Air New Zealand Limited · NZX:AIR
Air New Zealand — Debt Investor Presentation (October 2016)
30 slides from Air New Zealand's debt investor presentation, Oct 13, 2016
Slide 1: Bond Offer
For personal use only Air New Zealand Bond Offer 13 October 2016 1
Slide 2: Notice and Disclaimer
Notice and Disclaimer For personal use only The offer of the Bonds by Air New Zealand is made in reliance upon the exclusion in clause 19 of Schedule 1 of the Financial Markets Conduct Act 2013 (“FMCA”). The offer of Bonds is an offer of debt securities that have identical rights, privileges, limita
Slide 3: Agenda
Agenda For personal use only • Air New Zealand overview • 2016 Financial Year in review • Bond Issue Summary Terms, Offer Process and Key Dates • Appendices • Five year summary 3
Slide 4: Air New Zealand overview
For personal use only Air New Zealand overview
Slide 5: The network
The Air New Zealand network For personal use only Diversified profitability across a network focused on the Pacific Rim Growth underpinned by strong alliance partnerships in key markets 30 international destinations Leveraging our geography to maximise traffic through and into New Zealand – Tourism
Slide 6: Overseas tourism into New Zealand continues to grow
Overseas tourism into New Zealand continues to grow For personal use only International visitor arrivals to New Zealand: 11% For year ending June 2016 3.3M Visitors for the year ending June 2016 New Zealand’s tourism industry: • Contributes 17.4% of total exports • Employs 7% of the workforce • Cont
Slide 7: Inbound tourism expected to continue to fuel domestic growth
Inbound tourism expected to continue to fuel domestic growth For personal use only • Domestic dispersal of inbound international tourism through Auckland • Strong domestic market share to leverage growth from inbound tourists • Network strength, product and lounges to drive further stimulation • Ful
Slide 8: Our international growth is supported by strong alliance partnerships
Our international growth is supported by strong alliance partnerships For personal use only * Why it works for Air New Zealand Partners have “skin in the game” to sell the route Strength of sales & distribution in local markets Access to frequent flyer databases * Indicates a revenue share all
Slide 9: 2016 Financial Year in review
For personal use only 2016 Financial Year in review All of the data provided in this section is derived from publically available information in relation to Air New Zealand Limited and its subsidiaries (including the Annual Report of Air New Zealand Limited for the year ended 30 June 2016), unless o
Slide 10: The year in review
The year in review For personal use only • Operating revenue $5.2 billion (up 8.2%)* • Earnings before taxation $806** million (up 70%) • Net profit after taxation $463 million (up 42%) • Operating cash flow $1.1 billion (down 2.4%) • Return on invested capital (pre-tax) 22%** Earnings Earnings befo
Slide 11: Key drivers of the result
Key drivers of the result For personal use only • Passenger revenue up 8.9%* – Capacity and demand strong – ASKs and RPKs up 12% and 11%, Revenue respectively – RASK declined 2.3%* • Cargo revenue, up 10%* • CASK (excluding divestments) improved 10% – Fuel price declined 40% Fuel price Cost down S
Slide 12: Changes in profitability
Changes in profitability For personal use only 12
Slide 13: Strong operating cash flow and liquidity provide flexibility
Strong operating cash flow and liquidity provide flexibility For personal use only • Operating cash flow $1.1 billion, down 2.4% over prior period – Strong operating cash flow per share of $0.96 • Net cash on hand of $1.6 billion, up 21% from June 2015 13
Slide 14: Balance sheet remains strong
Balance sheet remains strong For personal use only • Gearing was 48.6% as at June 2016, improving 3.8 percentage points from June 2015 due to strong operating profit • Stable outlook Baa2 rating from Moody’s* • $150 million retail bond maturing in November 2016 Target gearing: 45% to 55% ** ** $464m
Slide 15: Aircraft update
Aircraft update For personal use only • Expected investment of ~$2.1 billion in aircraft and associated assets over the next 5 years • Assumes NZD/USD = 0.715 • Includes progress payments on aircraft • Shift towards increased proportion of owned fleet – Economic benefit over the lifetime of the airc
Slide 16: Modern aircraft driving improved variable cost efficiencies
Modern aircraft driving improved variable cost efficiencies For personal use only Wide-body Narrow-body Turbo-prop B787-9 A321 neo ATR72-600 Scale economies vs B767-300ER vs A320 ceo vs Bombardier Q300 Substantially lower ↑ 31% ↑ 23% ↑ 36%* operating costs and increased seat density Additional seats
Slide 17: Emergence of increasing competitive headwinds in second half of 2016
The second half of 2016 saw the emergence of increasing competitive headwinds For personal use only Tailwinds Headwinds • Double-digit growth* in New Zealand tourism • Increased competition pressuring RASK Revenue – Resulting in strong domestic tourism • Limitations of New Zealand tourism • Stable e
Slide 18: 2017 capacity and outlook
2017 capacity and outlook For personal use only Sector Competition Air New Zealand 2017 capacity Domestic Expect similar competitive +7% to 9% • Continued up-gauge for regional environment to 2016 routes and increased frequency on select trunk routes • Queenstown night flights Tasman & Pacific Expec
Slide 19: Bond Issue Summary: Terms, Offer Process and Key Dates
For personal use only Bond Issue Summary Terms, Offer Process and Key Dates
Slide 20: Summary Terms
Summary Terms For personal use only Issuer Air New Zealand Limited Description Unsecured, unsubordinated, fixed rate, interest bearing debt obligations Offer Amount NZ$75,000,000 Use of Proceeds General business purposes including partial repayment of the AIR010 Bonds Tenor 6 years Closing Date / Ra
Slide 21: Offer Process
Offer Process For personal use only • How to apply – Primary market participants, institutional investors and any other approved parties are invited to participate in the bookbuild process – All of the Bonds are reserved for clients of the Joint Lead Managers, institutional investors and other Prima
Slide 22: Key Dates
Key Dates For personal use only Opening Date Thursday, 13 October 2016 Roadshow Thursday, 13 October 2016 and Friday, 14 October 2016 Bookbuild Date Thursday, 20 October 2016 Closing Date Thursday, 20 October 2016 Rate Set Date Thursday, 20 October 2016 Issue Date / Allotment Date Friday, 28 October
Slide 23: Questions?
For personal use only Questions? p
Slide 24: Thank you
For personal use only Thank you <p
Slide 25: Appendix
Appendix For personal use only • Five year summary 25
Slide 26: Five year key operating statistics
Five year key operating statistics for the year to 30 June For personal use only 2016 2015 2014 2013 2012 Passengers Carried (000) Domestic 9,725 9,246 8,920 8,694 8,500 International Australia and Pacific Islands 3,507 3,388 3,277 3,181 3,073 Asia * 791 642 517 596 652 America and Europe 1,138 1,02
Slide 27: Five year summary of financial performance
Five year summary of financial performance for the year to 30 June For personal use only 2016 2015 2014 2013 2012 $m $m $m $m $m Operating Revenue Passenger revenue 4,481 4,113 3,851 3,765 3,634 Cargo 349 317 287 301 298 Contract services 172 258 277 310 316 Other revenue 229 237 237 239 235 5,231 4
Slide 28: Five year summary of Financial Position & Cash Flows
Five year summary of Financial Position & Cash Flows for the year to 30 June For personal use only 2016 2015 2014 2013 2012 $m $m $m $m $m Summary of Financial Position Current Assets Bank and short term deposits 1,594 1,321 1,234 1,150 1,029 Other current assets 745 661 593 693 658 Total Current As
Slide 29: Five year summary of Financial Ratios
Five year summary of Financial Ratios for the year to 30 June For personal use only 2016 2015 2014 2013 2012 Profitability and capital management EBIT 1/Operating Revenue % 15.9 11.1 8.4 6.7 3.5 EBITDRA2/Revenue % 29.5 23.6 21.6 19.4 15.9 Passenger Revenue per Revenue Passenger Kilometre (Yield) cen
Slide 30: For personal use only
For personal use only L_ AIR NEW ZEALAND Yo A A STAR ALLIANCE MEMBER we”
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