Auckland, March 20, 2020
The New Zealand government has come forward with a $900 million loan facility to Air New Zealand which has been obliged to cancel almost all its international flights and scale down services on domestic routes as the Corvid-19 begins to adversely effect the commercial.
An agreement between the government and the national air carrier is on debt-funding basis, allowing for the conversion of the loan to equity at the request of the Crown.
The Coalition Government has stepped in to protect Air New Zealand with a significant financial deal that protects essential routes and allows the company to keep operating.
Finance Minister Grant Robertson said that New Zealand is at the risk of losing the airline.
Unique and critical
“Air New Zealand has a unique and critical role in our economy and society. Also, the Government owns 52% of the company, which means that we have a responsibility towards it. We have acted swiftly to put this loan agreement in place and support our national carrier,” he said.
Mr Robertson said that the loan would enable the airline to continue to operate and play its part in making sure that New Zealanders can return home from overseas.
“Air New Zealand will also be able to ensure that essential flights and freight lines for goods like pharmaceuticals from key international destinations. The agreement also safeguards the domestic network, with flights assured to all current destinations,” he said.
However, job losses at Air New Zealand would be inevitable since capacity is largely reduced.
“The Government is actively working with Air New Zealand on what can be done to support these workers. This includes work underway through a separate process to mobilise some of Air New Zealand’s workforce to other areas of our fight against COVID-19, including supporting the health response. This shows how we are all working together in New Zealand in this battle against the virus,” Mr Robertson said.
Role in economic recovery
Air New Zealand will play an important role in our economic recovery, when the disruption caused by this global pandemic is over, he said.
Aside from the loan agreement, the Government is working with Air New Zealand to ensure that 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,” Mr Robertson said.