Air New Zealand

CLSA Investors’ Forum

15 May 2001

2

Agenda

Overview

Introduction to Air New Zealand

Key Markets

Fleet

Capital Management

Strategy

3

Alliance Partners

Operations Customer Services.

Strategy Networks Marketing

NZ NationalAN Australia

Nelson

Eagle

Mt CookSkywestAeropel.Kendall

Freedom

AN International

NZ International

ANZESVentures

Terminal Services

TravelandJetset

Mt Cook Ski-fields

Corporate Units

Cargo

Hazelton

Sales & Distribution

Introduction to Air New Zealand

World top 20 scale

Most comprehensive network across Australia, NZ and South Pacific

First to operate in all sectors of the Australasian aviation market

Offering world’s widest range of destinations, flight options, loyalty rewards – via SIA and Star

Two powerful brands in our home markets

Home market leader in e-travel services

4

Challenging Market Conditions

Australian New entrants: Share and Yield DeclineAnsett capacity share dropped from 46.2% to 42.5% Ansett average domestic yield has fallen significantly

1.3 1.4 1.3 1.21.7 2.2

0

1

2

3

4

5

FY96 FY97 FY98 FY99 FY00 Dec 00

Average Fuel Cost(NZ ¢/ASK)

Falling NZ$

0.86 0.88 0.89 0.87 0.84 0.80 0.77

0.64 0.67 0.690.59 0.53 0.5 0.42

0.00

0.30

0.60

0.90

1.20

1.50

1995 1996 1997 1998 1999 2000 2001

NZD : AUDNZD : USD

5

New Zealand Domestic Market

Historically strong position in the NZ market

The NZ Domestic Airline provides strong contribution to Group earnings

Qantas NZ franchise closed in April 2001

Air New Zealand moved by expanding “Freedom Air” into the domestic market

Other regional airlines have declared intentions to operate within NZ

90%

10%

20%

30%

40%

50%

60%

70%

80%

Fe

b-9

8

Ma

y-9

8

Aug

-98

Nov

-98

Fe

b-9

9

Ma

y-9

9

Aug

-99

Nov

-99

Fe

b-0

0

Ma

y-0

0

Aug

-00

Nov

-00

Market Share to Dec 2000

NZ QF NZ

6

Australian Domestic Market

Need To Reverse Ansett’sDomestic Capacity Disadvantage

Need To Reverse Ansett’sDomestic Capacity Disadvantage

Capacity Share Beyond The TippingPoint Can Deliver Exponential Market Share

Capacity Share Beyond The TippingPoint Can Deliver Exponential Market Share

Market Share Versus Capacity Share(Australian Domestic Market)

40%

42%

44%

46%

48%

50%

52%

54%

56%

58%

Jul 9

4

Nov

94

Mar

95

Jul 9

5

Nov

95

Mar

96

Jul 9

6

Nov

96

Mar

97

Mar

00

Jul 0

0

Jul 9

7

Nov

97

Mar

98

Jul 9

8

Nov

98

Mar

99

Jul 9

9

Nov

99

AN RPK

AN ASK

QF ASK

QF RPK

The Tipping Point

Capacity Share

7

Australian Domestic Market: Strategy Change Lack of investment in fleet capacity New aircraft

Grow at least at market rate

Low investment in product Advertising Airline relaunch Product refresh

Tight schedules affecting reliability Detailed punctuality study Build flexibility into schedules

Phased Maintenance Block maintenance 7 day operation Maintenance planning well within tolerance

Direct Sales Price setter Recapture lost share of agent and

corporate markets Improve overall offering

8

Australian Domestic Market: 767-200 Grounding

91% of all passengers booked were flown by Ansett or Air New

Zealand aircraft.

Galvanised workforce

Improved on-time performance

Consumer intention to fly Ansett has improved

Limited impact on forward bookings

B767 operating fleet cleared - “fit to fly”

NZ$20m advertising campaign launched

Cost of grounding estimated to be NZ$8m

9

Fleet DevelopmentOverall Fleet & Network plan currently under review

Initial changes to fleet structure underway–Ansett additional capacity (4 x 767-300)–767-200 sale and lease back agreement and subsequent replacement

Particular attention on Ansett fleet given lack of recent investment

Reduce aircraft types and manufacturers–maintenance & training synergies

Full purchase and funding decisions expected by December

10

Capital Management

Limted balance sheet capacity–Gearing as at December 2000 = 76.5%

A/B share structure restricts ability to raise equity

All funding options being reviewed–Equity–Operating leases–Secured aircraft financing–sale/leaseback of other assets

Funding plan to be finalised as part of the strategic review

11

Growth OptionsCapitalise on strength of brands in home markets

–Expansion of Ansett International–Regaining market share in Ansett Domestic–Growing New Zealand market via Freedom Air–Product investment

Futher growth and integration of Engineering businesses–ANNZES–Christchurch Engine Centre

Other Initiatives–Relaunch of brand–Frequent Flyer Program relaunch–Additional improvements to customer offerings

12

Key Strategic Milestones

Additional 767 capacity in Australia from July 2001

Strategic Review completed by the end of the year including:– Network initiatives – Funding plan– Fleet requirements

Aircraft orders placed shortly afterward

Airline relaunch early 2002

Air New Zealand

CLSA Investors’ Forum

15 May 2001