By Jamie Freed

(Reuters) – Air New Zealand Ltd. is now operating at less than a third of its normal domestic capacity because of strict COVID regulations in Auckland. It also has doubts about the possibility that a travel bubble with Australia can reopen.

Greg Foran from Air New Zealand, the CEO said that they are running nearly 100% of their operations outside Auckland. Although it is an adequate network, Auckland accounts for almost three-quarters of all domestic networks. It has a very significant effect on our business. Not having Auckland operational at this point would be a major loss.

According to the airline, it burns through between NZ$25 and NZ$35 millions of cash per month because of the lockdown in New Zealand’s biggest city. The government claims that the restrictions will be eased in stages as the vaccination rate rises.

This nation from the Pacific was one of a few countries that brought COVID-19 numbers down to zero in 2013. It remained virus-free for most of last year, until the outbreak of the Delta strain which is highly contagious. Efforts to eradicate transmission were thwarted by an epidemic of Delta variant.

A quarantine-free travel bubble between Australia and New Zealand is closing costs for the airline in NZ$20million to NZ$25m per month.

Foran stated that it is possible for the New Zealand government to treat Australia as any other country when it comes to quarantine and testing rules. This would be similar to what happens now.

His statement said, “It is up to New Zealand’s government to decide if the mandatory quarantine (relaxation) will be applied to people who are vaccinated.” Maybe they will be able do some isolation at home. Or maybe they’ll have the time to not need it. It was working in April, May, and June so I don’t believe it will ever return.

In light of the market challenges, the company has decided to suspend its guidance on earnings for the fiscal year ending June 30, 2009.

($1 = 1.4453 New Zealand Dollars)