Originally Posted by
Mendi Matt
There is another way to look at it. Air NZ was offered a rather large loan recently, to help with their immediate cashflow needs and 'keep the show on the road'. What may not be advertised is the interest rate - well over 8% I was told by an Air NZ mate.....!!! So if the Australian Govt. was fairly confident that VA will survive post Covid-19, this would be an opportunity for them to make money (borrow for 3-4%, or less....lend out at 8%+) and give an important lifeline too.
In the current climate that’s actually very reasonable.
VAH’s last bond raising in 2019 was at about 8.5%. In the early days of COVID-19 it was trading at a yield of around 20%. I’d imagine a bond raising for any airline on the open market now would be well north of that.
If ANZ secured a loan at around 8% from the government then the airline got a steal and the taxpayer got a very questionable investment.
That being said, Air New Zealand is a net importer of foreign tourist dollars and subsidizing their operation is to the taxpayers’ advantage. It’s questionable whether either VA or QF fly as many tourist dollars into Australia as they fly out.