Air New Zealand has announced a package it hopes will raise enough capital to pay back a loan from the Government.

The company is offering shares at a significant discount of 53 cents each as part of a $2.2 billion recapitalisation to help the airline return to its pre-Covid strength.

The Government has pre-committed to participating in the capital raise by purchasing shares necessary to retain its 51 percent holding, which is worth up to $602 million.

Tonight’s announcement is one of the largest capital raises in New Zealand’s corporate history.

A portion of the capital raised will be used to repay loans it received from the Government during the pandemic. 

Minister Grant Robertson said “It has been an incredibly challenging time for Air New Zealand over the past two years. We have provided significant support to Air New Zealand to recognise its critical role in keeping the country connected to the rest of the world, including the Crown loan facility which has been drawn down by $850 million.

Robertson said “Air New Zealand has also benefitted from the Government’s initiatives to support the wider aviation and transport sectors, including committing at least $620 million on air freight subsidies since the start of the pandemic to move New Zealand goods to export markets and the cancellation of Airways fees and certain passenger related fees.”

“In addition, Air New Zealand has, like many New Zealand businesses, benefitted from support through the Wage Subsidy Scheme and the PAYE deferral scheme provided by Inland Revenue.”

“We will also provide a standby loan facility of $400 million to ensure financial stability over the next few years. While it is not expected to be drawn upon, it is available to Air New Zealand if needed through to 2026. The arrangements for the facility have been benchmarked against equivalent private sector lending to airlines.”

“As a result of the government’s support, our national carrier is in a far stronger position than many other airlines around the world to return to the skies and take advantage of the opportunities that are ahead of it. This resilience is important as we need a national airline to support economic development and provide access to international markets, and to enable the return to international tourism,” Grant Robertson said.