Government offers $900m loan for Air New Zealand, CEO says 30 percent of workforce not needed
Topics: AIR NEW ZEALAND
The airline will be able to call on the loan if its cash reserves fall below an undisclosed level over the next two years, and the government which already owns 52 percent of the company will have the ability to turn the loan into shares in the airline.
Air New Zealand will continue to reduce staff despite the government's $900 million loan bailout during the Covid-19 crisis.
Chief executive officer Greg Foran says 30 percent of the workforce will not be needed.
Finance Minister Grant Robertson made the announcement this morning, warning New Zealand was at risk of not having a national carrier without this intervention.
"Air New Zealand has a unique and critical role in our economy and society. Also, the government owns 52 percent of the company, which means we have a responsibility towards it. We have acted swiftly to put this loan agreement in place and support our national carrier," he said.
The loan facility will be provided in two tranches: one of $600m with an effective interest rate initially expected to be between 7 and 8 percent, and a second tranche of $300m with an effective interest rate expected at 9 percent. ■