1 2009 ANNUAL RESULTS HIGHLIGHTS Normalised earnings* $145m - - PowerPoint PPT Presentation

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1 2009 ANNUAL RESULTS HIGHLIGHTS Normalised earnings* $145m - - PowerPoint PPT Presentation

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ANNUAL RESULTS 2009 1 2009 ANNUAL RESULTS HIGHLIGHTS Normalised earnings* $145m Net cash position of $1.6bn Gearing improved 0.3 pts to 45.0% Effective capacity management Award-winning innovations Positive

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2009 ANNUAL RESULTS

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ANNUAL RESULTS

2009

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2009 ANNUAL RESULTS

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HIGHLIGHTS

  • Normalised earnings* $145m
  • Net cash position of $1.6bn
  • Gearing improved 0.3 pts to 45.0%
  • Effective capacity management
  • Award-winning innovations
  • Positive employee engagement
  • Strong non-airline revenue growth

* Normalised earnings before taxation after excluding the net impact of derivatives that hedge exposures in other financial periods

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2009 ANNUAL RESULTS

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MAIN DRIVERS

  • Volatile foreign exchange rates and fuel prices
  • Deterioration of demand for air travel
  • Capacity reduction of 7.2% in response
  • Increased competitor capacity on trans Tasman and trans Pacific
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KEY INFLUENCES ON PROFITABILITY

$NZ (m)

145

(17) 272 25 51 (9) 370 (48) (59)

197

  • 200
  • 100

100 200 300 400

2008 Normalised Earnings before Taxation Yield Traffic Freight, Contract Services & Other Revenue Labour Fuel Price and Volume Maintenance, Aircraft Operations and Passenger Services Sales & Marketing Depreciation and Lease Costs Impact of Fuel Hedging Impact of FX (Including Hedging) Other 2009 Normalised Earnings before Taxation Hedge Timing Adjustment Reported NPBT 2009

(280) 18 (375) (138)

7

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2009 ANNUAL RESULTS

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COST INITIATIVES

  • Reduced aircraft operations
  • Fuel efficiency initiatives
  • FTE reduced by 467*
  • Reduced hours working week offered
  • Leave without pay initiative introduced
  • Board, executive and management pay freeze
  • Continuous cost management

*excluding acquired businesses

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YEAR TO DATE YIELD MOVEMENTS

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Change in Yield Yield Movement Yield Movement FX Adjusted

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LONG HAUL PERFORMANCE

  • RPKs down 8.8%
  • Capacity reduced by 9.4%
  • Load factor up 0.6 percentage points to 81.6%
  • Yield up 12.1%
  • Weaker NZD increased revenues
  • Influenza A (H1N1) impact
  • Pacific Premium Economy expanded on the 777-200 fleet
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2009 ANNUAL RESULTS

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LONG HAUL CAPACITY MANAGEMENT

  • Capacity forecast for 2010 is 9% lower than 2009

Long Haul Y.O.Y Capacity Change & Load Factor Y.O.Y Percentage Point Movement

  • 20%
  • 15%
  • 10%
  • 5%

0% 5%

Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09

Change in capacity

  • 20 ppt
  • 15 ppt
  • 10 ppt
  • 5 ppt

0 ppt 5 ppt

Load factor movement

Load Factor ppt Movement ASK Change

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2009 ANNUAL RESULTS

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DOMESTIC PERFORMANCE

  • Difficult economic conditions in regional New Zealand
  • Decreased capacity by 4.1%
  • Load factor up 0.4 of a percentage point
  • RPKs down 3.7%
  • Final two Q300 turbo props introduced to fleet
  • Award-winning airport innovations
  • Launched Masterton and Westport services
  • Changing competitive dynamics
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2009 ANNUAL RESULTS

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TASMAN & PACIFIC ISLAND PERFORMANCE

  • Reduced capacity by 3.9%
  • Load factor down 2.4 percentage points
  • RPKs down 6.8%
  • IFE* upgrade programme completed
  • Trans-Tasman services from Hamilton ceased and Dunedin

reduced

  • Rotorua/Sydney service announced

* Inflight entertainment

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2009 ANNUAL RESULTS

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SHORT HAUL CAPACITY MANAGEMENT

  • Capacity forecast for 2010 is 7% lower than 2009

Short Haul Y.O.Y Capacity Change & Load Factor Y.O.Y Percentage Point Movement

  • 20%
  • 15%
  • 10%
  • 5%

0% 5%

Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09

Change in capacity

  • 20 ppt
  • 15 ppt
  • 10 ppt
  • 5 ppt

0 ppt 5 ppt

Load factor movement

Load Factor ppt Movement ASK Change

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STRATEGIC PRIORITIES

  • Optimising network and refreshing product offering
  • Aligning supply to demand
  • Developing long haul product for B777-300ER
  • Evaluating narrow body fleet replacement options
  • Maintaining our environmental leadership position
  • Further development of Airpoints programme
  • Increase focus on new media within marketing
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ENGINEERING

  • Hangars remain full
  • Gas Turbines profitable business
  • Altitude Aerospace Interiors
  • TAE, Masling and Tenix Aviation smoothly integrated
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ENVIRONMENT

  • Biofuels development focus continues
  • Retrofitting winglets and zonal dryers
  • Fuel efficient flight planning
  • Environmental management system
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FINANCIAL MANAGEMENT

  • $1.6bn cash on balance sheet at year end
  • Gearing 45.0%, 0.3 percentage point improvement
  • Average fleet age of 7.4 years
  • Moody’s rating – Ba1 stable
  • Final dividend at 3.5 cents per share
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AIRCRAFT CAPEX COMMITMENTS

  • 1. Includes progress payments on aircraft and is net of sale and lease back agreements
  • 2. Assumes NZD/USD = 0.65
  • 3. Assumption of 6 month delay for 787-9 aircraft
  • 4. Excludes capitalised maintenance of approximately $55m per annum and non aircraft capex

$NZm 100 200 300 400 500 600 700 FY09 FY10 FY11 FY12

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FLEET FLEXIBILITY

  • Two B747 aircraft sold and

leased back

  • RFP for narrow body fleet

replacement issued

  • Seven ATR72-500s to be

purchased on expiry of lease

  • First 777-300ERs begin

arriving in November 2010

  • Fleet flexibility maintained

FLEET FLEXIBILITY

  • Assumes 6 month delay on Boeing 787-9 aircraft

3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 2009 2010 2011 2012 2013 2014 2015 2016 2017

Wide body seat count

High Med Low 5%

  • 5%
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FUEL HEDGING*

  • The first half of FY10 is 80% hedged. The average ceiling

price of the Singapore Jet hedge is US$70.78 per barrel. The average ceiling price of the WTI crude oil hedge is US$65.08 per barrel.

  • The second half of FY10 is 54% hedged with the average

ceiling at US$73.16 per barrel of WTI crude oil

* Fuel hedge position as at 21 August 2009. Refer to separate fuel hedge disclosure.

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CURRENCY HEDGING

  • 2010 US dollar operating cash flow exposure is approx.

88% hedged at an average NZ$/US$ rate of 0.69

  • US$322m of future capex commitments are hedged at

NZ$/US$ rate of 0.73 (spot)

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OUTLOOK

  • While demand is stabilising, yields remain under significant

pressure, fuel prices have resumed an upward trend and we are unlikely to achieve the same level of net hedging gains

  • The same agility displayed in the 2009 financial year will be

imperative throughout the next year

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SUPPLEMENTARY INFORMATION

  • Financial overview
  • Normalised Earnings
  • Group operating statistics
  • Long haul operating statistics
  • Short haul operating statistics
  • New aircraft arrivals
  • Current operating fleet
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FINANCIAL OVERVIEW

* Normalised earnings before taxation after excluding the net impact of derivatives that hedge exposures in

  • ther financial periods

(23.5%) (2.0)cps 8.5 cps 6.5 cps Annual dividend 0.3 pts N/A 45.3% 45.0% Gearing 22.0% $284m $1,289m $1,573m Net cash (46.4%) $(307)m $662m $355m Adjusted operating cash flow (90.4%) $(197)m $218m $21m Net profit after tax (26.4%) $(52)m $197m $145m Normalised earnings* (1.2%) $(58)m $4,667m $4,609m Operating revenue Percentage movement Dollar movement June 2008 June 2009

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$197m $145m Normalised Earnings before Taxation $2m $(1)m Interest rate derivatives $20m $9m Foreign exchange derivatives $(129)m $130m Fuel derivatives Reverse net (gains) / losses on derivatives that hedge exposures in other financial periods: $304m $7m Earnings before Taxation June 2008 June 2009

NORMALISED EARNINGS

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GROUP OPERATING STATISTICS

6.2% 13.0 13.8 Yield (cents per RPK) (0.3)pts 79.3% 79.0% Load factor (7.2%) 36,991m 34,316m Available seat kilometres (ASKs) (6.1%) 13.2m 12.4m Passengers carried Movement* June 2008 June 2009 * Calculations based on numbers before rounding

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LONG HAUL OPERATING STATISTICS

0.6 pts 81.0% 81.6% Load factor (8.8%) 18,015m 16,432m RPKs (9.4%) 22,243m 20,150m ASKs (9.8%) 2.0m 1.8m Passengers carried Movement* June 2008 June 2009 * Calculations based on numbers before rounding

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SHORT HAUL OPERATING STATISTICS

(1.5) pts 76.9% 75.4% Load factor (5.8%) 11,334m 10,680m RPKs (3.9%) 14,748m 14,166m ASKs (5.5%) 11.2m 10.6m Passengers carried Movement* June 2008 June 2009 * Calculations based on numbers before rounding

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NEW AIRCRAFT ARRIVALS

4

  • Boeing 787-9 *
  • 2

3

  • Boeing 777-300ER

FY14 FY13 FY12 FY11 FY10 Aircraft Type * Assumed 6 month delay on Boeing 787-9 aircraft

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CURRENT OPERATING FLEET

  • (3)

3 Saab 340A 100 2 98 3 95 Total operating fleet 18 1 17

  • 17

Beech 1900D 23 2 21 5 16 Bombardier Q300 11

  • 11
  • 11

ATR 72-500 16

  • 16

2 14 Boeing 737-300 12

  • 12
  • 12

Airbus A320-200 5

  • 5

(1) 6 Boeing 767-300ER 8

  • 8
  • 8

Boeing 777-200ER 7 (1) 8

  • 8

Boeing 747-400 June 2009 2009 movement June 2008 2008 movement June 2007 Aircraft Type

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