Air New Zealand Limited · NZX:AIR
Air New Zealand — FY2004 Earnings Presentation
25 slides from Air New Zealand's earnings presentation, Aug 25, 2004
Slide 1: Annual Results Announcement 2004
Slide 2: Overview - profitability
Overview - profitability € AIR NEW ZEALAND Revenue 3,498 3,617 (3.3) Operating Expenditure (2,799) (2,882) 2.9 EBIT 235 233 0.5 Profit Before Unusuals & Tax 243 220 10.1 Profit After Tax 166 166 0.3 Operating Cash Flow 467 523 (10.7) Gearing 52.6 62.0 9.4pts
Slide 3: Competition
Competition € AIR NEW ZEALAND enim SINGAPORE MRLUNES
Slide 4: Building strength from core
Building strength from core € AIR NEW ZEALAND @ Domestic hort haul international ong haul International
Slide 5: — — —— -— — Oo
— — —— -— — Oo
Slide 6: Strategic Alliance
Strategic Alliance € AIR NEW ZEALAND L2. = AIR NEW ZEALAND
Slide 7: Presentation overview
Presentation overview > Operating performance > Financial analysis > Strategic update 2. = AIR NEW ZEALAND
Slide 8: Passengers, RPKs up
Passengers, RPKs up million Passenger Numbers 10 Be SG & 2000 2001 2002 2003 2004 AIR NEW ZEALAND billion RPKs 24 3 93 [2 a ee oe ee oe ae | ; . iz 2000 2001 2002 2003 2004
Slide 9: Yield movement
Yield movement € AIR NEW ZEALAND Long Haul Yield Short Haul Yield Cents per RPK Cents per RPK 10/996 18 4756 9. | 17 Seu 8. | 16 : 6 _ a LL 14 . — FYO3 FX Other FY04 FY03 FX Other FYO04 > Reduced value of ticket >» More affordable fares sales made in foreign currencies
Slide 10: Operating revenue
Operating revenue € AIR NEW ZEALAND $3.6bn ss $144.5m $64.8m__ $3.5bn oe FY0O3 Less Less Less Plus FYO4 Pax Rev Cargo Contract Other & Mail Svcs
Slide 11: Operating expenses
Operating expenses € AIR NEW ZEALAND $73.8m $12.3m $2.9bn__ FY03 Plus Less Less Less Less Less Less FY04 Labour Maint Sales/ Pax Other Fuel Aircraft Mktg Sves &Oil Ops
Slide 12: Fuel price rises offset by FX
L. Fuel price rises offset by FX = > Increasing cost and consumption offset by currency and hedging gains AIR NEW ZEALAND 540 520 500 480 460 440 420 400 380 FY03 Less Less Plus Plus FY04 FX Hedge Price Usage
Slide 13: EBITDRA to NPAT
EBITDRA to NPAT 2. = AIR NEW ZEALAND EBITDRA 699.4 734.8 (35.4) Depreciation 235.6 237.4 1.9 Rental & Lease 229.1 263.9 34.8 Interest (7.8) 13.1 20.9 Unusual Items 3.2 (3.7) (6.9) Taxation 73.2 58.3 (14.9) NET PROFIT AFTER TAX 166.2 165.7 0.4
Slide 14: Total cash up, strong operating cash flow
Total cash up, strong operating 2. cash flow $m 600 | 500 400 300 Operating Cash Fiow 2000 2001 2002 2003 2004 Financial Year S AIR NEW ZEALAND $m Total Cash 1,100 1,000 900 | 800 700 600 — “ 2000 2001 2002 2003 2004 Financial Year
Slide 15: Gearing reduced to 52.6%
Gearing reduced to 52.6% € AIR NEW ZEALAND % 4100 Target Gearing Range
Slide 16: New business model
New business model € AIR NEW ZEALAND Cost per “low cost network model” ASK Cost per ASK
Slide 17: Express Class Results
Express Class Results & AIR NEW ZEALAND Cumulative traffic growth 40% 6.6 million passengers flown Direct bookings 65% (internet 42%) of revenue Up to 60% of customers using Kiosks at peak times
Slide 18: Significant economic benefits
Significant economic benefits 2. S (NZ$m) AIR NEW ZEALAND *NZIER “The Economic Impact of Air New Zealand's Express Class, National and Regional Analysis" duly 2004
Slide 19: Business transformation
Business transformation € AIR NEW ZEALAND > Business Transformation Programme — Over 40 initiatives > Initiatives implemented that deliver $65m of target $245m savings in 3 years time > Yield erosion will offset some of the gains > Transformation programme plus long haul renewal sets platform for re
Slide 20: Changes made and more to come
Changes made and more to come ie Express Class. Tasman Express Pacific Express San Francisco Nov 02 Oct 03 May 04 dun 04 Aiepaints Dollars New Inflight Product WW? Journey continues Nova Mid 05 Sep 05
Slide 21: Air New Zealand
2. = AIR NEW ZEALAND > Short haul transformation complete > Long haul transformation underway > Record jet fuel prices > Strengthening competition
Slide 22: Dividend policy
Dividend policy € AIR NEW ZEALAND > Board expects to be in a position to declare dividends in 2005 financial year > Target pay out expected to represent 25 to 35% of Net Profit After Tax > Dividend Reinvestment Plan
Slide 23: Small shareholder plan
Small shareholder plan € AIR NEW ZEALAND > Shareholders with less than 500 shares targeted > Can purchase or sell shares without incurring brokerage fees > Voluntary participation
Slide 24: Outlook
2. = AIR NEW ZEALAND > Qutlook is challenging ~ Record fuel price ~— Competition intense > Buoyant economic conditions in most of Air New Zealand's markets
Slide 25: Summary
2. = AIR NEW ZEALAND > Profit Before Unusuals and Tax up $22m to $243m > Profit After Tax $166m > Total cash over one billion collars > Gearing 52.6%