Our focus on New Zealand and the Pacific Rim has resulted in a network that is more diverse and ~35% larger 2012 2018 Routes operated by Air New Zealand Routes operated solely by alliance partners Chicago and Taipei services will commence Nov 2018
Net profit after tax Air New Zealand has ($ millions) 463 achieved profitability 382 and dividends 327 263 221 218 through the cycle… 180 181 166 166 96 82 81 71 21 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 15 years Dividends declared (cents per share) 45.0 of consecutive profitability* 13 years 21.0 20.0 18.0 16.0 11.0 8.0 8.5 7.0 5.5 5.5 5.0 6.5 5.0 of consecutive dividends 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1H 2018 * 2018 full year outlook as disclosed in 2018 Interim Ordinary dividend Special dividend Financial Results on 22 February 2018.
…and has demonstrated our ability to generate strong shareholder returns that exceed the major indices Total shareholder return 314% Air New Zealand NZX50 209% ASX200 50% 46% Bloomberg World Airlines Index S&P500 1 year 3 year 5 year 10 year Source: Bloomberg, period ended as at 13 April 2018.
Historic earnings volatility (standard deviation of 10-years adjusted EPS growth) Historically we have 1600% achieved significantly 1400% better earnings Earnings volatility 1200% stability than our 1000% APAC peers 800% 600% 400% 200% 0% China Southern ANA Hainan Airlines Thai Airways Bloomberg World Air New Zealand China Airlines China Eastern Qantas Singapore Airlines Air China Virgin Australia Cathay Pacific Airlines Index Source: Bloomberg. Original analysis derived from Forsyth Barr report published 7 March 2018.
Resilient core domestic business 1 Looking forward, our unique competitive advantages position Pacific Rim focused international network 2 us to drive future strong returns for our shareholders Focused on sustainable cost improvements 3 Investment grade financial strength 4
1 Resilient core domestic business Strong market share to leverage growth from inbound and domestic tourism • Most iconic brand in New Zealand • Strong loyalty base and still growing at over 2.7 million members* • Unmatched network breadth and depth − Over 400 flights daily to 20 domestic destinations • Differentiated in-flight and ground product that is valued by customers • Investing in the sustainable development of New Zealand tourism * Airpoints TM membership as at 31 December 2017.
Pacific Rim focused international network 2 Supported by strong revenue share alliance partnerships Routes operated by Air New Zealand Routes operated solely by alliance partners Chicago and Taipei services will commence Nov 2018
Focused on sustainable cost improvements 3 Fleet investment, economies of scale and productivity initiatives driving improved efficiencies Improving CASK* (ex fuel and FX) trend Targeting low-single digit nominal CASK improvement
Investment grade financial strength 4 Investing in the ideal fleet for the New Zealand market
Investment grade financial strength 4 Providing stability and financial flexibility over the long-term Moody’s credit rating Appropriate level of gearing A3 Gearing (%) Investment grade (including capitalised aircraft operating leases) Baa1 Target range of 45% to 55% Baa2 52.4% 51.8% 48.6% Baa3 42.9% 39.3% Ba1 Ba2 2013 2014 2015 2016 2017 Ba3 Financial year Source: Bloomberg as at 20 April 2018.
The financial framework that guides us
Putting ROIC performance into perspective Excellent return ~15% Pre-tax ROIC 19% Return that exceeds our 16% 15% 14% pre-tax cost of capital of ~10% 12% ~10% Sub-optimal return 2013 2014 2015 2016 2017
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