The Government has announced a $900 million loan package to keep Air New Zealand afloat.
The Government and Air New Zealand have agreed a debt funding agreement through commercial 24-month loan facilities of up to $900 million. The agreement also allows for the conversion of the loan to equity at the request of the Crown.
“Without this intervention, New Zealand was at risk of not having a national airline,” Finance Minister Grant Robertson says.
“Air New Zealand has a unique and critical role in our economy and society. Also, the Government owns 52 per cent of the company, which means we have a responsibility towards it. We have acted swiftly to put this loan agreement in place and support our national carrier."
"Air New Zealand is greatly appreciative of the Government’s support of a loan facility as the airline navigates its way through the unprecedented challenges created by COVID-19," says Air New Zealand chairman Dame Therese Walsh.
“This agreement means that Air New Zealand is in a position to play its part in making sure Kiwis can return home from overseas and that essential flights and freight lines for goods like pharmaceuticals remain open by ensuring flights continue to and from key international destinations," says Grant. "The agreement also safeguards the domestic network, with flights assured to all current destinations.
“While today’s action means the company can continue to operate, given the unprecedented shock to the global aviation industry caused by COVID-19, Air New Zealand has advised that there will unfortunately be job losses as capacity is cut.
“The Government is actively working with Air New Zealand on what can be done to support these workers. This includes work underway through a separate process to mobilise some of Air New Zealand’s workforce to other areas of our fight against COVID-19, including supporting the health response.
“This shows how we are all working together in New Zealand in this battle against the virus,” he says.
“Air New Zealand will play an important role in our economic recovery, when the disruption caused by this global pandemic is over.”
"The Government and Treasury moved swiftly to ensure that Air New Zealand had financial certainty as demand for flights domestically and internationally has rapidly fallen due to travel restrictions implemented by countries around the world," says Therese.
"The loan facility ensures that Air New Zealand can continue to play a vital role in connecting New Zealanders and our businesses with each other here at home and around the world."
Separately, and distinct from this agreement, the Government is working with Air New Zealand to ensure other key services can be provided, including repatriation flights, maintaining critical cargo transport lines and having Air New Zealand staff assist the health response. Those services will be provided for under separate commercial arrangements to be negotiated in the future on an arms’ length basis between the airline and the Government.