Air New Zealand pins hopes on more passengers, funds for freight service

More passengers flying again once Auckland's alert level 3 finishes and more financial support for its cargo business will influence how much of a $900 million loan is drawn down, Air New Zealand's chief finance officer says.

Air New Zealand is about to dip into the government loan after reporting huge losses yesterday.

The carrier reported the biggest corporate loss in recent history and its first loss in 18 years - a deficit of $454m for the year ended June compared with the previous year's $276m profit.

Much of the loss centred on the costs associated with 4000 redundancies, asset writedowns and grounded planes. Stripped of these one-off costs, the underlying loss was $87m.

The airline's domestic operations have been hit by the latest Covid-19 outbreak with social distancing requirements meaning fewer passengers can travel at any time.

As well, chief executive Greg Foran has cited concerns about the airline's ability to fly internationally if government funding to fly freight doesn't continue beyond November.

The government has given $330m in direct support to keep air freight routes open.

Chief financial officer Cam Wallace told Nine to Noon the carrier will aim to draw down the minimum of the government's $900m loan in the next few days, but needed around $200m in cash to operate.

How much it would need depended on whether domestic travel increased again once Auckland's alert level 3 finished (due at 11.59pm on Sunday) and if government support for its freight business continued beyond November.

The airline would be talking to the Ministry of Transport again about another freight support extension which was critical both for the airline and as a service for exporters and importers.

Asked when there might be clarity around the discussions, he said there was no defined timeline.

He did not rule out a capital raising exercise to offset the need for drawing on a large portion of the government loan.

"...We continue to be in constructive conversations with the government on a range of different options..."

He said the result had been a little bit better than expected, in part because many travellers had redirected their international fares into the domestic tourism industry.