Air New Zealand Limited · NZX:AIR
Air New Zealand — Macquarie Australia Conference 2018
20 slides from Air New Zealand's conference presentation, May 3, 2018
Slide 1: Macquarie Australia Conference 2018
A STAR ALLIANCE MEMBER EP For personal use only 2 AIR NEW ZEALAND ‘o_ MACQUARIE AUSTRALIA CONFERENCE 2018 Christopher Luxon Chief Executive Officer 3 May 2018
Slide 2: Forward looking statements
Forward looking statements For personal use only This presentation contains forward-looking statements. Forward-looking statements often include words such as “anticipate", "expect", "intend", "plan", "believe”, “continue” or similar words in connection with discussions of future operating or financ
Slide 3: Air New Zealand at a glance
Air New Zealand at a glance 18 years in operation 16m passengers carried annually $5.1b 2017 operating revenue #1 corporate reputation in New Zealand for 4th consecutive year 13 years of consecutive dividend distributions Pacific Rim focused network driven by alliance relationships 11,800 Air New Ze
Slide 4: Focus on New Zealand and Pacific Rim has resulted in a more diverse, larger network
Our focus on New Zealand and the Pacific Rim has resulted in a network that is more diverse and ~35% larger For personal use only 2012 2018 Routes operated by Air New Zealand Routes operated solely by alliance partners Chicago and Taipei services will commence Nov 2018
Slide 5: Achieved profitability and dividends through the cycle
Net profit after tax Air New Zealand has ($ millions) 463 achieved profitability 382 For personal use only 327 and dividends 263 221 218 through the cycle… 166 166 180 181 96 82 81 71 21 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 15 years of consecutive profitability*
Slide 6: Demonstrated ability to generate strong shareholder returns
…and has demonstrated our ability to generate strong shareholder returns that exceed the major indices For personal use only Total shareholder return Air New Zealand 314% NZX50 209% ASX200 46% 50% Bloomberg World Airlines Index S&P500 1 year 3 year 5 year 10 year Source: Bloomberg, period ended as a
Slide 7: Historic earnings volatility
Historic earnings volatility (standard deviation of 10-years adjusted EPS growth) Historically we have 1600% For personal use only achieved significantly 1400% better earnings 1200% Earnings volatility stability than our 1000% APAC peers 800% 600% 400% 200% 0% China Southern Thai Airways ANA Bloombe
Slide 8: Unique competitive advantages position us for future returns
1 Resilient core domestic business For personal use only Looking forward, our unique competitive advantages position us to drive future strong 2 Pacific Rim focused international network returns for our shareholders 3 Focused on sustainable cost improvements 4 Investment grade financial strength
Slide 9: Resilient core domestic business
1 Resilient core domestic business Strong market share to leverage growth from inbound and domestic tourism For personal use only • Most iconic brand in New Zealand • Strong loyalty base and still growing at over 2.7 million members* • Unmatched network breadth and depth − Over 400 flights daily to
Slide 10: Pacific Rim focused international network
2 Pacific Rim focused international network Supported by strong revenue share alliance partnerships For personal use only Routes operated by Air New Zealand Routes operated solely by alliance partners Chicago and Taipei services will commence Nov 2018
Slide 11: Focused on sustainable cost improvements
3 Focused on sustainable cost improvements Fleet investment, economies of scale and productivity initiatives driving improved efficiencies For personal use only Improving CASK* (ex fuel and FX) trend Targeting low-single digit nominal CASK improvement
Slide 12: Investment grade financial strength: ideal fleet
4 Investment grade financial strength Investing in the ideal fleet for the New Zealand market For personal use only
Slide 13: Investment grade financial strength
4 Investment grade financial strength Providing stability and financial flexibility over the long-term For personal use only Moody’s credit rating Appropriate level of gearing A3 Gearing (%) Investment grade (including capitalised aircraft operating leases) Baa1 Target range of 45% to 55% Baa2 52.4%
Slide 14: The financial framework that guides us
The financial framework that guides us For personal use only
Slide 15: Putting ROIC performance into perspective
Putting ROIC For personal use only performance into perspective Excellent return Pre-tax ROIC ~15% 19% 16% 15% Return that exceeds our 14% pre-tax cost of capital of ~10% 12% ~10% Sub-optimal return 2013 2014 2015 2016 2017
Slide 16: For personal use only
For personal use only
Slide 17: Trading and ownership facts
Trading and ownership facts For personal use only AIR AIZ ANZLY Share register NXZ stock ticker ASX stock ticker* ADR ticker on OTC (as at 31 December 2017) • Dual-listed on the NZX and ASX stock exchanges Retail • 1.4 million average daily trading volume investors • Member of the NZX20 index – incl
Slide 18: Glossary of terms
Glossary of terms For personal use only Available Seat Kilometres (ASKs) Number of seats operated multiplied by the distance flown (capacity) Cost/ASK (CASK) Operating expenses divided by the total ASK for the period Gearing Net Debt / (Net Debt + Equity); Net Debt includes capitalised aircraft oper
Slide 19: Investor relations information
Investor relations information For personal use only Resources Investor website: www.airnewzealand.co.nz/investor-centre Monthly traffic updates: www.airnewzealand.co.nz/monthly-operating-data Quarterly fuel hedging disclosure: www.airnewzealand.co.nz/fuel-hedging-announcements Corporate governance:
Slide 20: For personal use only
For personal use only L2. AIR NEW ZEALAND \o_ A A STAR ALLIANCE MEMBER YS"
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