Air New Zealand Limited · NZX:AIR
Air New Zealand — FY2013 Earnings Presentation
22 slides from Air New Zealand's earnings presentation, Aug 29, 2013
Slide 1: Annual financial results 2013
For personal use only Annual financial results 2013
Slide 2: Overview
Overview For personal use only • Earnings before taxation of $256 million • Net profit after taxation of $182 million • Operating revenue up 3.0% to $4.6 billion • Operating cash flow of $750 million • Best full year result in 5 years
Slide 3: Key revenue drivers
Key revenue drivers For personal use only • Passenger revenue up 3.6% to $3.8 billion • Improved performance of International long haul network • Growth in passenger demand and yield 2013 2012 movement* Passengers carried (000’s) 13,411 13,122 2.2% Available seat kilometres (ASKs) 33,167m 32,618m 1.
Slide 4: Cost containment
Cost containment For personal use only v 2013 (cents) 2012 (cents) Cost per ASK (CASK) 11.22 11.57 Exclude: Fuel (3.63) (3.77) Hedge timing and equity derivatives 0.01 (0.16) CASK (excl. fuel, hedge timing and equity derivatives) 7.60 7.64
Slide 5: Changes in profitability
For personal use only 0 50 150 300 100 200 250 NZ$m June 2012 Earnings bef ore $94m Taxation Passenger Yield $34m Passenger Traf f ic $137m Cargo, Contract $12m Services & Other Revenue Labour ($20m) Changes in profitability Aircraf t Operations ($32m) Passenger $9m Services Depreciation, Lease & Fu
Slide 6: Domestic
Domestic For personal use only • New Airbus A320s reducing cost base and increasing capacity • New ATR72-600s growing turboprop capacity • Competitive fares to stimulate demand • Continuing market growth 2013 2012 movement* Passengers carried (‘000s) 8,694 8,500 2.3% Available seat kilometres (ASKs)
Slide 7: Tasman & Pacific Islands
Tasman & Pacific Islands For personal use only • Increased capacity deployed on Perth and Honolulu routes • Seasonal services to Bali and Sunshine Coast proving successful • Virgin Australia alliance offers a comprehensive Australasian network to customers, and has driven continued revenue growth 20
Slide 8: International
International For personal use only • Network rationalisation - Hong Kong-London route suspended in March - Shanghai services now daily following Beijing suspension • Commenced new alliance with Cathay Pacific 2013 2012 movement* Passengers carried (‘000s) 1,536 1,549 (0.9%) Available seat kilometre
Slide 9: Cargo
Cargo For personal use only • Revenue continues to grow • Volume up 2.0% combined with yield growth of 0.7% • Leveraging additional cargo capability of Boeing 777-300ER • Adapting to changes in International long haul network • Excellent performance given challenging global cargo market
Slide 10: Financial management
Financial management For personal use only • Net cash on hand $1.15 billion, an increase of 12% on the previous year • Gearing improved by 7 percentage points to 39.1% • Fully imputed final dividend of 5.0 cps • Average fleet age of 9 years • Moody’s investment rating Baa3, outlook upgraded to stabl
Slide 11: Aircraft capital commitments
Aircraft capital commitments For personal use only • Investment of $1.8 billion in aircraft over the next 3 years • Includes progress payments on aircraft • Assumes NZD/USD = 0.8000 • Excludes capitalised maintenance of approximately $53m p.a. and non-aircraft capital commitments Aircraft delivery s
Slide 12: Loyalty
Loyalty For personal use only • Airpoints membership up 17% to 1.4 million members • Increased engagement with 20% more customers now earning • OneSmart activations up 45% • Airpoints partner revenues up 11%
Slide 13: Right network, right partners
Right network, right partners For personal use only
Slide 14: Investment in Virgin Australia
Investment in Virgin Australia For personal use only An efficient, cost effective way to gain exposure to the domestic Australian market. • Equity investment increased to 22.99% • Investment not equity accounted • Total investment carried at $300 million • Value of investment represents 27.4 cents o
Slide 15: Key strategic priorities
Key strategic priorities For personal use only • Deliver an improved customer experience • Grow developing markets while improving execution in existing markets • Maximise growth opportunities from partnerships • Successful implementation of fleet renewal programme • Continuous improvement and simpl
Slide 16: Earnings momentum
Earnings momentum For personal use only • Sustained earnings growth in line with expectations • Improving fleet efficiencies • Network rationalisation • Profit improvement programme delivering
Slide 17: Outlook
Outlook For personal use only • We are focused on further improving on this result in the 2014 financial year • Based on our forecast of market demand and fuel prices at current levels, early results and forward bookings are encouraging
Slide 18: Supplementary slides
Supplementary slides For personal use only • Financial overview • Fuel hedging • Foreign exchange hedging • Normalised earnings
Slide 19: Financial overview
Financial overview For personal use only Dollar Percentage v 2013 2012 movement movement Operating revenue $4,618m $4,483m $135m 3% Earnings before tax $256m $94m $162m 172% Net profit after tax $182m $71m $111m 156% Operating cash flow $750m $472m $278m 59% Net cash position $1,150m $1,027m $123m 1
Slide 20: Fuel hedging
Fuel hedging For personal use only •The first half of FY14 is 76% hedged •The second half of FY14 is 32% hedged Volume Ceiling Floor (bbls) (USD) (USD) FY14 H1 Brent swaps 607,500 108.08 Brent collars 2,155,000 104.30 95.02 FY14 H2 Brent swaps 12,500 105.00 Brent collars 930,000 103.00 93.48 WTI col
Slide 21: Foreign exchange hedging
Foreign exchange hedging For personal use only • The FY14 US dollar operating cash flow exposure is approximately 81% hedged at an average NZD/USD rate of 0.8234
Slide 22: Normalised earnings
Normalised earnings For personal use only 2013 2012 Earnings before taxation (per NZ IFRS) $256m $94m Reverse net (gains) / losses on derivatives that hedge exposures in other financial periods: Fuel derivatives ($2m) ($11m) Foreign exchange derivatives $2m $8m Normalised earnings* before taxation $