New Zealand Professional Investment Services Firm

Forsyth Barr

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Air New Zealand (AIR.NZ) Capital Raise Deferred Again</h2>
Air New Zealand (AIR) has deferred its capital raise (again) to the first quarter of 2022, its 3Q22. It was previously due to complete the capital raise by 30 September 2021. The deferral reflects the Government’s view that “the current environment is not sufficiently certain and stable to enable the Crown to provide a firm pre-commitment to support the planned equity raise”. This follows its reopening announcement yesterday and the closure of the trans-Tasman bubble last month in light of the rising number of COVID-19 cases in Australia. Other key points as follows:
<ul>
<li>Crown control: The Government has again stated its commitment to retaining majority control of the company.</li>
<li>Funding facility: The interest step up of +1% on the Crown’s funding facility (totalling NZ$1.5bn) was due to kick in from 29 October 2021. This will no longer apply. The facility remains available through to September 2023, though on completion of the capital raise AIR expects to repay all amounts drawn under the facility.</li>
<li>Liquidity: Repayment of the NZ$310m PAYE deferrals from the IRD is now expected between January and March 2022.</li>
</ul>
AIR’s profit before tax losses for FY22 will be significant (guidance of up to -NZ$530m) as outlined in its update last week. Heavy losses will continue to weigh on its underlying net asset value (NAV). Moreover, there remains a significant level of uncertainty over the near to medium term outlook.&nbsp;Our rating is UNDERPERFORM.&nbsp;AIR’s next news flow is&nbsp;its&nbsp;FY21 result on 26 August 2021.

Air New Zealand (AIR.NZ) Capital Raise Deferred Again
Air New Zealand (AIR) has deferred its capital raise (again) to the first quarter of 2022, its 3Q22. It was previously due to complete the capital raise by 30 September 2021. The deferral reflects the Government’s view that “the current environment is not sufficiently certain and stable to enable the Crown to provide a firm pre-commitment to support the planned equity raise”. This follows its reopening announcement yesterday and the closure of the trans-Tasman bubble last month in light of the rising number of COVID-19 cases in Australia. Other key points as follows:

Crown control: The Government has again stated its commitment to retaining majority control of the company.
Funding facility: The interest step up of +1% on the Crown’s funding facility (totalling NZ$1.5bn) was due to kick in from 29 October 2021. This will no longer apply. The facility remains available through to September 2023, though on completion of the capital raise AIR expects to repay all amounts drawn under the facility.
Liquidity: Repayment of the NZ$310m PAYE deferrals from the IRD is now expected between January and March 2022.

AIR’s profit before tax losses for FY22 will be significant (guidance of up to -NZ$530m) as outlined in its update last week. Heavy losses will continue to weigh on its underlying net asset value (NAV). Moreover, there remains a significant level of uncertainty over the near to medium term outlook.&nbsp;Our rating is UNDERPERFORM.&nbsp;AIR’s next news flow is&nbsp;its&nbsp;FY21 result on 26 August 2021.

Air New Zealand (AIR.NZ): Capital Raise Deferred Again