Air New Zealand Limited December 2000 Interim Result Presentation Date : 20 February 2001
Jan 22, 2016
Air New Zealand Limited
December 2000 Interim Result Presentation
Date : 20 February 2001
2
Result Overview
3
FY01 Interim Result Highlights
$m H1-01 H1-00 %
Revenue 4,311.5 1,803.9 139.0
EBITDRA 578.4 316.9 82.5
Pre Tax Op (Deficit)/Surplus (1.1) 76.8 (101.5)
Unusual Charges (31.8) 50.2 (163.3)
Associates Contribution 7.2 51.9 (86.1)
Tax Benefit (29.5) 51.6 (157.1)
Net Profit After Tax:
- Excl. Unusuals 24.8 83.4 (70.3)
- Incl. Unusuals 3.8 127.2 (97.0)
Cash flow from operations 189.1 157.9 19.8
4
Balance Sheet
As at 31 Dec 00 30 Jun 00 % 31 Dec 99
Net Debt (m) 3,147.1 3,107.6 1.3 1,186.9
Gearing (%) 62.3 66.2 (5.9) 34.7
Gearing incl. Leases (%) 76.5 75.7 1.1 56.2
Return on Ave Equity (%) 0.4 8.3 (95.6) 11.7
NTA/Share 2.72 2.46 10.6 3.58
DPS (C) 4.0 9.0 n/a 6.0
5
Results in Detail
6
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$110.7m— Other benefits
• All whilst integration is occurring and without a C.E.O.
7
Inbound Growth Continues, Outbound Recovering
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(%
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NZ Arrivals Aust Arrivals NZ Outbound Aust Outbound
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Australian Domestic Passenger Market
0
5,000,000
10,000,000
15,000,000
+ 7.2%
Australian Passenger Growth: 2000 v. 1999
Jun-Nov 1999 Jun-Nov 2000
9
Air New Zealand: International Airline(Excluding Tasman)
H1-01 H1-00 %
ASKs (m) 10,823 10,247 5.6RPKs (m) 8,086 7,242 11.7Passenger Load Factor (%) 74.7 70.7 5.7
Passenger Revenue ($m) 890.3 711.8 25.1
Yield/RPK 11.0 9.8 12.2
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Australasian Market(Including Aust & NZ Domestic Trunk and Regional, & Trans-Tasman)
H1-01 H1-00* %
ASKs (m) 14,320 13,377 7.0RPKs (m) 10,324 9,825 5.1Passenger Load Factor (%) 72.1 73.4 (1.8)
Passenger Revenue ($m) 2,337.1 2,145.6 8.9
Yield/RPK 22.6 21.8 3.7
Yield includes benefit of NZ$ depreciation against AU$. Adjusting for thisbenefit, Yield/RPK is 21.7 (0.5% decrease)
*Includes pro-forma Ansett Domestic results for H1-00
11
Ansett International (49% owned)
AU$ H1-01 H1-00 % change
ASKs (m) 2,578 2,653 (2.8)RPKs (m) 1,859 1,975 (5.9)Passenger Load Factor (%) 72.1 74.4 (3.1)
Passenger Revenue ($m) 146.8 141.1 4.0
Yield/RPK 7.9 7.1 11.3
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Revenue from Other Businesses
Total Other Revenue of $1,084.1 million:
• Cargo Revenue $319.4m
• Contract Services Revenue $159.8m
• Other Revenue - $604.9m— includes loyalty revenue, travel & tours revenue, in-flight sales etc
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Operating Expenditure by Category
Labour28%
Sales & Marketing18%
Other12%
Maintenance & Overhaul
9%
Aircraft & Traffic8%
Fuel17%
Pax Services8%
(23%)
(10%)
(12%)
(11%)
(15%)
(20%)
(11%)
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Operating Costs Impacted by Fuel & FX
10
12
14
16
Op Cost/ASK Op Cost/ASK ExclFuel Price Variance
Op Cost/ASK ExclFuel & FX Variances
Ce
nts
/AS
K
14.8
14.3
13.7
Costs exclude net interest, depreciation, amortisation, operating lease costs and abnormal items.
15
Group Fuel Position (Including Ansett International)
H1-01 H1-00* %
Total Consumption (m gallons) 303.7 285.1 6.5
USc per Gallon 94 73 28.9
Total Cost (US$m) 285.9 208.3 37.3
Total Cost (NZ$m) 677.6 391.9 72.9
Includes savings from hedging of US$27.8m (NZ$74.4m)
*Includes pro-forma Ansett for H1-00
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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
18
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
Strategies
20
J Dell
Chief Financial Officer
L Doolan
GGM Corp, Govt & Int
Affairs
A Paterson
EGM Commercial
T Jensen
GGMOps
Technical
I Diamond
GGM Ops Services
G Lilly
GMAir NZ Int
G Kingshott
GM AN Int
P Elmsly
GMCargo
A Miller
GMAnsett
Domestic
N Thompson
GM Air NZDomestic/
Trans Tas & SWP
R Rosalky
GM Aust Regional Airlines
B Fitzgerald
GM Terminal Services
B Jacobson
GM ANNZES
Gary ToomeyManaging
Director & CEO
Gary ToomeyManaging
Director & CEO
NZ
C Tremain
GGM HR & Org Change
NZ
G Frazis
EGM StrategyAust
NZAust Aust Aust AustNZ NZ NZ
NZAust
NZ
Aust
NZ
M Flanagan
GGMAN/NZ
Integration NZ
TBA
EGM Australasia
Aust
Aust
Current Management Structure...
21
Business Performance Enhancement
Ansett International
NZ
NZ
Finance
Corp, Govt & Int Affairs
NZ
HR & Org Change
Strategy, Network & Marketing
t
Sales & Distribution Customer Service
Operations WorldwideAirport 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...
22
Ansett International
NZ
NZ
A MoroneyCFO
& SVPFinance
NZ
L DoolanSVP Corp, Govt & Int
Affairs NZ
C Tremain SVP HR & Org
ChangeNZ
K TurnbullSVP Business Performance Enhancement
NZ
G FrazisSVP Strategy,
Network & Marketing
Aust
A. MillerSVP
Sales & Distribution
Aust
L GrantSVP
CustomerService
Aust
T Jensen
SVPOperations
Aust
B Fitzgerald
SVP Worldwide
Airport Svces Aust
B Jacobson
SVPANNZES
NZ
TBA
SVPVentures
NZ
G Toomey
Group President& CEO
G Toomey
Group President& CEO
No Change
Responsibilities Changed Somewhat
New Role
49% owned
Executive Management
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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.
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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
25
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