AIR - Air NZ.

[silverblizzard888]

You cannot make money when you retain 70% of your staff but have only 10% of your business left. My money is on Rob Fyfe who as the former CEO of 7 years would know best and he is on record today estimating they are burning $211m a month from April onward. One virologist expert reported today he thought the virus could be with us for 18 months. That's 18 months x $211m = $3,800 million. Why should ordinary hard working Kiwi's pay to indulge the lifestyles of all those fat cats indefinitely ?

AIR will be broke by May 2020 or quite possibly a lot earlier without Govt support, in my opinion.

Rob Fyfe will be right on the cash burn and its fair they will have a large wage bill, but no where will it be 18 months of that exact same thing, things will improve at least by 6 months and flying will resume on a profitable basis. You just have to look at China and how they have managed to get their impossible situation under control in 3 months. I estimate $1.5 billion loan is enough to get them through this given their current balance sheet.

[Beagle]

Respect your opinion but we don't live under military control like the Chinese so the outcome here could be very different.

[Biscuit]

Respect your opinion but we don't live under military control like the Chinese so the outcome here could be very different.

Chinese people quite like kiwis in many ways. It was as much the public-spirited determination to overcome their situation that won out as much as anything else.

[silverblizzard888]

Respect your opinion but we don't live under military control like the Chinese so the outcome here could be very different.

Currently at 28 cases could be 100 soon with the extra testing, but thats very much a situation NZ can control if they are onto it. Most of those infected have come from residents overseas coming back here. This will either head two directions, either it gets under control by April or rapidly increases once winter starts and no one can be sure who has what (which a lock-down will be required). Borders need to be closed outright, but I guess its still a right of residents to come back but soon there won't even be planes to come back here, so we could see a rush of residents coming back this month and that might spike numbers of cases (as it has currently), then the rate of growth will like fall and then grow at a slower pace.

[THEONE]

It is very strange they haven't made further cuts. The only reason I can think of is they have a reasonable deal in negotiation with Government.
The Government must be limiting their cuts. Ordering them to keep flying these flights to get people home and keep economy ticking over. Why else wouldn't they cut further? If they put AirNZ in recievership I presume this would ground all their flights.. For quite a while. Airnz is one of key drivers of economic activity. It wouldnt be worth the risk putting into recievership. Receiver surely can sell the planes to the highest bidder. Also I wonder if they would loose or need to reapply for the landing slots etc. I have no idea to be honest.. I do think AirNZ has a decent amount of bargaining power. The government dosent want them in recievership either. They want planes in the air..Especially when everything starts recovering...they should fly even when not economic to do so. Is worth it for the NZ economy

[Beagle]

Aviation is a sector where changes occur at 500 knots. Quite clear 30% human resource cuts is woefully inadequate. All international flights will be grounded shortly apart from freighter flights. Receivers can and often do continue to trade the business's under their control. My money is on the trading halt to be extended yet again tomorrow morning while they continue to crunch the numbers. If trading is allowed to resume tomorrow without a defined rescue plan you can expect several days catch-up of losses in this sector. A useful guide might be how much THL has fallen this week so far.

I would be very surprised if AIR didn't fall to under $1.00 if trading resumes tomorrow.

[Raz]

Chinese people quite like kiwis in many ways. It was as much the public-spirited determination to overcome their situation that won out as much as anything else.

From what we know so far it defies logic, China, like most countries, will not have another outbreak in time.

[bottomfeeder]

Chinas problem is now from returning citizens being infected overseas. They are a larger NZ over again. Air NZ have got planes that are worth so far below book value that storing them will cost more than they are worth. Hate to say it but this recovery needs a lot more than good ideas, good management, and good marketing. The external factors are just too great to overcome.

[biker]

AirNZ enters loan facility & cancels 2020 interim dividend
20/3/2020, 8:46 am MKTUPDTE
Air New Zealand has entered into a debt funding agreement with the New Zealand Government. Under the terms of the agreement the Government will provide a standby loan facility (‘the facility”) of up $900 million to support the airline as it manages the unprecedented impact of the Covid-19 outbreak on its business.

The facility will provide Air New Zealand with the ability to draw down on funds should its cash reserves drop below a minimum threshold, providing additional funds if cash reserves are not at a satisfactory level. The facility was negotiated on an arms’ length basis, with each party having been independently advised. The facility will be provided in two tranches – a tranche of $600,000,000 with an effective interest rate initially expected to be between 7% and 8% per annum and a second tranche of $300,000,000 with an effective interest rate initially expected to be in the order of 9% per annum. The facility will be available for a period of 24 months. The effective interest rates on both tranches will step-up by 1% if the facility remains after 12 months. This debt funding will be used to support the airline’s business operations as it manages the implications of various government border restrictions and substantial reductions in travel demand.

The availability of each tranche of the facility is subject to certain conditions precedent, including agreeing an operating finance plan with the Government and other documentary conditions precedent. Another condition precedent which Air New Zealand must satisfy in order to have the facility available is the cancellation of the 2020 interim dividend of 11 cents per share (which equates to a total of $123 million) that was announced to the market on 27 February 2020 and was due to be paid to all shareholders, including the Government, on 25 March 2020. Air New Zealand’s Board of Directors believes that, given the highly uncertain environment that exists, the cancellation of this dividend is in the best interests of the airline, including because that action is a pre-requisite to the availability of the facility. Accordingly, the Air New Zealand Board has cancelled this interim dividend effective today.

Other terms of the agreement (which is in the form of a binding terms sheet to be converted into long form agreements), include: a prohibition on payment by Air New Zealand of any dividends or other distributions to shareholders (including the Government) while any amount is available to be drawn under the facility, the giving of security for the loan by Air New Zealand and certain of its subsidiaries over their assets (subject to certain exceptions), the Government having the ability to seek repayment through a capital raise by the airline after six months, or converting the loan to equity (subject to compliance with laws and any necessary regulatory and/or shareholder approvals), Air New Zealand giving various undertakings, representations and operational and informational and other undertakings, and typical events of default. NZX Regulation has granted Air New Zealand waivers from the requirements under the NZX Listing Rules to obtain shareholder approval for entry into and performance of the facility with the Government (as a related party of Air New Zealand). Those waivers were granted because of the recent, extraordinary decline in Air New Zealand’s market capitalisation, and on the grounds that Air New Zealand’s Board of Directors have confirmed that: entry into the facility is in the best interests of all Air New Zealand shareholders (other than the Government); there has been an arms’ length negotiation in relation to the facility, and that the Government has not influenced Air New Zealand’s decision to enter into the facility.

Both Air New Zealand and the Government acknowledge that the terms of the facility do not alter the fundamental principles of their relationship, with the airlines Board of Directors, Greg Foran as CEO and the Executive Team maintaining responsibility for all commercial and operational decisions of the airline.

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.

[winner69]

So $900m from Government at exorbitant interest rates

In spite of the words about it being paid back inevitable that it will be converted into equity .....that would a huge dilution of existing shareholders

No divies for a few / many years I would say

http://nzx-prod-s7fsd7f98s.s3-websit...298/319205.pdf