Air New Zealand is planning to ground its entire Boeing 777-200 and 777-300 fleet until at least the end of calendar 2020, according to earnings update released to the domestic stock exchange.
In the statement Air New Zealand said that prior to the outbreak of Covid-19, it was in a strong position with a resilient balance sheet and short-term liquidity of more than $1 billion and no financial covenants on new or existing debt facilities and no significant debt maturities until 2022.
In addition to securing a $900 million with the New Zealand Government the airline has taken a number of measures to preserve liquidity such as grounding its 777 fleet. The airline is also planning th deferral or cancellation of almost $700 million in expected capital expenditure to December including deferrals of planned A321 NEO deliveries
“We have not yet needed to draw down on the government loan facility, as we continue to utilise all available levers to reduce our cash burn and right-size the business to reflect the expectation that, for some time, our airline will be smaller than it was pre Covid-19” said chief financial officer Jeff McDowall in the earnings update.
Air New Zealand’s policy of hedging up to 90% of its expected fuel consumption for the next three months, falling to a maximum of 30 percent after twelve months has resulted in the airline to record losses on its hedging programme of up to $100 million for 2020.
“These losses were partially offset by gains from closing out foreign exchange contracts relating to foreign currency operating revenues and expenditures which are no longer expected to occur,” Air New Zealand said in a statement.