The Air New Zealand share price is lifting in early trade today despite the Kiwi carrier’s results showing cash losses and workforce cuts.
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Air New Zealand Limited (ASX: AIZ) has posted a 93% loss in earnings before taxation and declined to give forward guidance other than “a significant loss in 2021”.
The Kiwi airline released its interim results today for the half-year ending 31 December. In opening trade, the Air New Zealand share price lifted 2.4% to $1.495 per share.
The airline’s earnings before other significant items and taxation was negative NZ$185 million for the half-year ending 31 December. It was positive NZ$198 million the prior year.
Operating revenue was down 59%, totalling just NZ$1.2 billion. The net loss after tax amounted to NZ$72 million.
Similar to its Australian rival Qantas Airways Limited (ASX: QAN), domestic and freight businesses kept some revenue coming in for the Kiwi carrier.
Cargo revenue was actually up 91% for the December half, while domestic flights were back to 76% of pre-COVID levels.
Air New Zealand chief Greg Foran said his team should be proud of the half-year results.
“We wouldn’t be operating the level of domestic and cargo capacity we are without their extraordinary efforts.”
Air New Zealand burning through cash
Foran warned the company has depleted NZ$1 billion of its own cash reserves while also receiving government assistance, but this would not extend into the second half.
The employee headcount has been slashed 38% to trim costs.
“From the start of this crisis we have had to make a lot of incredibly tough calls, especially, where our people are concerned, and that is never something we would do lightly,” said Foran.
“But it has all been with the sole purpose of ensuring Air New Zealand’s survival.”
The New Zealand government has given a written guarantee that it would remain a majority shareholder of the carrier.
No dividend will be paid out for the 2021 financial year.
Foran had high hopes for the coming year, due to the arrival of coronavirus vaccines.
“The strong recovery in domestic travel has been really exciting because it shows that when people have confidence to travel, they will,” he said.
“With the rollout of the vaccines underway around the world and here in New Zealand, this has positive implications for our recovery when borders open.”
Air New Zealand share price on the move
The Air New Zealand share price was down 2.34% and closed at $1.46 yesterday as a new COVID-19 cluster broke out in Auckland. Three Australian states today closed the one-way bubble that allowed travellers from New Zealand to avoid quarantine upon arrival.
The airline’s share price on the New Zealand exchange was also up 1.27% this morning.
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Motley Fool contributor Tony Yoo owns shares of Qantas Airways Limited. 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.