Air New Zealand Limited · NZX:AIR
Air New Zealand — Shareholder Meeting (October 2004)
39 slides from Air New Zealand's shareholder meeting presentation, Oct 27, 2004
Slide 1: Air New Zealand 65th Annual Meeting
Slide 2: John Palmer, Chairman
Slide 3: A Fundamentally Different Way of Thinking
Slide 4: Australian Competition Tribunal approved alliance
> Australian Competition Tribunal approved alliance > NZ High Court increased value of benefits but not enough to overturn NZCC decision > No further appeal > New opportunities being discussed
Slide 5: Codeshare partners
Sh Codeshare * (WA AQUI Fo | Codeshare AIR CANADA @) Codeshare SINGAPORE AIRLINES Codeshare Codeshare _ Ganras Plus other Star in discussions Alliance partners
Slide 6: Contributors have been profitability, currency, working capital management
> Contributors have been: — profitability — currency — working capital management FY01 FYO2 FYO3 FY04 PBUT ($m) 24.6 33.0 2203 242.5 Gearing (%) 93.3 73.8 62.0 52.6 Equity ($m) 518.0 881.8 1,031.7 1,214.5 Cash ($m) 764.4 5944 765.5 1,020.6 Net debt ($m) 3,449.4 780.55 3098 (37.8)
Slide 7: Capex increases with fleet orders
1,000 NZ$ g00 million 600 400 200 0 Projected > Capex increases with A320, B777 and Q300 fleet orders > Will shift leverage up but still manageable
Slide 8: Rights issue intention
> Advised market of intention to do rights issue 2 years ago > Board awaiting clarity on strategic alliance > Now sufficient clarity in the market to carry out a $186m rights issue > Crown has committed to its entitlement
Slide 9: Dividend expectations
> Board expects to be in a position to declare dividends this financial year > Target pay out expected to represent 25 to 35% of Net Profit After Tax > Imputed dividends seen as most efficient distribution
Slide 10: Trading environment and earnings expectation
> Buoyant economic conditions in most of Air New Zealand’s markets > But trading environment challenging: — Strong Tasman competition — Jet Fuel prices at record levels — High NZD is impacting on the competitiveness of ANZES > Earnings expectation of a Profit before Unusuals and Tax of around $220 m
Slide 11: Air NZ Share Price
oa Air NZ Share Price 166 e S G18- oN +64 a & 1.6-~ ze g 4.4- +62 =¥ a 42. World Airline Index |. 2 Ni 60 2 2 1- @ Z 0.8- lag 0.6- | ee 0.4--+—4 | \ } } | $ pe ee mb #5! > LP RS Ss S ros o ros Sy o ye ye Pa . ’ xo
Slide 12: Short and long term incentive plan
> Short term and long term incentive plan approved at 2003 Annual Meeting > Scheme now extended to executives who can significantly influence business outcomes > Mandatory minimum shareholding required
Slide 13: Challenging trading environment; platform set for growth
> Challenging trading environment currently > Platform set for future growth — New fleet order — Long haul in-flight renewal — Business Transformation benefits
Slide 14: Phased rollout: Domestic, Tasman, Long haul
ILLUSTRATIVE ONLY Phase one: Domestic Phase two: Tasman / Pacific Islands Phase three: Long haul Status B@e@e@e@R@@000 BEeOooOooooo
Slide 15: Network map
Ha SA Auckland Brisbane Gold Coast °° Sydney eee Melbourne .
Slide 16: Cost per ASK, low cost network model
Cost per “low cost network model” ASK Cost per ASK
Slide 17: Traffic and market share growth
Cumulative traffic growth 40% Online bookings close to 50% Up to 60% of customers using Kiosks at peak times Market share increased 7% Brand position strengthened Capacity growth of 26%
Slide 18: Economic impact of Express Class by region
Northland $5.1m _ | Auckland $95.1m Waikato $4.1m Taranaki $3.8m ___ Bay of Plenty $5.6m son Hawkes Bay $11.4m) Central $7.9m: Upper South Island $21.1m J ge 4 Wellington $74.6m| *NZIER “The Economic Impact of Air New Zealand's Express Class, National and Regional Analysis” July 2004 _ Canterbury $7
Slide 19: Airbus A320, Tasman Express, Pacific Express
Airbus A320 Tasman Express Pacific Express September 2003 October 2003 May 2004
Slide 20: Total Tasman market capacity increase
i TN Total Tasman Market Capacity Increase 3.6 ASKs 39- (Billion) 2.8 - 2.4 - 2.0 - - 2001 2002 2003
Slide 21: Long haul destinations
a ills > London > Hong Kong > Singapore > Taipei Sat > Los Angeles > Tokyo > San Francisco > Osaka > Nagoya Soe
Slide 22: Boeing 747-400 and 767-300ER fleet
Boeing 747-400 > 392 seats > 8 aircraft (4 owned, 4 leased) Boeing 767-300ER > 234 seats > 9 aircraft (5 owned, 4 leased)
Slide 23: PSEA CoML NOL MAES OED Eis
PSEA CoML NOL MAES OED Eis a Ai. is, ee
Slide 24: Slide 24
Slide 25: Largest fully flat bed in its class
> Largest fully flat bed in its class > Direct aisle access for all passengers > Separate mattress surface
Slide 26: Premium Economy and Economy Class
Premium Economy > > Only carrier to offer premium economy to and from NZ Extra 5-6” of seat pitch More recline In-seat power Economy Class Recaro slim line seats, generous recline In-seat personal video screens Movies on demand World leading 34” seat pitch (B747)
Slide 27: Le scena
Hf Le scena il : es He laste
Slide 28: sia
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Slide 29: New routes in service and commencing
In service: > > Auckland to San Francisco Freedom Air to Nadi from Christchurch, Palmerston North and Hamilton Commencing shortly: > > Christchurch to Los Angeles Christchurch to Rarotonga Wellington to Nadi Freedom Air to Nadi and the Gold Coast from Wellington
Slide 30: Cost reduction initiatives and annualised savings
> > > Over 40 initiatives Annualised savings of $245m by 2007 financial year First stage of programme completed by end of this financial year — $65m of $245m savings realised upon completion of first stage Most airlines focusing on some type of cost reduction so speed of realising benefits is import
Slide 31: Airpoints Dollars replace Airpoints
Airpoints Dollars replace Airpoints from November 16¢ Use Airpoints Dollars to purchase any seat at any time on any Air New Zealand operated flight Easier to redeem points Can still earn and redeem points on partner airlines
Slide 32: Aircraft engineering and maintenance industry change
> Aircraft engineering and maintenance industry undergoing substantial change — Increased competition from low labour cost engineering businesses in Asia, South America and Eastern Europe > Strength of NZD against USD has negatively impacted on ANZES'’ ability to compete > ANZES’ Business Transforma
Slide 33: Significant turnaround in operating and financial performance
Significant turnaround in Air New Zealand's operating and financial performance Voted Best Long Haul Airline and Best Pacific Airline Success of strategies have set a solid foundation for the transformation of Air New Zealand Ultimate goal is to be number one in every market we serve
Slide 34: Slide 34
Slide 35: 1. To re-elect directors: Jane Freeman
1. To re-elect directors a) Jane Freeman finn
Slide 36: 1. To re-elect directors: John McDonald
1. To re-elect directors b) John McDonald
Slide 37: 1. To re-elect directors: Warren Larsen
1. To re-elect directors c) Warren Larsen
Slide 38: 2. To adopt a new constitution
2. To adopt a new constitution To consider and, if thought fit, pass the following resolution as a special resolution: “That the existing Constitution of the Company be revoked and the Company adopt a new Constitution in the form tabled at the meeting and signed by the Chairman for the purpose of id
Slide 39: Slide 39