2 FY01 Interim Result Highlights $mH1-01H1-00 % Revenue4,311.51,803.9139.0 EBITDRA578.4316.982.5 Pre Tax Op (Deficit)/Surplus(1.1)76.8(101.5) Unusual Charges(31.8)50.2(163.3) Associates Contribution7.251.9(86.1) Tax Benefit(29.5)51.6(157.1) Net Profit After Tax: - Excl. Unusuals 24.883.4(70.3) - Incl. Unusuals3.8127.2(97.0) Cash flow from operations189.1157.919.8
3 Balance Sheet As at31 Dec 0030 Jun 00%31 Dec 99 Net Debt (m)3,147.13,107.61.31,186.9 Gearing (%)62.366.2(5.9)34.7 Gearing incl. Leases (%)76.5184.108.40.206 Return on Ave Equity (%)0.48.3(95.6)11.7 NTA/Share2.722.4610.63.58 DPS (C)4.09.0n/a6.0
5 Results in Context Obviously one of the most difficult trading periods experienced —Fuel Price at 10 year highs —NZD and AUD at all time lows against the USD —Increased competition on the Australian domestic market —Introduction of GST in Australia —Reduced Domestic travel in Australia due to Olympics —Increased competition and capacity on Tasman, Pacific and Atlantic Some positives —International traffic during the Olympic period —FX benefits on the revenue side —Hedging gains (Fuel and FX) of NZ$110.7m —Other benefits All whilst integration is occurring and without a C.E.O.
13 Operating Costs Impacted by Fuel & FX Costs exclude net interest, depreciation, amortisation, operating lease costs and abnormal items.
14 Group Fuel Position (Including Ansett International) H1-01H1-00*% Total Consumption (m gallons)303.7285.16.5 USc per Gallon947328.9 Total Cost (US$m)285.9208.337.3 Total Cost (NZ$m)677.6391.972.9 Includes savings from hedging of US$27.8m (NZ$74.4m) *Includes pro-forma Ansett for H1-00
15 Integration Savings to date lower than anticipated, however progress on: —Common IT platform —Procurement Savings —Management Reduction Redundancies —Mainly management at this stage —TVSS still in progress Full Year Forecast —Revenue projects will not deliver due to market conditions —Timing has been slower than first expected —Full range if initiatives being pursued
17 Outlook Based on current trading conditions, the outlook for the second half is uncertain and there is potential for further deterioration in operating result in the short-term Building blocks in place for medium term improvement in profitability and creation of shareholder value
19 J Dell Chief Financial Officer L Doolan GGM Corp, Govt & Int Affairs A Paterson EGM Commercial T Jensen GGM Ops Technical I Diamond GGM Ops Services G Lilly GM Air NZ Int G Kingshott GM AN Int P Elmsly GM Cargo A Miller GM Ansett Domestic N Thompson GM Air NZ Domestic/Tr ans Tas & SWP R Rosalky GM Aust Regional Airlines B Fitzgerald GM Terminal Services B Jacobson GM ANNZES Gary Toomey Managing Director & CEO Gary Toomey Managing Director & CEO NZ C Tremain GGM HR & Org Change NZ G Frazis EGM Strategy Aust NZ Aust NZ Aust NZ Aust NZ M Flanagan GGM AN/NZ Integration NZ TBA EGM Australasia Aust Current Management Structure...
20 Business Performance Enhancement Ansett International NZ Finance Corp, Govt & Int Affairs NZ HR & Org Change Strategy, Network & Marketing t Sales & Distribution Customer Service Operations Worldwide Airport Svces ANNZES Ventures G Toomey Group President & CEO G Toomey Group President & CEO Focus on growth of Aust regional / NZ Link airlines & smaller enterprises. Integrates all airport delivery. Contains aircraft provisioning Integrates all operations. Manages all pilots (except regionals). Australian & NZ pilots remain in separate structures. Focus on customer service standards, delivery & consistency. Manages all cabin crew, inflight service staff & call centres (except regionals) Focus on revenue generation across brands & optimisation of yield, agency relat’s Focus on strategy development across markets, product, brand, loyalty, fleet, alliances & network integration, e- commerce Integrates business performance activities 49% owned New Structure...
21 Ansett International NZ A Moroney CFO & SVP Finance NZ L Doolan SVP Corp, Govt & Int Affairs NZ C Tremain SVP HR & Org Change NZ K Turnbull SVP Business Performance Enhancement NZ G Frazis SVP Strategy, Network & Marketing Aust A. Miller SVP Sales & Distribution Aust L Grant SVP Customer Service Aust T Jensen SVP Operations Aust B Fitzgerald SVP Worldwide Airport Svces Aust B Jacobson SVP ANNZES NZ TBA SVP Ventures NZ G Toomey Group President & CEO G Toomey Group President & CEO No Change Responsibilities Changed Somewhat New Role 49% owned Executive Management
22 Key Group Strategies Strategies are being formulated to improve performance in the medium term Overall profit enhancement program Complete network and fleet planning Growing international operations Protecting strong New Zealand position New marketing plans Improve total customer service levels Brand positioning and simplification Harness alliance benefits Balance sheet management and funding All strategies will be underpinned with detailed financial plans with the end aim of creating value for shareholders.
23 Strategies - Ansett Ansett, in particular, needs attention: Address capacity deficiencies and deteriorating market share Target sales growth through agents and corporates Extensive punctuality review Rebuild confidence in safety and reliability Review Australian trunk and regional networks Build accurate and reliable accounting and management reporting systems Review product and positioning with new competition Fleet replacement and rationalisation over time Improve cost position
24 Current Issues Hazelton —Currently have acceptances for 78.5% —Still awaiting decision from the ACCC Ansett Australia B767-200 Maintenance —All 7 aircraft now fully compliant —Maintenance Management Processes meet CASA Requirements —CASA general audit underway DVT —Have not been formally approached on legal proceedings —Warsaw convention —Acted responsibly by issuing warnings on tickets and in-flight products Targeted Voluntary Severance —Good response —Process is still underway and thus cannot give final data
Air New Zealand Limited December 2000 Interim Result Presentation Date : 20 February 2001