Air New Zealand Limited · NZX:AIR
Air New Zealand — Deutsche Bank Transport Conference 2004
42 slides from Air New Zealand's conference presentation, Nov 30, 2004
Slide 1: Deutsche Bank Transport Conference, Sydney, 30 Nov 04
2. = AIR NEW ZEALAND Being there is everything. Deutsche Bank Transport Conference Sydney, 30 Nov 04
Slide 2: Slide 2
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Slide 4: Customer purchase factors
Price Frequency of flights Travel Time Seat comfort Branding of Carrier In-flight Entertainment Frequent Flyer Points In-flight Meals Ease of booking
Slide 5: Old Model versus New Model
Old Model : Complex fare structure Full meal service Two class configuration Four cabin attendants Commission & incentive Corporate rebates 21% of bookings direct Airpoints on all fares Counter check-in only 4 t New Model 3 simplified fare types Tea, coffee, water only Economy only Three cabin atten
Slide 6: Saab 340A and Bombardier Q300
He 000i Saab | Bombardier 340A Q300 Fleet Size 17 17 Average Age 17 yrs New Operating 3 Efficiency 35% CASK Seats 33 50
Slide 7: Two examples
> Two examples: — Improve speed of aircraft turn-arounds — More innovation to boost on-line sales
Slide 8: Customer preferences by market segment
Willingness to purchase online Domestic 0-2 hours Short Haul International 3-5 hours Long Haul 5 hours + Importance of price relative to other features Willingness to self serve Importance of comfort relative to other features Role of agents in creating itineraries Reliance on partners to achieve re
Slide 9: Tasman network map
Isiand Brisbane« Gold Coast “ Sydney “ern Perth Yee pc secnspansensn™ Melbourne “a
Slide 10: MINIs
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Slide 11: Qantas 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 12: Long haul destinations
tia Ameena tans Ala il > London > Hong Kong > Los Angeles > Tokyo > Singapore > San Francisco > Osaka > Taipei > Nagoya
Slide 13: Our Vision
Our Vision We will strive to be number one in every market we serve by creating a workplace where teams are committed to our customers in a distinctly New Zealand way, resulting in superior industry returns. Passion for Ins pl ‘alal g Leadership customers Journeys Excellence in everything we do Enga
Slide 14: Business class fully flat bed
lit > Largest fully flat bed in its class > Direct aisle access for all passengers
Slide 15: Premium economy and economy class
Premium economy > Unique (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 16: Cost base
Cost base ILLUSTRATIVE ONLY FY03 Cost base FY08 Initiatives
Slide 17: Airpoints Dollars
> Use Airpoints Dollars to purchase any seat at any time on any Air New Zealand operated flight > Easier to understand and redeem points > Yields on 3 party points sales up
Slide 18: Slide 18
Slide 19: Buoyant economic conditions; FY05 challenging
Buoyant economic conditions in most of Air New Zealand’s markets But FY05 trading environment is challenging with strong Tasman competition and jet fuel prices. Earnings expectation of a Profit before Unusuals and Tax of around NZ$220m Earnings include one-off costs of NZ$15m related to new fleet in
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Slide 21: Aircraft range map
Los Angeles \ * New 777-200ER Range Mexico \ | 4 AUCKLAND Lima 767-300 Range 777-300ER/7E7 Range Janeiro
Slide 22: Maintenance
Maintenance Service Delivery & Management Maintenance Specification & Design
Slide 23: Status
ILLUSTRATIVE ONLY Status Domestic TTITIITIIII LI International short haul TTI ILL ele International long haul gaooooooo0o
Slide 24: Product launch timeline
Express Class Tasman Express Pacific Express San Francisco Nov 02 Oct 03 May 04 Jun 04 S 3 Airpoints Dollars New Inflight Product 777 Nov 04 Mid 05 Sep 65
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Slide 26: Deutsche Bank Transport Conference 04, Ralph Norris
Le. Se AIR NEW ZEALAND Deutsche Bank Transport Conference 2004 presented by Ralph Norris Chief Executive Officer and Managing Director Air New Zealand Sydney 30 November 2004
Slide 27: Background slide
BACKGROUND SLIDE Good Morning. | am pleased to be here to talk about some of the significant changes that we have made at Air New Zealand. In particular, | have been asked to talk on “re-positioning for the changing paradigm: the polarisation of short-haul no frills versus long haul premium”. Many a
Slide 28: Programme of change
for our customers, we needed to simplify our processes by only doing that which is valued by our customers. This required “fresh thinking” at both the Board and executive levels. A new Board was appointed in 2002 and | accepted the role as CEO that same year. In my former life | was CEO of ASB Bank
Slide 29: Customer value
model. | want to share with you the simple but profound navigation point that we have used to chart this journey — it is called customer value. Whenever we have been faced with choices in our strategy we have continually asked the simple question — what do customers value? What are most customers wi
Slide 30: Low cost network airline model
leap of faith and evolve a completely new business model — moving away from the full service network to a low cost network model. This model captures low fares, but also retains flexibility in its pricing structure to service our business customers. Connectivity is also retained as our customers val
Slide 31: Domestic model success
- No base commissions on our domestic network resulted in significant cost of sale savings. - Lounge food and beverage offerings were upgraded. Members were willing to accept a 50 percent fee increase for lounge services due to the low fares on offer. The changes made have increased domestic market
Slide 32: What customers value
and aircraft turnarounds. Excess baggage is another area that we have targeted and this has had a positive impact on domestic on- time-performance. New or-line initiatives, soon to be announced, will also continue to grow this sales channel for Air New Zealand. The success of this strategy made us q
Slide 33: International short haul network
INTERNATIONAL SHORT HAUL NETWORK (2-5 hrs) The Tasman routes between New Zealand and Australia are where a significant proportion of our international short haul capacity is deployed. The Tasman is an intensely competitive market that is grossly oversupplied, with a dozen airlines fighting aggressiv
Slide 34: Qantas strategic alliance and long haul network
yields requires sustained focus on cost improvements and more changes can be expected. QANTAS STRATEGIC ALLIANCE The decision by the Australian Competition Tribunal to approve Air New Zealand and Qantas’ strategic alliance is acknowledgement that some type of structural change is needed in this mark
Slide 35: Long haul customer experience
Europe that are further away from New Zealand. It is for this reason that we are working closely with Tourism New Zealand to increase demand for travel to New Zealand and improve the conversion ratio. We are positioning ourselves to take advantage of the increased demand by being the carrier of choi
Slide 36: Business class fully flat bed
Passengers won't be cramped for space, with the bed being six foot six inches long and nearly three feet wide at the shoulders. This product is a first class product at a business class price, while the unique herring bone configuration will allow every passenger to have direct aisle access. With su
Slide 37: Four year plan cost savings
digital on-demand system for complete control over when and what passengers want to watch. This system can hold up to 780 hours of video or 2,000 hours of audio content. So passengers will need to travel around the world 16 times before they have watched or listened to everything — and by then we wo
Slide 38: New loyalty programme
We spent over a year analysing and conducting market research to better understand how the loyalty scheme could be improved. While the answer was obvious - simplify the scheme by removing restrictions and making seats available - the leap in faith needed to do this was much more difficult. Our innov
Slide 39: Gearing, rights issue and dividend policy
Gearing — which includes operating leases capitalised at seven times annual lease payables — is now within our target range of 45 to 55 percent. While this means that we are close to our optimal balance sheet position, an increase in debt needed to fund the NZ$2 billion total capital expenditure ove
Slide 40: Fleet: Boeing 777 and 7E7
The Boeing 777s will feature the same interiors as the refurbished Boeing 747s, and will become a regular sight in Asia and San Francisco. Air New Zealand is also the second launch customer for the revolutionary Boeing 7E7 aircraft. We are very excited about the capabilities of this aircraft, which
Slide 41: ANZES review
ANZES. For this reason we have recently undertaken an extensive review of this business. ANZES IS OUT OF BALANCE ... This review highlighted the disproportionate focus of ANZES on maintenance activities when compared with the other key areas of engineering services and customer management. This focu
Slide 42: The journey continues
The long haul strategy is in train and by mid 2005 we will bring to market our new in-flight offering. Our new loyalty programme — another world first from Air New Zealand — has been well received by our customers and we anticipate it will successfully do what it is designed to do — increase loyalty
Air New Zealand — Deutsche Bank Transport Conference 2004 on 6ix