The Kiwi airliner has flagged greater than expected losses from ongoing travel restrictions.
The post Air New Zealand (ASX:AIZ) share price flat despite earnings downgrade appeared first on The Motley Fool Australia. –
At the time of writing, shares in the company are trading for $1.41 – down just 0.35% on yesterday’s close. For context, the S&P/ASX 200 Index (ASX: XJO) is 0.16% higher.
Let’s take a closer look at the company’s announcement.
What did Air New Zealand announce?
In a statement to the ASX, Air New Zealand gave a financial update following the New Zealand government’s decision to suspend the Trans-Tasman bubble for 8 weeks.
The Kiwi carrier says it expects losses before other significant items of NZ$530 million for FY22. That assumes a fuel price of US$78 per barrel and an exchange rate of 70 New Zealand cents per US dollar.
The company previously said it expects losses for the last financial year to be no more than NZ$450 million.
In its statement, the company said it does not expect demand to pick up to previous levels once the suspension is over. It cites the risk of further travel bubble suspensions as one reason.
As well, Air New Zealand says operating cash flow, unsurprisingly, will be reduced due to the current coronavirus situation in Australia. Therefore, the airliner will draw down from its loan facility from the New Zealand government.
While cash flow is reduced, the company says it is still net positive, mostly due to domestic travel in New Zealand and Ardern government funds. Air New Zealand still has NZ$1.15 billion available to it under the loan facility agreement.
Air New Zealand share price snapshot
Over the past 12 months, the Air New Zealand share price has increased 14.1%. Year-to-date, however, it is down 16.3%.
On the first trading day of 2020 (pre-pandemic), Air New Zealand shares opened at $2.86. At its current share price, the company has lost just over half of its value since then.
Air New Zealand has a market capitalisation of around $1.58 billion.
Should you invest $1,000 in Air New Zealand right now?
Before you consider Air New Zealand, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Air New Zealand wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of May 24th 2021
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.