Government backs Air New Zealand as Trans-Tasman bubble opens

The Government is continuing to support Air New Zealand while aviation markets stabilise and the world moves towards more normal border operations.

The Crown loan facility made available to Air New Zealand in March 2020 has been extended to a debt facility of up to $1.5 billion (an additional $600 million) available to 27 September 2023 (an extra 16 months). The interest rate will be adjusted to reflect current market conditions.

Air New Zealand has also decided to defer its planned equity capital raise until 30 September 2021. This will give them more time to assess market conditions. As previously stated, the Crown wants to remain a majority shareholder and will participate in the raise, subject to Cabinet approval of the terms.

Minister of Finance Grant Robertson said the amendment to the loan facility allows Air New Zealand to benefit from the increased activity as borders re-open and travel and trade movements increase.

"The Crown's role as majority shareholder has been a major source of stability for the national airline during a very difficult time.

"As a result, our national carrier is in a much stronger position than many airlines around the world. We need that strength to be retained because we need a national airline to support economic development and provide access to international markets, and to enable the international tourism we're beginning to see emerge with the opening of the Trans-Tasman bubble.

"We also need a national airline to provide a domestic network that allows people to be where they want to be across New Zealand and gets goods where they are needed," Grant Robertson said.

The Crown Standby Loan Facility agreed in March 2020 was a measure that provided the time for Air New Zealand to reposition its operations and facilitate the implementation of an optimal long-term capital structure. The amended loan agreement retains this expectation and the provision of the conversion of the loan to equity at the request of the Crown. Air New Zealand's intention is that all amounts outstanding under the facility will be repaid from the proceeds of its proposed capital raise.