National flag carrier Air New Zealand has reportedly begun drawing down on an NZD900m ($589.95m) government debt facility.

In March, the New Zealand Government granted a bailout offer of up to NZD900m ($522m) to the carrier to cope with the impact of the Covid-19 pandemic.

Last month, the airline initially hinted at the need to draw down on the government loan to endure severe revenue loss during the pandemic.

Besides charging a 7%-9% interest on loan, the government can also seek repayment through a capital raising after six months or transform the loan to equity.

Furthermore, drawing down would enable the carrier to gain sufficient time to review its capital structure and complete a capital raising by June 2021.

In its statement to the New Zealand Exchange, the airline said:  “Assuming there are no further material adverse developments, the company is expecting to complete the strategic capital structure review by early 2021 and be in a position to proceed with capital raising to be completed before June 2021.”

“The New Zealand Government has recently reaffirmed its commitment to maintaining its majority shareholding in Air New Zealand, and the board is engaging constructively with the Crown in its capital structure and funding discussions.”

Posting its first loss of NZD87m ($57.23m) in 18 years due to the impact of the pandemic, the airline proposed up to 385 additional cabin crew job cuts by December.

Due to the pandemic, the carrier cut more than 4000 of its 12,500 employees besides grounding almost all of its Boeing 777 fleet.