New Zealand

$289 million loss for Air New Zealand

The effects of COVID-19 have been challenging for the New Zealand airline.

In its first post-pandemic full-year result, Air New Zealand has reported an after-tax loss of $289 million. 

Border closures and travel restrictions have decimated the tourism and travel industry globally, and many businesses are struggling with the uncertainties posed by continued lockdowns. For Air New Zealand, COVID-19 has led to significant financial losses. 

The result is an improvement on 2020, when the airline reported its first annual loss in 18 years, totalling $454 million.

Since then, Air New Zealand has relied on support from the New Zealand government, which owns 52 percent of the carrier. In the 2021 financial year, the airline received approximately $450 million in government assistance. This will be repaid after recapitalisation, set to take place in 2022.

Like many other businesses, large and small, in the tourism industry, Air New Zealand has endured revenue collapses. Last year, many aircraft were sent to storage overseas, with some of those aircraft now intended for disposal.

When COVID-19 restrictions began to ease, it seemed that hope was on the horizon for New Zealand’s largest air carrier, with the company’s domestic capacity rebounding to 93 percent of pre-COVID rates in the three months ending in July. 

But renewed lockdowns and travel restrictions in Australia and New Zealand have quashed business recovery efforts once more, with the COVID-19 Delta outbreaks in Sydney, Melbourne, Canberra and Auckland putting a pause on the Australia-New Zealand travel bubble and again limiting tourism opportunities.   

According to the company’s chief executive, Greg Foran, a return of international travel could still be a while away. Air New Zealand, Mr Foran said, would instead need to focus on domestic opportunities, serving the  local market with additional flight times and new price differentiation models. 

While Air New Zealand’s 2021 financial result was disappointing, Mr Foran said that it wasn’t a surprise, the result aligning with projections despite a heavier emphasis on cargo, not domestic travel, than expected.

“We ended up where we expected, but we got there through different methods,’ said Mr Foran.

The airline is now operating a skeleton crew on its domestic network, avoiding areas affected by the latest New Zealand lockdowns and enduring the temporary pause of the trans-Tasman travel bubble.

Of over 4,000 stood-down staff in 2020, Air New Zealand has now welcome 700 back to work and hopes to endure continued lockdowns well ahead of an eventual return to normal operations. 

“We’ll just see what transpires,” Mr Foran said, who has also faced personal financial losses, reducing his own salary by $250,000 as part of Air New Zealand’s COVID-19 response. 

It is hoped that increasing vaccination rates will limit the need for future restrictions and provide opportunities for safe travel, domestically for now and internationally in the future. These will path the way for Air New Zealand and other carriers to recover.  

Other articles: 

Air New Zealand deal to ease Queensland’s border pain

New Zealand COVID-19 cases hit hard for Cook Islands businesses

Shannon Jade

Shannon Jade is an author, editor, marketer, and journalist. Her work has appeared in many online and print publications both in Australia and internationally. Stay up to date with Shannon's writing by subscribing to Accom News.

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