Air New Zealand Limited · NZX:AIR
Air New Zealand — H1 FY2009 Earnings Presentation
23 slides from Air New Zealand's earnings presentation, Feb 26, 2009
Slide 1: Interim Results 2009
For personal use only INTERIM RESULTS 2009
Slide 2: Agenda
» AGENDA For personal use only • Overview & Operating Environment • Performance – Long Haul Airline – Short Haul Airline • Domestic • Tasman & Pacific Islands – Other businesses • Strategy • Financial Management • Outlook 2 INTERIM RESULTS 2009
Slide 3: Overview
» OVERVIEW For personal use only • Normalised earnings* $26m • Operating revenue up 3.7% • Capacity reduced by 3.6% • Net cash position of $1.4bn • Domestic airport check in upgrade * Normalised Earnings before taxation after excluding net gains and losses on derivatives that hedge exposures in othe
Slide 4: Operating Environment
»OPERATING ENVIRONMENT For personal use only • Average jet fuel spot price was 36% higher • Weakening passenger demand across all markets • Increased competition on the Tasman • NZ dollar weakening 4 INTERIM RESULTS 2009
Slide 5: Key Influences on Profitability
KEY INFLUENCES ON » PROFITABILITY For personal use only $NZD (m) 300 200 16 159 74 (27) 100 (78) 16 2 26 14 135 0 (12) (199) -100 (48) (24) -200 Norma lised Traffic Y ield Freight, La bour Fuel Maintenance Finance FX Gain on Other Normalised He dge Timing Reported NPBT Earnings Contract Costs Acquis
Slide 6: Group Operating Performance
GROUP OPERATING » PERFORMANCE For personal use only Load Factor ppt Movement Group Year-on-Year Load Factor & Year to Date Yield Movements FX Adjusted Yield Change 10% 10 ppt Yield Change 8% 8 ppt Load Factor Movement 6% 6 ppt Change in Yield 4% 4 ppt 2% 2 ppt 0% 0 ppt -2% -2 ppt -4% -4 ppt Jul Aug
Slide 7: Long Haul Performance
LONG HAUL » PERFORMANCE For personal use only • Passenger numbers down 5.5% • Capacity reduced by 5.7% • Yields up 12.3% • Load factor improved 1.3 percentage points • Aggressive capacity management 7 INTERIM RESULTS 2009
Slide 8: Long Haul Capacity Management
LONG HAUL CAPACITY » MANAGEMENT For personal use only Long Haul Y.O.Y Capacity Change Load Factor ppt Movement & Load Factor Y.O.Y Percentage Point Movement ASK Change Projected ASK Change 5% 5 ppt Load Factor Movement 0% 0 ppt Change in Capacity -5% -5 ppt -10% -10 ppt -15% -15 ppt -20% -20 ppt Jul
Slide 9: Domestic Performance
»DOMESTIC PERFORMANCE For personal use only • Passenger numbers down 2.9% • Capacity decreased by 1.9% • Yield increased by 0.3% • Load factor decreased by 0.3 percentage points • New commercial accounts won • Domestic airport improvements well received 9 INTERIM RESULTS 2009
Slide 10: Tasman & Pacific Island Performance
TASMAN & PACIFIC » ISLAND PERFORMANCE For personal use only • Passenger numbers decreased by 7.3% • Capacity was held constant - 0.1% increase • Yield increased by 6.4% • Load factor down 5.3 percentage points • Underlying market softening and increased competition • In-flight entertainment upgrade
Slide 11: Other Businesses
» OTHER BUSINESSES For personal use only • CARGO – Volumes down 13% – Yield increase and FX benefit – Freighter to be withdrawn 31 March 2009 • TECH OPS – Increased third party work – Acquisition of Tenix and Masling – Falling NZD has increased competitiveness • OTHER – Acquisition of VCubed 11 INTE
Slide 12: Cost Focus
» COST FOCUS For personal use only • Reduced capacity in response to demand softness • Labour initiatives – Voluntary and compulsory redundancies – Reduced working week and unpaid leave – Reduction through attrition • Reduced discretionary spend • Reduced regional charter capacity 12 INTERIM RESULTS
Slide 13: Strategy
» STRATEGY For personal use only PRIORITIES • Closely matching supply to demand remains a top priority • Being the leader in chosen markets • New generation interior design for 777-300ERs and 787-9s • Growing non-airline revenue sources • Being an industry leader on environmental initiatives 13 INTE
Slide 14: Financial Management
» FINANCIAL MANAGEMENT For personal use only • $1.4bn cash on balance sheet excluding $190m restricted cash • Gearing 52.7%, from 45.5% as at June 2008 • Limited debt repayments and no covenants or refinancing risk • Interim dividend is 3.0 cents per share 14 INTERIM RESULTS 2009
Slide 15: Fleet Management
» FLEET MANAGEMENT For personal use only • 2 x Boeing 747-400s sold and leased back • Next jet aircraft not due until November 2010 • Additional Boeing 777-300ER confirmed for 2012 • New delivery date and terms for Boeing 787-9 agreed • Average operating fleet age of 7 years 15 INTERIM RESULTS 2009
Slide 16: Capex Projection
» CAPEX PROJECTION For personal use only Including Option Aircraft 1,400 Excluding Option Aircra ft 1,200 1,000 800 NZ$ (m ) 600 400 200 0 FY09 FY10 FY11 FY12 1. Assumes NZD/USD = 0.53 2. 787-9 progress payments have shifted in line with announced delays 16 INTERIM RESULTS 2009
Slide 17: Fuel Hedging
» FUEL HEDGING* For personal use only • The second half of FY09 is approx. 72% hedged with the average effective floor** at US$85.10 per barrel of WTI crude oil • At current prices, average Singapore Jet fuel price would be US$88 per barrel for the second half of FY09 compared with US$123 in the fir
Slide 18: Currency Hedging
» CURRENCY HEDGING For personal use only • Operating cash flow exposure for the second half of 2009 is 99% hedged at an average NZ$/US$ rate of 0.765 • The 2010 operating cash flow exposure is 71% hedged at an average NZ$/US$ rate of 0.703 • US$370m of future capex commitments are hedged at NZ$/US$
Slide 19: Outlook
» OUTLOOK For personal use only • Competitive strength in core markets • Greater benefit from lower fuel prices in second half of FY09 • Strong currency hedging position • Global economic environment concerning If current conditions and jet fuel prices continue, Air New Zealand expects to see financ
Slide 20: Financial Overview
» FINANCIAL OVERVIEW For personal use only INTERIM INTERIM Dollar Percentage 2009 2008 movement movement Operating revenue $2,419m $2,332m $87m 4% Normalised Earnings* $26m $159m $(133)m (84)% Net profit after tax $24m $115m $(91)m (79)% Adjusted operating cash flow $113m $320m $(207)m (65)% Net cas
Slide 21: Supplementary Information
» For personal use only SUPPLEMENTARY INFORMATION INTERIM RESULTS 2009 21 INTERIM RESULTS 2009
Slide 22: Hedges Relating to Other Financial Periods
HEDGES RELATING TO » OTHER FINANCIAL PERIODS For personal use only INTERIM 2009 INTERIM 2008 Earnings before Taxation $14m $172m Reverse net (gains) / losses on derivatives that hedge exposures in other financial periods: Fuel derivatives $101m $(14)m Foreign exchange derivatives $(88)m $(2)m Intere
Slide 23: New Aircraft Arrivals
» NEW AIRCRAFT ARRIVALS For personal use only Aircraft Type FY09 FY10 FY11 FY12 FY13 FY14 Boeing 777-300ER - - 3 2 - - Boeing 787-9* - - - - 3** 2 Bombardier Q300 2 - - - - - Beech 1900D 1 - - - - - * Launch customer ** New delivery dates and terms agreed with Boeing for the 787-9s delivery 23 INTER