Air New Zealand reels from Auckland curbs, Australia bubble loss

Spark New Zealand

07/10/2021 06:40

* Domestic capacity less than a third of usual
    * Quarantine-free travel bubble with Australia may not
return
    * Burning through at least NZ$45 mln monthly as a result

    By Jamie Freed
    Oct 7 (Reuters) - Air New Zealand Ltd  AIR.NZ  is operating
less than one-third of its usual domestic capacity due to tough
COVID restrictions in Auckland and doubts whether a travel
bubble with Australia will reopen, the airline's chief executive
said on Thursday.
   "We're running almost 100% outside of Auckland," Air New
Zealand CEO Greg Foran told Reuters in an interview. "It's a
reasonable network but Auckland is literally two-thirds of the
domestic network so it's a pretty significant impact to our
business, not having Auckland operating at this stage."
    The airline has said it is burning through around NZ$25
million ($17.30 million) to NZ$35 million of cash a month due to
the lockdown in the country's largest city, which the government
says will be scaled back in phases as vaccination rates rise.
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    The Pacific nation was among just a handful of countries to
bring COVID-19 cases down to zero last year and largely stayed
virus-free until an outbreak of the highly infectious Delta
variant in mid-August frustrated efforts to stamp out
transmission.
    The closure of a quarantine-free travel bubble with
Australia is costing the airline another NZ$20 million to NZ$25
million a month in cash burn.
    Foran said it was possible the New Zealand government would
treat Australia like any other country in the future when it
came to testing and quarantine rules, as is being done now.
    "It will be up to the New Zealand government to decide if
they going to relax (mandatory quarantine) for people who were
vaccinated," he said. "Maybe they can do isolation at home or
maybe hopefully in time they don't have to do any. But the way
it was operating in April, May and June, I'm not convinced it
ever returns."
    The company has suspended its earnings guidance for the
financial year ending June 30 amid the challenging market
conditions.  urn:newsml:reuters.com:*:nL4N2PW3U0
($1 = 1.4453 New Zealand dollars)

 (Reporting by Jamie Freed in Sydney; Editing by Raju
Gopalakrishnan)
 ((Jamie.Freed@thomsonreuters.com;))