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HIGHLIGHTSHIGHLIGHTSHIGHLIGHTSHIGHLIGHTS
• Normalised earnings* $96m, up $70m
• Net cash position of $1.1bn
• Gearing stable at 46.0%
• ATW Airline of the Year
• Unveiling of new long haul product
• Airpoints™ developments
* Normalised earnings before taxation after excluding the net impact of derivatives that hedge exposures in other financial
periods
3333
MORE STABLE OPERATING ENVIRONMENTMORE STABLE OPERATING ENVIRONMENTMORE STABLE OPERATING ENVIRONMENTMORE STABLE OPERATING ENVIRONMENT
• Air travel demand bottoming out
• Lower spot fuel prices, long term upward trend continues
• More stable foreign exchange rates
• Competition remains intense
NZ$ / US$ US$ / BBLUS$ FOREIGN EXCHANGE
0.50
0.55
0.60
0.65
0.70
0.75
0.80
Jul Aug Sep Oct Nov Dec Jan Feb
FY10
FY9JET FUEL SPOT PRICEJET FUEL SPOT PRICEJET FUEL SPOT PRICEJET FUEL SPOT PRICE
50
70
90
110
130
150
170
190
Jul Aug Sep Oct Nov Dec Jan Feb
FY10
FY9
4444
KEY INFLUENCES ON PROFITABILITYKEY INFLUENCES ON PROFITABILITYKEY INFLUENCES ON PROFITABILITYKEY INFLUENCES ON PROFITABILITY
$NZ (m)
96
(1)(65)
2929
28
15
(9)(40)
26
(400)
(300)
(200)
(100)
0
100
200
300
Dec 2008
Normalised
Earnings
Before
Taxation
Yield Traffic Cargo,
Contract
Services &
Other
Revenue
Labour Fuel Price
and Volume
Aircraft
Operations
and
Passenger
Services
Sales and
Marketing
Net Finance
Costs
Net impact
of FX
(Including
Hedging)
Other Dec 2009
Normalised
Earnings
Before
Taxation
Hedge
Timing
Adjustment
Dec 2009
Reported
Profit
Before
Taxation
(251)
(12)
84335
5555
REVENUE MANAGEMENTREVENUE MANAGEMENTREVENUE MANAGEMENTREVENUE MANAGEMENT
*Revenue per Available Seat Kilometre
(16%)
(14%)
(12%)
(10%)
(8%)
(6%)
(4%)
(2%)
0%
JUL AUG SEP OCT NOV DEC JAN
YTD RASK* Change
YTD Yield Change
6666
LONG HAUL PERFORMANCELONG HAUL PERFORMANCELONG HAUL PERFORMANCELONG HAUL PERFORMANCE
• Passenger demand down 7.3%
• Capacity reduced by 8.7%
• Load factor improved 1.2 percentage points to
83.3%
• Yield down 12.5%
• Demand remained weak on Asian routes
• US routes showed signs of recovery
7777
LONG HAUL REVENUE MANAGEMENTLONG HAUL REVENUE MANAGEMENTLONG HAUL REVENUE MANAGEMENTLONG HAUL REVENUE MANAGEMENT
*Revenue per Available Seat Kilometre
Long Haul
(20%)
(18%)
(16%)
(14%)
(12%)
(10%)
(8%)
(6%)
(4%)
(2%)
0%
JUL AUG SEP OCT NOV DEC JAN
YTD RASK* Change
YTD Yield Change
8888
DOMESTIC PERFORMANCEDOMESTIC PERFORMANCEDOMESTIC PERFORMANCEDOMESTIC PERFORMANCE
• Demand up 4.8%
• Capacity relatively unchanged
• Load factor improved 3.8 percentage points to 77.2%
• Changing competitive dynamics
• OTP improved to 87.6%* on time
• A320s on order in move to a single narrow body fleet
• grabaseat™ an effective sales tool for low cost seats
* Air New Zealand adheres to a more disciplined 10 min standard than the rest of the market
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TASMAN & PACIFIC ISLAND PERFORMANCETASMAN & PACIFIC ISLAND PERFORMANCETASMAN & PACIFIC ISLAND PERFORMANCETASMAN & PACIFIC ISLAND PERFORMANCE
• Demand down 2.9%
• Reduced capacity by 10.5%
• Load factor improved 6.3 percentage points
• Rotorua/Sydney service launched
• Sydney to Rarotonga trial service announced
• Unstable market dynamics persist
10101010
SHORT HAUL REVENUE MANAGEMENTSHORT HAUL REVENUE MANAGEMENTSHORT HAUL REVENUE MANAGEMENTSHORT HAUL REVENUE MANAGEMENT
*Revenue per Available Seat Kilometre
SHORT Haul
(14%)
(12%)
(10%)
(8%)
(6%)
(4%)
(2%)
0%
JUL AUG SEP OCT NOV DEC JAN
YTD RASK* Change
YTD Yield Change
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• Cargo
– Revenue down on lower volumes and yields
– Cessation of Freighter lease in March 2009
• Engineering businesses continue to increase
revenue
– Marine & Industrial Gas Turbines
OTHER BUSINESSESOTHER BUSINESSESOTHER BUSINESSESOTHER BUSINESSES
12121212
COST INITIATIVESCOST INITIATIVESCOST INITIATIVESCOST INITIATIVES
• Network optimised for demand levels
• Fuel efficiency initiatives continue
• Employee numbers reduced by 5% since December 2008
• Continuous cost management
Employee NumbersEmployee NumbersEmployee NumbersEmployee Numbers
10,000
10,200
10,400
10,600
10,800
11,000
11,200
Jun 2007 Dec 2007 Jun 2008 Dec 2008 Jun 2009 Dec 2009
Full
tim
e eq
uiva
lent
em
plo
yee
s
13131313
THE TRAVEL EVOLUTION CONTINUES
• World-first Long Haul product from November
• Continue to evolve Tasman/Pacific operations
• More capacity and everyday low fares for
Domestic operation with A320 arrival
14141414
STRATEGIC PRIORITIESSTRATEGIC PRIORITIESSTRATEGIC PRIORITIESSTRATEGIC PRIORITIES
• Making the most of any demand upside
• Promotion and delivery of new long haul
product
• Managing fleet replacement programmes
• Maintaining our environmental leadership
position
• Further development of Airpoints programme
15151515
FINANCIAL MANAGEMENTFINANCIAL MANAGEMENTFINANCIAL MANAGEMENTFINANCIAL MANAGEMENT
• $1.1bn cash, down $0.5bn on June 2009
– debt hedge roll over
– debt payments
– progress payments
– fixed asset additions
• Gearing 46.0%, 1.0% increase on June 2009
• Average fleet age of 7.9 years
• Interim dividend of 3.0 cents per share
16161616
AIRCRAFT CAPEX COMMITMENTSAIRCRAFT CAPEX COMMITMENTSAIRCRAFT CAPEX COMMITMENTSAIRCRAFT CAPEX COMMITMENTS
1. Includes progress payments on aircraft and is net of sale and lease back agreements
2. Assumes NZD/USD = 0.7
3. Excludes capitalised maintenance of approximately $50m per annum and non aircraft capex
$NZm
0
100
200
300
400
500
600
700
2010 2011 2012 2013
17171717
FUEL HEDGING*FUEL HEDGING*FUEL HEDGING*FUEL HEDGING*
• The second half of FY10 is approx. 90% hedged with the average
effective ceiling at US$76 per barrel of WTI crude oil
• At current prices, the average Singapore Jet fuel price after
hedging would be US$85 per barrel for the second half of FY10
compared with US$75 in the first half
• The first half of FY11 is approx 53% hedged with the average
ceiling of US$82 and average floor of US$70 per barrel of WTI
crude oil
*Fuel hedge position as at 19 February 2010
18181818
CURRENCY HEDGINGCURRENCY HEDGINGCURRENCY HEDGINGCURRENCY HEDGING
• Operating cash flow exposure for the second half of
FY10 is 91% hedged at an average NZ$/US$ rate of 0.66
• The FY11 operating cash flow exposure is 69% hedged at
an average NZ$/US$ rate of 0.64
• US$466m of future capex commitments are hedged at
NZ$/US$ rate of 0.73 spot
19191919
OUTLOOKOUTLOOKOUTLOOKOUTLOOK
• Stabilisation and recovery of the trading environment
• Challenge remains to improve passenger numbers and
yields
• We expect a more normal seasonal balance this year with
the second half weaker than the first
• foreign exchange hedging loss of around $20 million* in
the second half compared to a gain of $24 million in the
first half
• We expect the business to remain profitable in the second
half
*Based on current exchange rates continuing
20202020
SUPPLEMENTARY INFORMATIONSUPPLEMENTARY INFORMATIONSUPPLEMENTARY INFORMATIONSUPPLEMENTARY INFORMATION
21212121
FINANCIAL OVERVIEWFINANCIAL OVERVIEWFINANCIAL OVERVIEWFINANCIAL OVERVIEW
* Normalised earnings before taxation after excluding the net impact of derivatives that hedge exposures in other financial periods
--3.0 cps3.0 cpsInterim Dividend
5.9 ptsN/A51.9%46.0%Gearing
(23%)$(322)m$1,417m$1,095mNet cash
46%$52m$113m$165mAdjusted operating cash flow
133%$32m$24m$56mNet profit after tax
269%$70m$26m$96mNormalised earnings*
(15%)$(365)m$2,419m$2,054mOperating revenue
Percentage
movement
Dollar
movementINTERIM 2009INTERIM 2010
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$26m$96mNormalised Earnings before Taxation
$(1)m-Interest rate derivatives
$(88)m$11mForeign exchange derivatives
$101m$1mFuel derivatives
Reverse net (gains) / losses on derivatives that hedge exposures in other financial periods:
$14m$84mEarnings before Taxation
INTERIM 2009INTERIM 2010
NORMALISED EARNINGSNORMALISED EARNINGSNORMALISED EARNINGSNORMALISED EARNINGS
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AIRCRAFT DELIVERY SCHEDULEAIRCRAFT DELIVERY SCHEDULEAIRCRAFT DELIVERY SCHEDULEAIRCRAFT DELIVERY SCHEDULE
5
3
-
FY14
-
4
-
FY15
122-Airbus A320
----Boeing 787-9
-23-Boeing 777-300ER
FY13FY12FY11FY10Aircraft Type
24242424
QUESTIONS