Air New Zealand (ASX:AIZ) share price drops then stops amid NZ$1.2bn cap raise rumblings

The Kiwi national airline’s shares are frozen pending an announcement later today.

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a gloved hand with a fur lined jacket attached holds a small toy aeroplane against a frozen white, icy backdrop.

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Key points

  • The Air New Zealand share price is in a trading halt 
  • The company's shares fell 0.78% on the ASX before the freeze 
  • The airline plans to resume trading on Thursday after an announcement 

The Air New Zealand Ltd (ASX: AIZ) share price is on ice today pending an announcement.

The company’s shares dropped 0.78% on the ASX before grinding to a halt at $1.28.

Let’s take a look at what is happening at Air New Zealand.

Possible capital raise?

Air New Zealand is in a trading halt at the request of the airline pending “a material announcement in relation to the company’s recapitalisation plans”.

Speculation emerged in The Australian earlier today the airline is about to launch a NZ$1.2 (A$1.11 billion) capital raise. The company’s hares are expected to be sold at a 35% discount.

The Air New Zealand share price has been under pressure amid COVID-19 border closures and rising fuel costs. In the company’s half-year results released in February, Air New Zealand reported a statutory loss before tax of $376 million, with dividends remaining suspended.

In these results, the airline informed shareholders it plans to launch a capital raise before the end of March this year, “subject to market conditions”.

The trading halt is expected to remain in place until market open on Thursday. Commenting on the freeze, Air New Zealand said:

Unless ASX decides otherwise, the securities will remain in trading halt until the earlier of the commencement of normal trading on Thursday, 31 March 2022 or when the announcement is released to the market.

Air New Zealand chair Dame Therese Walsh and CEO Greg Foran are due to hold a media conference in Auckland at 6.30 pm local time, 1news reported. This will be after the ASX closes.

The equity raise comes ahead of New Zealand’s border opening to international tourists. The New Zealand border will be reopening to Australians from 13 April. Fully-vaccinated travellers from 60 further countries will be able to travel to the island nation from 2 May.

Share price snapshot

The Air New Zealand share price has descended 16% in the past year, while it has lost nearly 10% year to date.

For perspective, the benchmark ASX 200 has returned nearly 12% over the past year.

In the past week, Air New Zealand shares have slumped more than 3%, and 9% in a month.

Air New Zealand has a market capitalisation of about $1.44 billion based on the current share price.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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