INTERIM RESULTS 2009 AGENDA Overview & Operating - - PowerPoint PPT Presentation

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INTERIM RESULTS 2009 AGENDA Overview & Operating - - PowerPoint PPT Presentation

Nov 22, 2023 340 likes •580 views

INTERIM RESULTS 2009 AGENDA Overview & Operating Environment Performance Long Haul Airline Short Haul Airline Domestic Tasman & Pacific Islands Other businesses Strategy Financial Management

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INTERIM RESULTS 2009

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INTERIM RESULTS 2009

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AGENDA

  • Overview & Operating Environment
  • Performance

– Long Haul Airline – Short Haul Airline

  • Domestic
  • Tasman & Pacific Islands

– Other businesses

  • Strategy
  • Financial Management
  • Outlook
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OVERVIEW

  • 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 other financial periods

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OPERATING ENVIRONMENT

  • Average jet fuel spot price was 36% higher
  • Weakening passenger demand across all markets
  • Increased competition on the Tasman
  • NZ dollar weakening
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KEY INFLUENCES ON PROFITABILITY

  • Average hedged WTI fuel cost for the 6 months to December 2008 was US$100 per barrel.

$NZD (m)

26 2 16 135 (24) (48) (199) (27) 16 74 (78) 159

  • 200
  • 100

100 200 300 Normalised Earnings Interim 2008 Traffic Yield Freight, Contract Services & Other Revenue Labour Fuel Maintenance Finance Costs FX Gain on Acquisition Other Normalised Earnings Interim 2009

14 (12)

Hedge Timing Adjustment Reported NPBT Interim 2009

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GROUP OPERATING PERFORMANCE

Change in Yield Load Factor Movement

Group Year-on-Year Load Factor & Year to Date Yield Movements

  • 4%
  • 2%

0% 2% 4% 6% 8% 10%

Jul Aug Sep Oct Nov Dec

  • 4 ppt
  • 2 ppt

0 ppt 2 ppt 4 ppt 6 ppt 8 ppt 10 ppt

Load Factor ppt Movement FX Adjusted Yield Change Yield Change

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LONG HAUL PERFORMANCE

  • Passenger numbers down 5.5%
  • Capacity reduced by 5.7%
  • Yields up 12.3%
  • Load factor improved 1.3 percentage points
  • Aggressive capacity management
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LONG HAUL CAPACITY MANAGEMENT

Change in Capacity Load Factor Movement

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

  • 20%
  • 15%
  • 10%
  • 5%

0% 5%

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

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

0 ppt 5 ppt Load Factor ppt Movement ASK Change Projected ASK Change

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DOMESTIC PERFORMANCE

  • 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
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TASMAN & PACIFIC ISLAND PERFORMANCE

  • 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 programme complete
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OTHER BUSINESSES

  • 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

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COST FOCUS

  • 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
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STRATEGY

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
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FINANCIAL MANAGEMENT

  • $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
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FLEET MANAGEMENT

  • 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
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CAPEX PROJECTION

1. Assumes NZD/USD = 0.53 2. 787-9 progress payments have shifted in line with announced delays

NZ$ (m)

200 400 600 800 1,000 1,200 1,400 FY09 FY10 FY11 FY12 Including Option Aircraft Excluding Option Aircraft

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FUEL HEDGING*

  • 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 first half

  • The first half of FY10 is approx. 20% hedged with the average

ceiling of US$68.47 and average floor of US$45.20 per barrel of WTI crude oil

* Fuel hedge position as at 22 January 2009 ** The effective floor includes benefits from WTI bought put spreads

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CURRENCY HEDGING

  • 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$/US$ rate of 0.720 spot

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OUTLOOK

  • 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 financial performance significantly improve in the second half of the financial year.

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FINANCIAL OVERVIEW

* Normalised Earnings before taxation after excluding net gains and losses on derivatives that hedge exposures in other financial periods (40)% 2.0cps 5.0cps 3.0cps Interim dividend (4.1) pts 48.6% 52.7% Gearing 16% $195m $1,222m $1,417m Net cash (65)% $(207)m $320m $113m Adjusted operating cash flow (79)% $(91)m $115m $24m Net profit after tax (84)% $(133)m $159m $26m Normalised Earnings* 4% $87m $2,332m $2,419m Operating revenue Percentage movement Dollar movement INTERIM 2008 INTERIM 2009

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INTERIM RESULTS 2009

SUPPLEMENTARY INFORMATION

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$159m $26m Normalised Earnings before Taxation $3m $(1)m Interest rate derivatives $(2)m $(88)m Foreign exchange derivatives $(14)m $101m Fuel derivatives Reverse net (gains) / losses on derivatives that hedge exposures in other financial periods: $172m $14m Earnings before Taxation INTERIM 2008 INTERIM 2009

HEDGES RELATING TO OTHER FINANCIAL PERIODS

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NEW AIRCRAFT ARRIVALS

* Launch customer ** New delivery dates and terms agreed with Boeing for the 787-9s delivery

  • 1

Beech 1900D

  • 2

Bombardier Q300 2 3**

  • Boeing 787-9*
  • 2

3

  • Boeing 777-300ER

FY14 FY13 FY12 FY11 FY10 FY09 Aircraft Type