Air New Zealand Limited · NZX:AIR
Air New Zealand — H1 2013 Earnings Presentation
21 slides from Air New Zealand's earnings presentation, Feb 28, 2013
Slide 1: Interim financial results 2013
For personal use only Interim financial results 2013 1
Slide 2: Interim result highlights
For personal use only • Normalised earnings* before taxation of $139 million • Statutory net profit after taxation of $100 million 160 140 • Operating revenue up 3.4% 120 to $2.4 billion 100 NZ $millions 80 • Operating cash flow of 60 $139 M $343 million 40 20 $33M • Highest half year result in 0 5
Slide 3: Operating revenue up 3.4% to $2.4 billion
For personal use only • Operating revenue up 3.4% to $2.4 billion • Capacity growth across network • Improved International long haul yields • Cost containment – unit cost decreased by 4.7% • Profit improvement initiatives ahead of expectation * Calculations based on numbers before rounding 3
Slide 4: Normalised earnings before taxation bridge
For personal use only NZ$m 200 180 160 $139m $141m $26m 140 $6m ($1m) ($11m) $11m $3m 120 $72m 100 80 60 40 $33m 20 0 Dec 11 Passenger Other Labour Fuel Aircraft Depreciation, Net FX Impact Dec 2012 Dec 2012 Normalised Revenue Revenue Operations, Lease & Normalised Statutory Earnings* Maintenance Fi
Slide 5: Reducing Cost per ASK
For personal use only Reducing Cost per ASK 8.1 Cost per AS K e xcluding F uel a nd F X 8.0 7.9 7.8 7.7 7.6 7.5 7.4 7.3 7.2 7.1 Jun 11 Dec 11 Jun 12 Dec 12 5
Slide 6: Net cash on hand $1.1 billion
For personal use only • Net cash on hand $1.1 billion • Gearing improved by 4.3 percentage points to 41.8% • Fully imputed interim dividend of 3 cps, a 50% increase • Average fleet age of 9 years • Moody’s investment rating Baa3 • Share buyback programme – 8.8 million shares purchased so far 6
Slide 7: Strong first half earnings
For personal use only • Strong first half earnings • Earnings trend positioning for future growth • Impact of B773 replacing B747 now being felt • Redeployment of aircraft improving long haul efficiency and competitiveness • Better marketplace execution 7
Slide 8: Increased demand
For personal use only • Increased demand • Slower than expected economic growth • Improving operating efficiencies • Acceleration of A320 deliveries • New ATR72-600s boosting capacity • Competitive fare structure * Calculations based on numbers before rounding 8
Slide 9: Virgin Alliance provides customers with a comprehensive Australasian network
For personal use only • Virgin Alliance provides customers with a comprehensive Australasian network and seamless travel • Seats to Suit and Virgin Alliance driving growth • Capacity increases to Perth and Hawaii • Seasonal services to Bali and Sunshine Coast well received and will continue * Calcul
Slide 10: Positive profit contribution for the first time since GFC
For personal use only • Positive profit contribution for the first time since GFC • Improving fleet efficiencies including cargo capacity • Refocused on improving execution, particularly in Asia/Japan • Planned exit of Hong Kong-London route, commencement of Cathay Pacific alliance • Redeployment of
Slide 11: Profit improvement update
profit improvement update 2. S a Overhead Costs Ancillary Revenue Network Fleet Supply Chain & Other Direct Costs $6O0m COMPLETE $40m Seat select, OneUp, OneSmart << Cathay Pacific alliance, $60m Y suspended Hong Kong-London, Auckland-Beijing routes Improving fleet efficiencies from $35m Y Boeing 77
Slide 12: Invest in capability to drive Loyalty revenue
For personal use only • Invest in capability to drive Loyalty revenue • Membership grown to 1.4 million members • Non-air revenue now exceeds air revenue • Will continue to launch value add products such as OneSmart 12
Slide 13: Has performed well in first full year of operation
For personal use only • Has performed well in first full year of operation • Improved compatibility & functionality with new SabreSonic reservations system • A platform to retain or replace connecting traffic once we exit HKG-LHR • Opportunity to grow HKG as a second point of entry into Mainland Chi
Slide 14: Expands our economic footprint into domestic Australia
For personal use only • Expands our economic footprint into domestic Australia • Cost effective entry, not capital intensive • Equity investment maintained at 19.99% • Total investment carried at $264 million • Value of investment represents 24 cents of value per Air NZ share • Virgin delivering on
Slide 15: Seamless CEO transition
For personal use only • Seamless CEO transition • New senior leadership team in place from 1 January • New functional organisation structure with centralised sales and operations functions • New Go Beyond strategy puts growth at the heart of the business 15
Slide 16: Second half outlook
For personal use only “Based on our current forecast of market demand and fuel prices at current levels, we expect normalised earnings before taxation for the second half of the 2013 financial year will comfortably exceed the corresponding period” 16
Slide 17: For personal use only
AYR NEW ZEALAND @eeeeeecoss © sie oe
Slide 18: For personal use only
For personal use only * Normalised earnings before taxation represents Earnings stated in compliance with NZ IFRS after excluding net gains and losses on derivatives that hedge exposures in other financial periods. Refer to supplementary slide 19 for a reconciliation to IFRS earnings ^ Comparative i
Slide 19: For personal use only
For personal use only * Normalised Earnings represents Earnings stated in compliance with NZ IFRS after excluding net gains and losses on derivatives that hedge exposures in other financial periods. Normalised Earnings is a non-IFRS financial performance measure that matches derivative gains or loss
Slide 20: Aircraft Capital Commitments
Aircraft Capital Commitments For personal use only $NZm 800 700 1. Includes progress payments on 600 aircraft. 500 2. Assumes NZD/USD = 0.83 400 300 3. Excludes capitalised 200 maintenance of approximately $57m per annum and non- 100 aircraft capital commitments. 0 FY13 FY14 FY15 FY16 20
Slide 21: Fuel & currency hedging
Fuel & currency hedging For personal use only Fuel* • The second half of FY13 is 63% hedged • The first half of FY14 is 12% hedged Currency • The second half of FY13 US dollar operating cash flow exposure is approximately 89% hedged at an average $NZ/$US rate of 0.8078 • The FY14 operating cash flow