Air New Zealand (ANZ) expects to bolster its balance sheet with a NZ$186 million ($126 million) rights issue to existing shareholders. Its biggest shareholder, the New Zealand government, is taking up its full entitlement with NZ$150 million already budgeted for this purpose. That leaves NZ$36 million for other investors.
The new issue, announced at the airline's annual general meeting, has been widely expected, but is slightly below analysts' estimates of NZ$200 million.
The airline has not earmarked this new capital for any specific purpose, but wants to maintain its favourable debt-equity ratio in the face of an expensive refleeting programme that will be largely self-funded. Its biggest outlay will be on a NZ$1.3 billion order for Boeing 777s and 7E7s - of which some will be purchased - with first deliveries starting next September. Recently it also placed a NZ$350 million order for 17 Bombardier Dash 8s, with deliveries starting next July. And it already has a NZ$160 million refurbishment of its Boeing 747-400 fleet under way.
ANZ's board delayed a decision on the rights issue until after the New Zealand high court ruled on its proposed merger with Qantas Airways. After that adverse ruling, directors knew they would need to raise capital from sources other than Qantas.
With this investment, the government's stake in ANZ remains at 82%.
Source: Airline Business