Air New Zealand (NZ, Auckland International) will raise NZD2.2 billion New Zealand dollars (USD1.53 billion) in a “recapitalisation package to refuel for its recovery” after two years of turbulence and with the country’s international border restrictions now starting to ease, it outlined in a statement on March 30.

The airline, which is 51.9% owned by the New Zealand government, has been kept afloat during the pandemic with state aid totalling NZD2 billion (USD1.39 billion), most recently with an additional support package of liquidity in December 2021.

The new “comprehensive recapitalisation” is designed to repay the money it borrowed from the state, strengthen its balance sheet, improve liquidity, and help position it for recovery, it said. It is made up of three parts:

  • a deeply-discounted NZD1.2 billion (USD834 million) rights issue in which the government has said it will participate to retain its 51.9% shareholding;
  • a NZD600 million (USD417 million) issuance of redeemable shares to the government, to be refinanced through a bond issuance by June 30;
  • a new NZD400 million (USD278 million) state loan to replace the existing loan facility, to be available to the airline until January 2026.

The rights offering, which will open on April 6 and close on May 2, will enable eligible shareholders to buy up to two new shares for every one they own in Air New Zealand at an offer price of NZD0.53 (USD0.37) per share. The share price closed on Wednesday at NZD1.375 (USD0.956).

“The moment is right for Air New Zealand to raise equity, recapitalise its balance sheet, and repay the loan it received,” said chairman Therese Walsh, adding that the carrier “is committed to rebuilding a stronger, more nimble airline.”

At a news conference, she elaborated that the airline plans to return to 2019 profit levels by 2025, while CEO Greg Foran said that capacity would reach 90% of pre-pandemic levels by 2025 but weighted more towards domestic traffic than previously.

Last week, Air New Zealand confirmed it would relaunch a direct route from Auckland International to New York JFK, 3x weekly, on September 17 using B787-9s. The route will become its “flagship” service, replacing flights to London Heathrow. Visitors from visa-waiver countries such as the United States, the United Kingdom, and Singapore can return to New Zealand from May 1, and vaccinated travellers from Australia will be able to enter the country without quarantining from April 12.