Air New Zealand 2018 Investor Day presentation

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.

The Company, its directors, employees and/or shareholders shall have no liability whatsoever to any
person for any loss arising from this presentation or any information supplied in connection with it. The
Company is under no obligation to update this presentation or the information contained in it after it has
been released.

Nothing in this presentation constitutes financial, legal, tax or other advice.

Forward-looking statements
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Agenda
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Key messages you should take away from today
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This year we have proven our resilience in the face of several external
challenges...
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...thanks to extraordinary dedication from our people, and supported by the
continued trust and loyalty of our customers
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• Highly engaged and committed people
− Driven to go above and beyond to get our
customers where they need to go
• #1 corporate reputation in New Zealand and
Australia
• A trusted brand that evokes national pride
• High levels of customer satisfaction
• Loyalty enhanced by ~2.9 million Airpoints
TM
members*
− New Zealand’s largest and most valuable
loyalty programme
− High levels of member engagement
* Airpoints
TM
membership as at 30 May 2018.

2018 will be another strong year, despite absorbing over $100 million
in higher fuel expense
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1
Assumed average jet fuel price for the 2018 financial year.
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2017 Annual Shareholder Review.
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2018 Interim Financial Report.

We are seeing competition in some of our markets start to rationalise
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Too early to predict impact of fuel on 2019, but we are deploying multiple
levers to adjust our business
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We will continue to perform well due to the strategic investments we have
made over the long-term
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Those structural investments have resulted in earnings stability that has
significantly outperformed our APAC peers...
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...and have achieved strong returns for our shareholders through the cycle
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Megatrends are informing how we shape our business for the future
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While maintaining focus on the mission that aligns our people, our customers
and our shareholders
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Macro environment is supportive of continued strong demand for
New Zealand tourism...
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Millions of visitors

...and our business model is tailored to win the New Zealand market while
driving strong profitability
Domestic
Tasman & Pacific Islands International Long-haul
• ~80% market share; unmatched network
offering against sole LCC competitor
• Main domestic routes utilise A320s;
turboprops service regional routes
• Single class cabins only:
− Longest sector is ~2 hours
− Shortest sector is ~30 minutes
• Routes utilise A320/321 jets and wide-
body aircraft (B777s / B787-9s)
• Able to nimbly adjust capacity to reflect
changing demand
• Passenger fares vary from pure
economy (“Seat”) to Business Premier
− Longest sector is ~11 hours
− Shortest sector is ~2 hours

• ~40% market share of inbound travel
(includes alliance partners)
• Routes utilise Boeing wide-body aircraft
• Full service premium leisure focus,
complemented by efficient aircraft
configuration
− Longest sector is ~16 hours
− Shortest sector is ~9 hours
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Sustaining Air New Zealand’s success for the long-term
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Our current success is the result of alignment and execution of a
number of strategic initiatives made 5 to 10 years ago



Where we are today

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An award-winning organisation with 12,000 people aligned to execute our
strategic priorities
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A world-class culture is the foundation of our business
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Our strategy starts with knowing our people and what drives them
Employee data as at 31 December 2017.
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Attracting and developing top talent is core to our performance
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Investments in talent development have paid off in key areas
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Our talent development approach and programmes reflect the varying
needs of our diverse workforce
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As a result, our people are actively engaged and motivated to provide an
excellent service for our customers
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High Performance Engagement was introduced to drive stronger
relationships with our union partners

High Performance Engagement
(HPE) aspires to ensure:

• Employees have direct and
substantive involvement in problem
solving, initiating improvements and
the decision making process
• Collaborative relationships exist
throughout the organisation
• Utilising interest-based problem
solving methods
• Understanding that Air New Zealand
respects and supports the role of
unions in the workplace
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HPE has driven significant benefits since its inception
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Strategic employee relationships at work: ratification of 9-year pilot
agreement
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• In May 2018 Air New Zealand and NZALPA (the union that
represents the majority of our pilots) entered a nine-year
strategic partnership
– Structured as three tranches of three-year Collective
Employment Agreements
• This provides a framework for pay settlements across the
three Collective Employment Agreements
− A commitment to work together on business issues and
improvement initiatives
• The strategic partnerships are the result of the parties wanting
to build stronger and more collaborative relationships to
benefit the company, unions and pilots
• Framework provides long-term stability in terms of union and
industrial relations, and labour cost

We are continuously working to improve the employee experience for current
and future Air New Zealanders
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A culture that believes the best customer experiences start with the best
employee experiences
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Evolution of our network
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2010

Evolution of our network
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Routes operated by Air New Zealand
Revenue share alliance partner
2014

Evolution of our network
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Routes operated solely by alliance partners
Routes operated by Air New Zealand
Chicago and Taipei services will commence Nov 2018
Revenue share alliance partner
Indicates a code share partner
2018

Disciplined route assessment is an integral part of our network planning
• Regular evaluation of route performance against
strategic objectives and profitability targets
• Market development plans form a critical
component of route assessment
• Routes in the “review” quadrant at any given time
have a turnaround plan with specific timelines
• This focus has delivered a number of changes to
our network
– Markets exited
– Capacity added
– Capacity re-allocated
– Seasonalisation

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Medium-term outlook for network growth of 5% to 7%
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A compelling domestic business with strong demand fundamentals
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Looking at larger gauge aircraft to support future domestic jet growth
Benefits of deploying larger aircraft on
select domestic jet routes:

• More efficient growth of premium
domestic traffic during peak demand
• Cost advantage over our LCC
competitor
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For example, the A321 NEOs on order for the trans-Tasman flights will
be configured with ~25% more seats
Current jet aircraft servicing domestic trunk routes

Investment in our Australian sales infrastructure and marketing has
strengthened our Tasman business
Point-to-point

Connecting via Auckland

• Invested in Australian sales teams with focus on
state-by-state presence
• Improved brand awareness with customers and
trade
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• Increased wide-body flying to support North and South
American travel via Auckland
• Launched “A Better Way to Fly” campaign targeting
awareness of our long-haul product and value proposition
– ~45% of Australians connecting in Auckland travel on to
Buenos Aires, ~20% travel on to Houston
Chicago service will commence Nov 2018
Routes currently serviced by Air New Zealand

Opportunity to independently grow Tasman market further and deliver a
consistent premium customer experience
• Exit from Virgin Australia Alliance effective 27
October 2018
New routes from December 2018:
– Queenstown – Brisbane
– Wellington – Brisbane
Additional capacity growth from 28 October 2018:
– Auckland - Sydney
– Christchurch – Melbourne
– Christchurch – Brisbane
• Beginning 28 October 2018, code sharing with
Qantas on respective domestic routes within
New Zealand and Australia

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Routes Air New Zealand will operate from Dec 2018
Routes Air New Zealand currently operate

An international network strategy focused on driving profitable growth
between New Zealand and the Pacific Rim
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Strong alliance partnerships provide meaningful support to long-haul growth
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New Auckland – Chicago route will stimulate new demand from the US
Why Chicago?

• Stimulate new and significant
catchment areas of demand in the
US east coast
• Help drive increased connecting
flows to United’s domestic network
• Accelerate growth by leveraging
traffic to/from Australia via Auckland

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Taking our alliance relationship even further – growing Singapore
Alliances help us grow certain
markets faster and more efficiently
• Advancing our partnership with Singapore
Airlines to seasonalise a new service
• Growing with a third daily service
commencing Nov 2018
– Singapore Airlines will fly Nov – Mar
(Northern Winter)
– Air New Zealand will fly Apr – Oct
(Northern Summer)
• Effective utilisation of aircraft for both
partners
• Allows better timing for customers
connecting to New Zealand for European,
South-east Asian and Indian traffic, as
well as to Buenos Aires
2006 2018
Together, both carriers have been able to grow
the market, with 3 daily services via Auckland, a
direct Christchurch service and an indirect
Wellington service
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Both carriers operated separate and
competing services

Our approach to new market development –Taipei
Auckland – Taipei service will launch
November 2018 with up to 5 services/week

Taipei aligns with key market principles used in
determining new route opportunities:
• Established demand via Australia
• Relatively wealthy population with a
propensity for holiday travel
• Long-standing ties between New Zealand
and Taipei resulting in attractive VFR market
• Sector length of ~11 hours allows for
efficient utilisation of aircraft
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Innovation will reshape how we grow our network in the future
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Fleet planning approach considers short, medium and long term operational
and financial impact
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Our new A321/320 NEOs will be operational from late 2018*
Single cabin
214 seats
7 aircraft
4 purchase / 3 lease

Large markets across
Tasman & Pacific
Island network
(e.g. Auckland-Melbourne,
Auckland-Sydney)
Single cabin
165 seats
6 aircraft
4 purchase / 2 lease

Smaller markets
across Tasman &
Pacific Island network
(e.g. Wellington-Sydney,
Christchurch-Melbourne)
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* Refers to calendar year.

A phased and efficient plan to grow our Domestic jet network
Step 1
• Existing leased A320 aircraft
currently on Trans-Tasman will be
re-deployed to service Domestic
jet network
– Resulting in capacity growth
through additional 3 aircraft

Step 2
• Arrival of three A321NEO aircraft
will replace these older leased
A320 aircraft, which will be
subsequently returned
– Resulting in capacity growth
through up-gauging
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~

Making strategic choices to guide our widebody fleet selection
• Will replace eight B777-200
aircraft between 2023 and
2025 financial years


• Candidate aircraft:
– B787 Family
– B777X Family
– A350 Family


• Balancing cost efficiency vs
fleet flexibility

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Wide-body replacement discussions with OEMs are underway
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Over the next 9 months we expect to adjust the aircraft capex forecast to
reflect our growth priorities
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Improving CASK* (ex fuel and FX) trend
Our approach to cost management has demonstrated impressive results
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Runway for continued cost improvement in the 2018 to 2020 period
Targeting low-single digit nominal
CASK improvement
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2019 fuel costs will be a headwind which we are managing through several
levers – including hedging
• Our hedging philosophy is focused on
providing the business with time to
adjust
− Maximum tenor of 12 months
– Primarily utilise Brent Crude
collars
• Current hedge profile for first half of
the 2019 financial year is close to
maximum policy level of ~80%
* Per fuel hedge position as at 8 June 2018; no material hedges in place for Q4 FY2019.
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76%
75%
35%
47%
FY19 Q1
Jul-Sep
FY19 Q2
Oct-Dec
FY19 Q3
Jan-Mar
FY19
Fuel hedge position*
(Hedged volume as a proportion of estimated consumption)
Average US$ Ceiling price
~$66 ~$71 ~$75 ~$70

Internal alignment of ROIC as a short-term financial performance metric
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Our capital allocation priorities are balanced to support sustainable
earnings and shareholder returns
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Key messages we would like to leave with you
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Christopher has been Chief Executive Officer since
January 2013 having previously held the role of Group
General Manager International Airline for almost two
years. Prior to joining Air New Zealand, Christopher
was President and Chief Executive Officer at Unilever
Canada. This was one of several senior leadership
roles he held during an 18-year career at the multi-
national that saw him work in roles in Europe, North
America and Asia/Pacific.
Jeff joined Air New Zealand in 2000 and was
appointed Chief Financial Officer in January
2018. Prior to this position he held a range of
senior commercial and finance roles within Air
New Zealand. Prior to joining Air New
Zealand, Jeff spent 6 years as a management
consultant, working in New Zealand, Europe,
Asia and the United States.
Leila joined Air New Zealand in 2015. She was
most recently Director of Investor Relations for a
multinational industrial company based in the
United States. Prior to that role, Leila had 3 years
experience in treasury management, and over 10
years experience in the financial services
industry, working in the United States.
Jodie joined Air New Zealand in 2012 and was
appointed Chief People Officer in February 2016.
Prior to this she held a number of senior HR roles
within Air New Zealand. Prior to joining Air New
Zealand, Jodie spent 16 years in London, working at
KPMG in leadership and management consultancy
roles across a range of industries. Jodie began her
career in New Zealand, working for New Zealand
Treasury and NZ Dairy Co-operative.
Nick joined Air New Zealand in May 2003 and was
appointed Chief Strategy, Networks and Alliances
Officer in October 2017. Nick has worked across a
number of functions and regions in the business,
beginning his Air New Zealand career in Finance,
before holding senior roles in Loyalty, Sales and
Commercial areas across Australia, China, America
and New Zealand. Prior to joining Air New Zealand,
Nick spent time in the United Kingdom and Canada,
working in finance roles within the banking and
media industries.

Glossary of terms
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Available Seat Kilometres (ASKs)
Number of seats operated multiplied by the distance flown (capacity)
Cost/ASK (CASK)
Operating expenses divided by the total ASK for the period
Net Debt
Interest-bearing liabilities and bank overdrafts, less bank and short-term deposits, net open derivatives
held in relation to interest-bearing liabilities, interest-bearing assets and non-interest bearing assets,
plus net aircraft operating lease commitments for the next twelve months multiplied by a factor of seven
Pre-Tax Return on Invested
Capital (ROIC)
Earnings Before Interest and Taxation (EBIT), and aircraft lease expense divided by three, all divided by
the average Capital Employed (being Net Debt plus Equity) over the period
Total Shareholder Return (TSR)
The movement in share price, and assuming that all dividends are reinvested in shares on the ex-
dividend date throughout the period
The following non-GAAP measures are not audited: CASK, Net Debt, ROIC and TSR. Amounts used within the calculations are derived where
possible from the audited 2017 Group financial statements and the Five Year Statistical Review contained in the 2017 Annual Financial Results. The
non-GAAP measures are used by management and the Board of Directors to assess the underlying financial performance of the Group in order to
make decisions around the allocation of resources.

Resources
Contact information
Email: investor@airnz.co.nz
Share registrar: enquiries@linkmarketservices.com
Investor website: www.airnewzealand.co.nz/investor-centre
Monthly traffic updates: www.airnewzealand.co.nz/monthly-operating-data
Quarterly fuel hedging disclosure: www.airnewzealand.co.nz/fuel-hedging-announcements
Corporate governance: www.airnewzealand.co.nz/corporate-governance
Sustainability: https://www.airnewzealand.co.nz/sustainability
Where to find more information about
Air New Zealand
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