Investor Presentati tion on London Investor Roadshow 20 20 - PowerPoint PPT Presentation

Investor Presentati tion on London Investor Roadshow 20 20 October 2016 2016 1

Forward looking statements This presentation contains forward-looking statements. Forward-looking statements often include words such as “anticipate", "expect", "intend", "plan", "believe“ , “continue” or similar words in connection with discussions of future operating or financial performance. The forward-looking statements are based on management's and directors’ current expectations and assumptions regarding Air New Zealand’s businesses and performance, the economy and other future conditions, circumstances and results. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes in circumstances. Air New Zealand’s actual results may vary materially from those expressed or implied in its forward-looking statements. 2

Hig ighlig ights 3

Air New Zealand at t a g gla lance nce 76 76 Paci cifi fic R c Rim Focused network driven by Years in operation alliance partnerships 30 30 21 21 International Domestic destinations destinations 15 m millio llion 11, 11,500 Passengers carried Air New Zealand annually employees based globally 11 11 Baa2 aa2 Consecutive years of Investment grade credit dividend payments rating from Moody’s #1 #1 #6 #6 Corporate reputation Corporate reputation in New Zealand in Australia 4

Exchanges and ownership str tructur ucture Share r e regis ister er (as at 30 June 2016) AI AIZ AI AIR ASX stock ticker NXZ stock ticker Retail investors 4% • Dual-listed on the NZX and ASX stock exchanges • Strong trading liquidity: ~2.1 million average daily trading volume • Member of the NZX50 index – includes the 50 New Zealand Government largest and most liquid companies of the NZX 52% International institutional investors 35% • New Zealand Government holds 52% New Zealand – No direct Board representation institutional investors • Seven independent Directors 9% 5

2016 netw network and key ey fina inancia ncial m metr etrics ics $5.2b 5.2b operating revenue $806 806m * 2016 ASK growth + 12% 12% earnings before taxation $1.1b 1.1b Driven by new international routes & fleet up-gauge operating cash flow 22% * 22% Pre-tax ROIC Focused on the Pacific Rim * Before other significant items of $143 million. See appendix for reconciliation 6 to IFRS earnings.

Profitability and dividends thr throug ugh the h the cycle cycle 13 consecut ecutiv ive y e years o of posit itiv ive e e earning nings… …and nd 11 years o of consecut ecutiv ive d e divid idend ends Net profit after tax Dividends declared ($ millions) (cents per share) 50.0 45.0 $500 463 Ordinary dividend 40.0 $400 Special dividend 327 30.0 $300 263 221 218 20.0 18.0 180 181 20.0 $200 166 166 16.0 96 8.5 8.0 82 81 71 7.0 10.0 6.5 $100 5.5 5.5 5.0 5.0 21 $0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 7

Mark rket environm nment ent

Demand drivers remain rob robust Domestic tourism and travel Tourism to New Zealand New Zealand economy demand strong growing double-digits remains healthy  Average GDP growth of 2.5% in 2015**  Largest inbound markets are Australia,  Stable economic conditions and China and the U.S.  Tourism and robust construction activity consumer sentiment supporting GDP growth  International visitors +11%* to 3.3 million  Increased regional travel throughout  Historic high net migration levels  Visitor expenditure +18%* New Zealand by overseas and domestic visitors alike 9 * NZ Statistics, based on year ending 30 June 2016. ** NZ Statistics.

Market envir et environm nment ent Strong inbound tourism growth Current view of stable fuel prices Increased competitive landscape 10

Competitiv ive advan antag ages

A simple le and proven ven strategy for success 1. Our alliance-driven 2. Our brand and Kiwi 3. Our domestic 4. Our Airpoints TM 5. Our simplified fleet & Pacific Rim network service culture network members competitive cost structure 12

1. Our allia lliance nce-driv iven en Pacific Rim network Strong JV partnerships de-risk international growth Why r reven enue s ue share e allia iances nces?  Partners have “skin in the game” to sell the route  Strength of sales & distribution in local markets  Access to frequent flyer databases Strong partnerships across 13 the Pacific Rim

2. Our bran and and Kiw iwi s i ser ervi vice ce culture Experiencing record high customer satisfaction, brand health & employee engagement 69 % Record Customer satisfaction Employee engagement # 1 # 6 Corporate reputation in Corporate reputation Brand Health in Australia in New Zealand Great Shape 14

3. Our domes esti tic network Strong market share to leverage growth from inbound tourism • The heartland of M ā ori culture • Unmatched network offering to 21 main centres and regions across New Zealand • Domestic dispersal of inbound international tourism through Auckland • Network strength, product and lounges to drive further stimulation 15

TM members 4. Our Airpoin ints ts TM Our platform for loyalty and customer relationship data Since launching in 1989, the Members are based in more than Airpoints TM programme now has 160 different countries over 2.2 million members In 2016, members have enjoyed More than 50 New Zealand retail, more than 840,000 flights paid for by banking, and travel businesses are Airpoints Dollars TM now part of the programme We’ve launched programmes such as Airpoints™ for Business, which reward Our Airpoints™ Mall houses more businesses when their employees fly with us than 140 international and domestic and Airpoints™ for Schools, a community retailers where members can earn initiative allowing members to donate Airpoints™ Airpoints Dollars™ for their online to school fundraising projects purchases 16

5. Our simpli lified ied fleet More than halfway through significant capex programme Historical & projected aircraft capex* Impact of fleet programme 2012 2018 Aircr craft t types es ~$2.1b ** $1,000 Many Few 2017-2021 projected aircraft Wide-body $800 Turboprops capex B747 Wide-body Turboprops ATR72s B767 B787 ATR72s Q300 B777 $ millions $600 B777 family Q300 Beech 1900D Narrow-body B737 Narrow-body $400 A320 A320 family Flee eet age ( e (sea eat w wei eighted) $200 8.6 years 6.7 years $0 2014 2015 2016 2017 2018 2019 2020 2021 Ownership ip p profile le Financial year Historical capex Projected capex* 62% owned 72% owned 28% leased 38% leased * Excluding orders of up to five A320/A321 NEOs with purchase substitution rights. 17 ** Projected aircraft expenditure based on US dollar exchange rate of 0.715.

5. Our co competi etiti tive ve cost structure Simplified and modern fleet driving improved variable cost efficiencies Narro rrow-bo body dy Turbo-prop Tu Wide-bo Wi body B787 87-9 A321 neo neo AT ATR72-600 00 Effici cien enci cies es vs B767-300ER vs A320 ceo vs Bombardier Q300 Substantially lower ↑ 36%* ↑ 31% ↑ 23% operating costs and increased seat density resulting in Additional seats Additional seats Additional seats red educ uced uni unit co costs ↓ ~13%* ↓ ~20% ↓ ~16% Variable Variable Variable Operating cost Operating cost Operating cost (per seat) (per seat) (per seat) 18 * When compared to the Beech 1900D, the ATR72-600 aircraft has 49 more seats and approximately 40% improvement in variable operating costs per seat.

Finan ancial al prio iorit ities

Financial framework – our 2016 p 2016 performance 1 Excluding fuel price movement, foreign exchange and divestments. 20 2 Excluding other significant items. Refer to the appendix.

Profitable growth driven by dis isci ciplined ned ca capacit city m y mana nagem ement ent and co continuo ntinuous us C CASK im improvem ement ent Capacity aligned with tourism growth Efficiencies driving CASK** improvement Investment in fuel efficient and simplified aircraft resulting in: • Pilot, crew & operational efficiencies • Lower fuel burn • 2017 financial year capacity in range of +4% to +6% 12 • Absorbing growth from 2016 CASK 16% (ex. fuel price & FX) oved 2.6% 11 improv im 10. 10.57 57 0. 0.53 53 0.17 0. 17 10. 10.32 12% CASK (cents) Growth rate (0.25 25) 10 (0.44 44) 8% 9.30 30 (1.28 28) 4% 9 0% 2014 2015 2016 8 Financial year 2015 Divestments 2015 Price Economies Foreign Fuel price 2016 CASK ongoing of scale and exchange CASK Overseas visitor growth* Air NZ capacity growth (ASK) operations efficiencies CASK 21 * NZ Statistics, based on year ending 30 June 2016. ** Operating expenditure per ASK.