Air New Zealand Limited · NZX:AIR
Air New Zealand — FY2009 Earnings Presentation
29 slides from Air New Zealand's earnings presentation, Aug 27, 2009
Slide 1: Annual Results 2009
ANNUAL RESULTS 2009 For personal use only 1 2009 ANNUAL RESULTS
Slide 2: Highlights
HIGHLIGHTS For personal use only • Normalised earnings* $145m • Net cash position of $1.6bn • Gearing improved 0.3 pts to 45.0% • Effective capacity management • Award-winning innovations • Positive employee engagement • Strong non-airline revenue growth * Normalised earnings before taxation after e
Slide 3: Main Drivers
MAIN DRIVERS For personal use only • Volatile foreign exchange rates and fuel prices • Deterioration of demand for air travel • Capacity reduction of 7.2% in response • Increased competitor capacity on trans Tasman and trans Pacific 3 2009 ANNUAL RESULTS
Slide 4: Key Influences on Profitability
KEY INFLUENCES ON PROFITABILITY For personal use only $NZ (m) 400 300 25 (375) 51 18 (280) (9) 197 370 272 (17) 200 145 (138) 100 7 0 (59) -100 (48) -200 2008 Yield Traffic Freight, Labour Fuel Price Maintenance, Sales & Depreciation Im pact of Im pact of FX Other 2009 Hedge Reported Norm alised Con
Slide 5: Cost Initiatives
COST INITIATIVES For personal use only • Reduced aircraft operations • Fuel efficiency initiatives • FTE reduced by 467* • Reduced hours working week offered • Leave without pay initiative introduced • Board, executive and management pay freeze • Continuous cost management *excluding acquired busine
Slide 6: Year to Date Yield Movements
YEAR TO DATE YIELD MOVEMENTS For personal use only Yield Movement 9% Yield Movement FX Adjusted 8% 7% Change in Yield 6% 5% 4% 3% 2% 1% 0% Nov 08 Jul 08 Jan 09 Jun 09 Aug 08 Sep 08 Oct 08 Dec 08 Feb 09 Mar 09 Apr 09 May 09 6 2009 ANNUAL RESULTS
Slide 7: Long Haul Performance
LONG HAUL PERFORMANCE For personal use only • RPKs down 8.8% • Capacity reduced by 9.4% • Load factor up 0.6 percentage points to 81.6% • Yield up 12.1% • Weaker NZD increased revenues • Influenza A (H1N1) impact • Pacific Premium Economy expanded on the 777-200 fleet 7 2009 ANNUAL RESULTS
Slide 8: Long Haul Capacity Management
LONG HAUL CAPACITY MANAGEMENT For personal use only Long Haul Y.O.Y Capacity Change Load Factor ppt Movement & Load Factor Y.O.Y Percentage Point Movement 5% 5 ppt ASK Change 0% 0 ppt Load factor movement Change in capacity -5% -5 ppt -10% -10 ppt -15% -15 ppt -20% -20 ppt Jul 08 Aug 08 Oct 08 Nov 0
Slide 9: Domestic Performance
DOMESTIC PERFORMANCE For personal use only • Difficult economic conditions in regional New Zealand • Decreased capacity by 4.1% • Load factor up 0.4 of a percentage point • RPKs down 3.7% • Final two Q300 turbo props introduced to fleet • Award-winning airport innovations • Launched Masterton and We
Slide 10: Tasman & Pacific Island Performance
TASMAN & PACIFIC ISLAND PERFORMANCE For personal use only • Reduced capacity by 3.9% • Load factor down 2.4 percentage points • RPKs down 6.8% • IFE* upgrade programme completed • Trans-Tasman services from Hamilton ceased and Dunedin reduced • Rotorua/Sydney service announced * Inflight entertainme
Slide 11: Short Haul Capacity Management
SHORT HAUL CAPACITY MANAGEMENT For personal use only Short Haul Y.O.Y Capacity Change Load Factor ppt Movement & Load Factor Y.O.Y Percentage Point Movement 5% 5 ppt ASK Change 0% 0 ppt Load factor movement Change in capacity -5% -5 ppt -10% -10 ppt -15% -15 ppt -20% -20 ppt Jul 08 Aug 08 Oct 08 Nov
Slide 12: Strategic Priorities
STRATEGIC PRIORITIES For personal use only • Optimising network and refreshing product offering • Aligning supply to demand • Developing long haul product for B777-300ER • Evaluating narrow body fleet replacement options • Maintaining our environmental leadership position • Further development of Ai
Slide 13: Engineering
ENGINEERING For personal use only • Hangars remain full • Gas Turbines profitable business • Altitude Aerospace Interiors • TAE, Masling and Tenix Aviation smoothly integrated 13 2009 ANNUAL RESULTS
Slide 14: Environment
ENVIRONMENT For personal use only • Biofuels development focus continues • Retrofitting winglets and zonal dryers • Fuel efficient flight planning • Environmental management system 14 2009 ANNUAL RESULTS
Slide 15: Financial Management
FINANCIAL MANAGEMENT For personal use only • $1.6bn cash on balance sheet at year end • Gearing 45.0%, 0.3 percentage point improvement • Average fleet age of 7.4 years • Moody’s rating – Ba1 stable • Final dividend at 3.5 cents per share 15 2009 ANNUAL RESULTS
Slide 16: Aircraft Capex Commitments
AIRCRAFT CAPEX COMMITMENTS For personal use only $NZm 700 600 500 400 300 200 100 0 FY09 FY10 FY11 FY12 1. Includes progress payments on aircraft and is net of sale and lease back agreements 2. Assumes NZD/USD = 0.65 3. Assumption of 6 month delay for 787-9 aircraft 4. Excludes capitalised maintenan
Slide 17: Fleet Flexibility
FLEET FLEXIBILITY For personal use only • Two B747 aircraft sold and FLEET FLEXIBILITY leased back 10,000 • RFP for narrow body fleet 9,000 replacement issued 8,000 Wide body seat count • Seven ATR72-500s to be 7,000 purchased on expiry of 6,000 lease 5,000 • First 777-300ERs begin 4,000 arriving in
Slide 18: Fuel Hedging
FUEL HEDGING* For personal use only • The first half of FY10 is 80% hedged. The average ceiling price of the Singapore Jet hedge is US$70.78 per barrel. The average ceiling price of the WTI crude oil hedge is US$65.08 per barrel. • The second half of FY10 is 54% hedged with the average ceiling at US
Slide 19: Currency Hedging
CURRENCY HEDGING For personal use only • 2010 US dollar operating cash flow exposure is approx. 88% hedged at an average NZ$/US$ rate of 0.69 • US$322m of future capex commitments are hedged at NZ$/US$ rate of 0.73 (spot) 19 2009 ANNUAL RESULTS
Slide 20: Outlook
OUTLOOK For personal use only • While demand is stabilising, yields remain under significant pressure, fuel prices have resumed an upward trend and we are unlikely to achieve the same level of net hedging gains • The same agility displayed in the 2009 financial year will be imperative throughout the
Slide 21: Supplementary Information
SUPPLEMENTARY INFORMATION For personal use only • Financial overview • Normalised Earnings • Group operating statistics • Long haul operating statistics • Short haul operating statistics • New aircraft arrivals • Current operating fleet 21 2009 ANNUAL RESULTS
Slide 22: Financial Overview
FINANCIAL OVERVIEW For personal use only Dollar Percentage June 2009 June 2008 movement movement Operating revenue $4,609m $4,667m $(58)m (1.2%) Normalised earnings* $145m $197m $(52)m (26.4%) Net profit after tax $21m $218m $(197)m (90.4%) Adjusted operating cash flow $355m $662m $(307)m (46.4%) Ne
Slide 23: Normalised Earnings
NORMALISED EARNINGS For personal use only June 2009 June 2008 Earnings before Taxation $7m $304m Reverse net (gains) / losses on derivatives that hedge exposures in other financial periods: Fuel derivatives $130m $(129)m Foreign exchange derivatives $9m $20m Interest rate derivatives $(1)m $2m Norma
Slide 24: Group Operating Statistics
GROUP OPERATING STATISTICS For personal use only June 2009 June 2008 Movement* Passengers carried 12.4m 13.2m (6.1%) Available seat kilometres (ASKs) 34,316m 36,991m (7.2%) Load factor 79.0% 79.3% (0.3)pts Yield (cents per RPK) 13.8 13.0 6.2% * Calculations based on numbers before rounding 24 2009 A
Slide 25: Long Haul Operating Statistics
LONG HAUL OPERATING STATISTICS For personal use only June 2009 June 2008 Movement* Passengers carried 1.8m 2.0m (9.8%) ASKs 20,150m 22,243m (9.4%) RPKs 16,432m 18,015m (8.8%) Load factor 81.6% 81.0% 0.6 pts * Calculations based on numbers before rounding 25 2009 ANNUAL RESULTS
Slide 26: Short Haul Operating Statistics
SHORT HAUL OPERATING STATISTICS For personal use only June 2009 June 2008 Movement* Passengers carried 10.6m 11.2m (5.5%) ASKs 14,166m 14,748m (3.9%) RPKs 10,680m 11,334m (5.8%) Load factor 75.4% 76.9% (1.5) pts * Calculations based on numbers before rounding 26 2009 ANNUAL RESULTS
Slide 27: New Aircraft Arrivals
NEW AIRCRAFT ARRIVALS For personal use only Aircraft Type FY10 FY11 FY12 FY13 FY14 Boeing 777-300ER - 3 2 - - Boeing 787-9 * - - - - 4 * Assumed 6 month delay on Boeing 787-9 aircraft 27 2009 ANNUAL RESULTS
Slide 28: Current Operating Fleet
CURRENT OPERATING FLEET For personal use only Aircraft Type June 2008 June 2009 June 2007 movement 2008 movement 2009 Boeing 747-400 8 - 8 (1) 7 Boeing 777-200ER 8 - 8 - 8 Boeing 767-300ER 6 (1) 5 - 5 Airbus A320-200 12 - 12 - 12 Boeing 737-300 14 2 16 - 16 ATR 72-500 11 - 11 - 11 Saab 340A 3 (3) -
Slide 29: For personal use only
For personal use only 29 2009 ANNUAL RESULTS