2 May 2022
M Dorn
[FYI request #19015 email]
Dear M Dorn
Thank you for your Official Information Act request, received on 30 March 2022. You
requested:
the total dollar figure given to Air NZ that may cover share purchase (including the
upcoming 600m announced today), wage subsidy and any other covid related
payments (support payments etc) in the past 3 years
Please note that the information you are requesting is publicly available, including in Air
NZ’s investor presentation for its rights issue, which can be found here:
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-
2.amazonaws.com/attachments/AIR/389769/367765.pdf
Source of funding to Air NZ
Amount ($m)
Comment
MIAC cargo scheme
620
Wage subsidy
170
Aviation relief package
85
COVID-19 tax related relief
65
Crown loan facility
850
This is repayable by Air NZ
Redeemable shares facility
600
This is repayable by Air NZ
Crown contribution to equity raise
602
I have not provided a total, as some of the funding provided to Air NZ is repayable by the
company.
Below is some context for each of these items.
Maintaining International Air Connectivity (MIAC)
The MIAC scheme, and its predecessor scheme, the International Airfreight Capacity
Scheme, are intended to retain air connectivity with New Zealand’s principal trading
partners, enable continued essential passenger movements, retain important air
connections to the Pacific, retain air connections to key routes and hubs important for
tourism recovery, and maintain core capability, capacity and competitiveness within the
New Zealand aviation sector to provide a platform for an efficient and competitive market
when international air travel recovers. This scheme ensures a predictable and regular
schedule of air services to safeguard New Zealand’s international connectivity.
Further
information
about
the
MIAC
scheme
can
be
found
here:
https://www.transport.govt.nz/area-of-interest/air-transport/government-support-for-the-
transport-sector/
Wage subsidy
The wage subsidy scheme is administered by the Ministry for Social Development, and
has provided financial support for employers to retain employees. You can find more
information about the current support here:
https://www.workandincome.govt.nz/covid-19/covid-19-support-for-employers.html Aviation relief package
You can find a description of this package here:
https://www.transport.govt.nz/area-of-
interest/air-transport/government-support-for-the-transport-
sector/#:~:text=In%20March%202020%2C%20the%20Government,to%20and%20from
%20New%20Zealand. COVID-19 tax related relief
The Government has provided significant tax support for businesses affected by COVID
19, administered by the Inland Revenue Department. You can read more about these
programmes here:
https://www.ird.govt.nz/covid-19/business-and-organisations Crown loan facility
In March 2020 the Government stepped in to protect Air NZ with a debt funding
agreement through commercial loan facilities. As I said at the time, without this
intervention, New Zealand was at risk of not having a national airline.
To date Air NZ has borrowed $850m from this loan facility. Air NZ has been paying a
commercial rate of interest on the amounts it has borrowed. The full $850m borrowed by
Air NZ will be repaid in early May 2022.
Further details of the Crown loan facility, as originally established, can be found here:
https://www.nzx.com/announcements/350298
The terms of the facility were amended during its term; details of these amendments can
be found here:
https://www.nzx.com/announcements/377176
https://www.nzx.com/announcements/384616
Redeemable shares facility
In December 2021 the Government provided further support to Air NZ through a
redeemable shares facility. Under this facility, Air NZ was able to issue up to $1 billion of
redeemable shares to the Crown once certain conditions were met.
Air NZ has indicated that it will issue $600m of redeemable shares to the Crown by May
2022. Air NZ is intending to borrow $600 million through raising private sector debt by 30
June 2022 (subject to market conditions). This will be used to repay around $400 million
2
of the redeemable shares. Air NZ has said it intends to repay the remaining $200m of
the redeemable shares before the end of calendar 2023.
Further details of the redeemable shares facility can be found here:
https://www.nzx.com/announcements/384616
Crown contribution to Air NZ’s equity raise
Finally, as you are aware, Air NZ has announced a $1.2 billion rights issue. This involves
issuing new shares to those of the company’s current shareholders who wish to purchase
them. The Crown has committed to participate in the rights issue, by purchasing around
$602 million of new shares, ensuring the Crown will maintain its majority shareholding of
51% in Air NZ once the rights offer is completed.
Further details of Air NZ’s rights issue and the Crown’s participation in it can be found
here:
https://www.nzx.com/announcements/389769
Finally, you may be interested to know that I provided an enduring letter of the
Government’s expectations to the Chair of Air New Zealand in April 2021. This letter is
publicly available here:
https://www.treasury.govt.nz/sites/default/files/2021-04/loe-airnz-8apr21.pdf This reply addresses the information you have requested. You have the right to ask the
Ombudsman to investigate and review my decision.
Yours sincerely
Hon Grant Robertson
Minister of Finance
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