Air New Zealand Limited · NZX:AIR
Air New Zealand — H1 FY2015 Earnings Presentation
25 slides from Air New Zealand's earnings presentation, Feb 25, 2015
Slide 1: Interim Result - Air New Zealand
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Slide 2: Another strong result
Another strong result For personal use only Normalised Statutory earnings* Hedge timing Taxation net profit before tax ($19m) ($64m) after tax $216m $133m * Normalised earnings represents Earnings stated in compliance with NZ IFRS (Statutory Earnings) after excluding net gains and losses on derivati
Slide 3: First half normalised earnings before taxation
First half normalised earnings before taxation For personal use only $216m > Result includes equity losses of $14 million from the company’s Virgin Australia shareholding $180m $139m DEC 12 DEC 13 DEC 14
Slide 4: First half operating cash flow
First half operating cash flow For personal use only > Operating Cash Flow before tax payments up $113 million > Increased tax payments of $35 million > Underpins strong liquidity position $378m $343m $300m DEC 12 DEC 13 DEC 14
Slide 5: Key revenue metrics
Key revenue metrics For personal use only Passenger Yield Capacity Load revenue up up up factor 5.1%* 3.8%* 1.7% 83.9% Cargo Cargo revenue up capacity up 6.8%* 3.0% * Prior to the impact of foreign exchange
Slide 6: Changes in profitability
Changes in profitability For personal use only
Slide 7: Cost per ASK
Cost per ASK For personal use only Dec 2014 Dec 2013 (cents) (cents) Cost per ASK* 10.76 10.84 Exclude Fuel (3.22) (3.49) Foreign exchange gains 0.07 0.19 CASK (excl. fuel and foreign exchange gains) 7.61 7.54 > Impacted by growth in higher unit cost short sectors versus longer sectors * Includes no
Slide 8: Full year FY15 capacity (ASKs) increasing 6.6%
Full year FY15 capacity (ASKs) increasing 6.6% For personal use only 1H 2H Total 1.7% 11.6% 6.6% North America Asia & Europe 22% 3% Tasman & Pacific 3% Domestic New Zealand 4%
Slide 9: Domestic
Domestic For personal use only > Capacity growth driven by replacement of B737-300 with larger A320 aircraft and additional ATR72s > Final B737 scheduled to exit fleet in third quarter of 2015 Dec 2014 Dec 2013 movement* Passengers carried (‘000s) 4,562 4,465 2.2% Available seat kilometres (ASKs) 2,
Slide 10: Tasman & Pacific Islands
Tasman & Pacific Islands For personal use only > B787-9 now flying Auckland-Perth route > Virgin Australia alliance continues to improve customer proposition > Strong capacity growth on Pacific Island routes Dec 2014 Dec 2013 movement* Passengers carried (‘000s) 1,718 1,698 1.2% Available seat kilom
Slide 11: International
International For personal use only > Significant capacity increases in Asia, particularly Japan > B787-9 performance exceeding expectations – now into Shanghai, Tokyo and Perth Dec 2014 Dec 2013 movement* Passengers carried (‘000s) 764 764 0.1% Available seat kilometres (ASKs) 8,758m 8,659m 1.2% Re
Slide 12: Singapore Airlines alliance
Singapore Airlines alliance For personal use only > Air New Zealand recommenced flying Auckland-Singapore route last month > Captures connecting traffic beyond Singapore > Refurbished Boeing 777-200 aircraft offering great customer product
Slide 13: New Buenos Aires route
New Buenos Aires route For personal use only > First scheduled direct Air New Zealand service to South America > Consistent with Pacific Rim growth strategy > Code share agreement* with Aerolineas Argentinas > Flights commence December 2015 *Subject to regulatory approval
Slide 14: Cargo
Cargo For personal use only Revenue Volume Yield up up down 6.8%* 7.6% 0.8% > Virtual global network providing innovative solutions for New Zealand’s exporters and importers * Excluding the impact of foreign exchange
Slide 15: Financial management
Financial management For personal use only > Net cash on hand of $1.27 billion Interim dividend > Gearing moved up to 51.6% (cents per share) > Fully imputed interim dividend of 6.5 cents per share, an increase of 44% on the previous corresponding period > Moody’s Baa3 investment grade rating 6.5 4.
Slide 16: Aircraft capital expenditure
Aircraft capital expenditure For personal use only $NZm 900 800 700 > Investment of $3.0 billion in aircraft and associated assets 600 over the next 6 years 500 400 > Includes progress payments on aircraft 300 200 > Assumes NZD/USD = 0.7500 100 > Excludes capitalised maintenance of approximately $65
Slide 17: Fleet update
Average fleet age in years (seat weighted) Fleet update 9.2 9.1 For personal use only 7.9 JUN 13 JUN 14 DEC 14 Projected jets in service FY15 FY16 FY17 FY18 FY19 FY20 Boeing 777-300ER 7 7 7 7 7 7 Boeing 777-200ER 8 8 8 8 8 8 Boeing 787-9 3 6 8 11 12 12 Boeing 767-300 5 4 2 - - - Airbus A320 26 28 28
Slide 18: Jet fuel
Jet fuel For personal use only > Price drop largely the result of structural changes to global jet fuel market. > Average jet fuel price per barrel down 13% (in USD terms) for 1H15, partially offset by hedge losses of $26 million. > Benefits from lower jet fuel price will accrue more in 2H15, albeit
Slide 19: Jet fuel price benefits going forward
Jet fuel price benefits going forward For personal use only > Based on current jet fuel prices the impact of the reduction in jet fuel prices on the 2H15 compared to the 1H15 is $148 million. This price impact is offset by an increase in hedge losses of $66 million giving a net improvement of $82 mi
Slide 20: Currency
Currency For personal use only > 2H15 is 94% hedged at 0.8452 > 1H16 is 80% hedged at 0.8175
Slide 21: Outlook
Outlook For personal use only > In November we stated that should the then current level of jet fuel price persist, there would be a significant additional improvement in earnings in the second half of the financial year. > Fuel prices are lower than in November and the sales momentum has been maint
Slide 22: Supplementary slides
For personal use only slides Supplementary
Slide 23: Financial overview
Financial overview For personal use only $ % Dec 2014 Dec 2013 movement movement Operating revenue $2,403m $2,324m $79m 3% Normalised earnings before taxation $216m $180m $36m 20% Statutory earnings before taxation $197m $198m ($1m) (1%) Statutory net profit after taxation $133m $141m ($8m) (6%) Ope
Slide 24: Fuel hedging
Fuel hedging* For personal use only Volume Ceiling Floor Strike price (bbls) (USD) (USD) (USD) FY15 H2 WTI swaps 175,000 94.74 Brent collars 1,675,000 106.02 97.60 WTI collars 537,500 88.38 80.60 Bought Brent puts 612,500 89.29 FY16 H1 WTI swaps 25,000 94.74 Brent collars 162,500 102.33 95.71 WTI co
Slide 25: Normalised earnings reconciliation
Normalised earnings reconciliation For personal use only Dec 2014 Dec 2013 Earnings before taxation (per NZ IFRS) $197m $198m Reverse net (gains) / losses on derivatives that hedge exposures in other financial periods: Fuel derivatives $17m ($18m) Foreign exchange derivatives $2m n/a Normalised earn