Air NZ expects bigger loss after Australia travel bubble suspension

Adds details on outlook, cash flow, background

Aug 4 (Reuters)Air New Zealand AIR.NZ said on Wednesday its fiscal 2022 loss would be bigger than earlier expected due to suspension of a quarantine-free travel arrangement with Australia, where COVID-19 cases are growing.

The travel bubble, which was launched in April as the two nations kept a tight leash on infections, was paused in July as Australia recorded an outbreak of the highly infectious Delta virus variant.

Air New Zealand said it now expects a loss before significant items and tax of as much as NZ$530 million ($371.8 million), compared with its prior forecast of a loss not exceeding NZ$450 million.

The company said that the suspension of the travel bubble had reduced its operating cash flow and that it expects to draw down further on a NZ$1.5 billion loan facility from the government.

While the carrier warned that demand in the Tasman region may be slower to recover following a reopening of the bubble, it said its cash flow was still positive, thanks to continued domestic performance and government schemes.

Australian airline Qantas QAN.AX said on Tuesday it would temporarily idle about 2,500 employees without pay for at least two months, as fresh COVID-19 restrictions in Australia slashed domestic travel demand.

($1 = 1.43 New Zealand dollars)

(Reporting by Savyata Mishra in Bengaluru; Editing by Maju Samuel)

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