of NZ$725, compared to NZ$444 previous year. The statutory loss before taxation was NZ$810. While the operating revenue was up 9% to NZ$2.7 billion, the airline completed its recapitalisation, raising NZ$2.2 billion. 

The airline experienced greater demand for travel in the last quarter of FY22, which improved its performance to some extent. In addition, cargo and domestic revenues helped lift overall revenue by 9%.

The Company has been focusing on restoring services, maintaining a choice of fares, and launching new products to improve the travel experience.

According to the release, the airline has a "strong" liquidity position with NZ$2.3 billion, consisting of approximately NZ$1.9 billion in cash and NZ$400 million of available funds. With the border now open, the company expects the 2023 FY to be a year full of passenger flights, which will have an impact on its financial performance.

As per the Company, its capacity is likely to be in the range of 75 to 80% of pre-COVID-19 levels. On the basis of this, AIA is hoping for a significant improvement in its financial performance as compared to FY22. However, due to a degree of uncertainty regarding volatility in jet fuel prices and the risk of a global recession, Air New Zealand did not provide any earnings guidance.

Dividend suspended

The airline does not expect to resume dividend payments before its earnings recover well.