The Air New Zealand Limited (ASX: AIZ) share price is struggling to leave the tarmac this morning. This follows the release of a trading update from the airline operator.
At the time of writing, Air New Zealand shares are flat at $1.50 a piece.
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Flight path to revival
The Air New Zealand share price is looking attractive to investors today after the airline disclosed an optimistic trading update.
According to the airline, the strong and sustained recovery in demand for domestic travel, in addition to its cargo business has been a significant factor in mitigating the negative impacts of COVID-19.
On 27 May 2021, Air New Zealand advised it had been awarded a further five months of cargo flights under the New Zealand government's Maintaining International Air Connectivity (MIAC) scheme. This agreement will see the kiwi airliner conduct an average of 30 international flights per week until the end of October 2021.
The company reported that domestic capacity across its operations is now around 90% of pre-COVID levels, with corporate demand showing strong signs of recovery. Additionally, the Trans-Tasman bubble is hovering around 70% pre-COVID levels.
Commenting on the trading update, Chief Executive Officer Greg Foran said:
The airline has its eyes firmly set on the future as we move out of the survive phase and into revival mode. For us this means further strengthening our core Domestic business and putting even greater focus on our customer obsession, making sure we understand what our customers truly want from their end-to-end travel journey.
Long haul international passengers remain heavily impacted by international border restrictions. Currently, less than 5% of pre-COVID long haul passenger volume is being exhibited.
How about the finances?
Air New Zealand stated that it has been earnings before interest, depreciation, and amortisation (EBITDA) positive since September 2020. Similarly, the airline has been operating cash flow positive since the second quarter of FY21 – buoyed by cargo support, wage subsidies, and relief packages.
Additionally, Air New Zealand has managed to defer the delivery of its first of eight Boeing 787 Dreamliners. The order has been pushed back to 2024 from the 2023 financial year.
The company has continued its cost management focus. No further drawdowns have been made on its $1.5 billion Crown standby loan facility, since the release of its interim results in late February. The airline's current amount drawn down remains at $350 million.
Importantly, Air New Zealand provided an update on its FY21 earnings guidance. Losses before other significant items and taxation will not exceed $450 million for FY21, according to the airline.
Likewise, the company expects a comparable loss in FY22, as government support drops off.
Employees to receive Air Zealand shares
After a tumultuous period, the Kiwi airliner is looking to give its permanent employees a pat on the back.
In recognition of the efforts, Air New Zealand will be awarding eligible employees $1,000 worth of Air New Zealand shares. The issue price was not stated.
These shares will be allocated in the fourth quarter of the calendar year.
