Air New Zealand Investor Update (Op Stats) – May 2020

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Contents
• May 2020 traffic highlights
• Operating statistics table
• Recent market announcements and media releases




May 2020 highlights










* % change is based on numbers prior to rounding.
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Reported RASK (unit passenger revenue per available seat kilometre) is inclusive of foreign currency impact, and
underlying RASK excludes foreign currency impact.



Group traffic summary
20202019% *2020+2019% *
Passengers carried (000)671,281(94.8%)13,09416,163(19.0%)
Revenue Passenger Kilometres(m)79
2,684(97.1%)29,23935,149(16.8%)
Available Seat Kilometres (m)2303,187(92.8%)35,77741,922(14.7%)
Passenger Load Factor (%)34.2%84.2%(50.0 pts)81.7%83.8%(2.1 pts)
Ye a r-to-da te RASK
1
+
Group(0.2%)(0.9%)
Short Haul1.6% 1.6%
Long Haul(0.7%)(2.2%)
MAY
% change in reported RASK
(incl. FX)
% change in underlying RASK
(excl. FX)
FINANCIAL YTD
29 June 2020

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Operating statistics table



GroupM AYFINANCIAL YTD
2020
2019% *20202019% *
Passengers carried (000)671,281(94.8%)13,09416,163(19.0%)
Revenue Passenger Kilometres(m)792,684(97.1%)29,23935,149(16.8%)
Available Seat Kilometres (m)2303,187(92.8%)35,77741,922(14.7%)
Passenger Load Factor (%)
34.2%84.2%(50.0 pts)81.7%83.8%(2.1 pts)
Short Haul Total
M AYFINANCIAL YTD
20202019% *20202019% *
Passengers carried (000)631,126(94.4%)11,40114,179(19.6%)
Revenue Passenger Kilometres(m)40
1,168(96.6%)12,57715,667(19.7%)
Available Seat Kilometres (m)1111,389(92.0%)15,60918,922(17.5%)
Passenger Load Factor (%)36.0%84.1%(48.1 pts)80.6%82.8%(2.2 pts)
DomesticM AYFINANCIAL YTD
20202019% *20202019% *
Passengers carried (000)59855(93.2%)8,41610,488(19.8%)
Revenue Passenger Kilometres(m)29
431(93.2%)4,3535,444(20.0%)
Available Seat Kilometres (m)60500(88.0%)5,3266,476(17.8%)
Passenger Load Factor (%)49.0%86.3%(37.3 pts)81.7%84.1%(2.4 pts)
Tasman / PacificM AYFINANCIAL YTD
2020
2019% *20202019% *
Passengers carried (000)5271(98.2%)2,9853,690(19.1%)
Revenue Passenger Kilometres(m)
10
737(98.6%)8,22310,223(19.6%)
Available Seat Kilometres (m)51889(94.3%)10,28312,445(17.4%)
Passenger Load Factor (%)20.5%82.9%(62.4 pts)80.0%82.1%(2.1 pts)
Long Haul TotalM AYFINANCIAL YTD
20202019% *20202019% *
Passengers carried (000)4155(97.6%)1,6931,984(14.7%)
Revenue Passenger Kilometres(m)39
1,516(97.4%)16,66219,482(14.5%)
Available Seat Kilometres (m)1191,798(93.4%)20,16923,000(12.3%)
Passenger Load Factor (%)32.6%84.3%(51.7 pts)82.6%84.7%(2.1 pts)
Asia / Japan / Singapore +M AYFINANCIAL YTD
20202019% *20202019% *
Passengers carried (000)171(98.9%)733833(12.0%)
Revenue Passenger Kilometres(m)7629(98.9%)6,5097,418(12.2%)
Available Seat Kilometres (m)
40764(94.7%)8,0508,792(8.4%)
Passenger Load Factor (%)17.9%82.4%(64.5 pts)80.9%84.4%(3.5 pts)
Americas / UKM AYFINANCIAL YTD
20202019% *20202019% *
Passengers carried (000)384(96.4%)9611,151(16.6%)
Revenue Passenger Kilometres(m)32887(96.4%)10,15312,064(15.8%)
Available Seat Kilometres (m)
791,034(92.4%)12,11914,208(14.7%)
Passenger Load Factor (%)40.2%85.8%(45.6 pts)83.8%84.9%(1.1 pts)
Air New Zealand operates primarily in one segment, its primary business being the transportation of passengers and cargo on an integrated
network of scheduled airline services to, from and within New Zealand. The following operational data and statistics is additional
supplementary information only.
* % change is based on numbers prior to rounding

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Market Announcements
(during the period 2 June to 26 June 2020)

Air New Zealand provides 2020 earnings guidance 18 June 2020

Air New Zealand has provided an update on its earnings expectations for the 2020 financial year.

As disclosed to the market on 9 March 2020, Air New Zealand suspended earnings guidance for the 2020
financial year due to the significant uncertainty surrounding the duration, scale and impact of the Covid-19
pandemic. The New Zealand Government’s recent move to Alert Level 1 has enabled the airline to slowly
restart the Domestic network, however revenue and earnings are significantly lower than expected prior to
the outbreak of Covid-19.

As the Company nears the end of its financial year on 30 June 2020, it is expecting to report an underlying
loss before Other Significant Items and taxation of up to $120 million for the 2020 financial year. This
underlying earnings guidance excludes the impact of fluctuations in foreign currency rates for the month of
June, as well as any fuel price changes for the remainder of the period, which are not expected to be material
given the reduced level of flying.

In addition to the $120 million underlying loss, a number of Other Significant Items will impact the 2020
financial results. On 26 May 2020, the airline disclosed its expectations for these items for the 2020 financial
year. These expectations are summarised in the table below and remain unchanged from the previous
announcement subject to the inclusion of the non-cash gain on unhedged foreign currency debt as discussed
below.

The Company is now in a position to provide further information on the impact of unhedged foreign currency
debt resulting from the de-designation of revenue hedges due to a decline in expected foreign currency
revenues. The non-cash impact of currency movements on unhedged foreign currency debt for the 2020
financial year was described in the airline’s 26 May disclosure. However due to the translation risk related to
the revaluation of these balances each month, a dollar impact could not be estimated reliably and therefore
was not was not provided at that time. Assuming current exchange rates, a non-cash gain of $70 million is
expected to be recognised within Other Significant Items in the 2020 financial year, however this will change
if exchange rates move materially before the end of the financial year.

Other Significant Items impact for the 2020 Financial Year
Interim impact
(as previously reported in the
2020 Interim Financial
Results)
Estimated full year impact
(total expected to be reported in
2020 Financial Results subject to
audit process)
De-designation of hedges Nil ($85 million to $105 million)
Aircraft impairment charge Nil
($350 million to $450 million)
non-cash charge
Reorganisation costs $13 million charge ($140 million to $160 million)
Gain on sale from airport slots Nil Approximately $21 million gain
Disestablishment of fair value
hedges
($46 million)
non-cash charge
No change from 2020 Interim
Financial Results total

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FX Revaluation of unhedged
foreign currency debt
Nil
~$70 million
non-cash gain based on current
foreign currency rates

It should be noted that these estimates are subject to sign off by Air New Zealand’s external auditors and the
Board.


Air New Zealand responds to media speculation 11 June 2020

Air New Zealand notes the recent speculation included in the Australian Financial Review
regarding Air New Zealand currently considering various funding options, including a potential
capital raising.

Air New Zealand currently has a $900 million facility from the Crown which has yet to be drawn.
The company continues to assess its capital structure and the options available to it, including
taking advice from professional advisers as required.

Air New Zealand will provide any further updates to the market as required in accordance with its
continuous disclosure obligations.

Air New Zealand CEO - next 800 days 8 June 2020

On Friday afternoon (5 June 2020) Chief Executive Officer Greg Foran sent an email to customers and staff
of Air New Zealand, providing an update on a plan for the next 800 days.

Please note that this email is not intended to provide a forecast or guidance on revenue or earnings for the
2020 financial year.


Kia ora,

I recently completed my first 100 days with our incredible airline. It’s an understatement to say it hasn’t gone
entirely as expected. However, it has proven to me that the care, compassion and heart of our people is
everything I expected and more. Before our lockdown and even through it, I have experienced the wonderful
culture that makes Air New Zealand very special.

Today we are sharing with you the plan and timeline to get Air New Zealand back on its feet. Make no mistake
this is going to be a hard journey as we create our own playbook for the airline to emerge even better than
before. Over the next two years we will Survive, then Revive and finally Thrive. We have set the Annual
Results announcement in late August 2022, which is in around 800 days’ time, as the target date for Air New
Zealand to report we are starting to earn healthy profits again even though we may be only 70% of our pre-
COVID-19 size.

We can see an Air New Zealand of 2022 that is flying about 13 million customers annually versus almost 18
million pre-COVID-19. We will be highly efficient and operate fewer wide body aircraft. The good news is that
Air New Zealand could be more profitable in the future than before, allowing us to start reinvesting in our
customer experience, to share the rewards with Air New Zealanders via consistent profit share bonuses and
to distribute dividends to our shareholders.

If we fast forward to 2022, our vision is a successful airline that:

• Takes care better than any other airline on earth
• Is operationally efficient and excellent at all we do
• Enables Kiwis to fly again, after all, we are a nation of great explorers
• Plays a critical role in helping New Zealand’s economy get back on its feet
• And is seen as the carrier of the most revered nation on earth in a post-COVID-19 world.

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All supported by a strong performance-oriented culture with employee engagement which is amongst the best
in our industry.

But in order to get there we still have a tough road ahead. We must first Survive, then Revive and finally
Thrive.

Survive

The Survive platform of our plan is likely to run until the end of August this year. We have to cut costs across
the business and already, we have sadly said farewell to 4,000 Air New Zealanders.

Survive is a whole-of-company approach and no area is immune. We have had to start radically overhauling
our cost base. From grounding our 777 fleet to deferring expenditure on new aircraft, hangars and parking;
seeking savings across contracts in our supply chain and leases for aircraft; Executive roles, office space and
even company vehicles. We are leaving no stone unturned. Our wage bill is down by a third now but our
revenue has fallen by more than two thirds. We need to balance the scales further.

Today, we start Phase 2 to remove around $150 million additional from our wages bill as part of a suite of
other changes to our cost base to put Air New Zealand in the shape to be able to meet our 800-day ambition
for August 2022.

As soon as possible we will be engaging with you and your unions as we investigate how best to reduce the
labour bill. We are open to explore all options with unions that help meet our cost saving goals, but I do want
to be clear that we need to brace ourselves for more discussions around leave without pay, reduced hours,
job share, voluntary exits with redundancies as the last option. Thinking this through carefully will be important
so that as the airline regains more customers and routes we are ready to take that volume on. I am really
sorry we are in a situation of needing to reduce our wages bills further, but I believe this is what we need to
do with some urgency to get through the Survive phase.

As you know Air New Zealand finds itself in a predicament unlike any it has faced before. We’ve had
challenges for sure, but never one where our revenue has effectively evaporated from $6 billion last year to
almost nothing for a couple of months. Revenue will slowly return but in the next financial year it is likely to
be less than half what we used to earn. This has put our finances under great stress.

In this Survive platform we must develop new ways of working, become more flexible and adaptive to what
we are facing and with it we will simply stop doing some activities. If we get this right, this will be an exciting
period of reinvention to help set us up for the next phase - Revive. Some of Air New Zealand’s greatest
innovations came out of the dark days of Ansett and the Global Financial Crisis – and we’ll do all we can to
encourage that same level of creativity and innovation again.

Revive

We expect to spring into the Revive section of our journey from 1 September, if we have completed the
Survive platform and reduced our cost base to match the much smaller business, we are than pre-COVID-
19. We are also hopeful that around this time the nation will well and truly have returned to Level 1 and that
Tasman and Pacific Island flying could be returning for leisure and business travellers.

However, we are not factoring a return to long haul flying of any note until next year. We believe that until
there is a vaccine, effective treatment or elimination of the disease in key markets, the New Zealand
Government will not fully open its borders for growth in long haul air travel.

That said one glimmer of hope of late has been the extra cargo movements, which are helping the economy
and our cashflow as well as the heartening support we are seeing in domestic travel.

Nevertheless, the reality is that during our Revive period we will be a much smaller airline, growing gradually
as routes open and customer confidence returns. We will use this phase to develop new products and

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services, while creating innovative ways to encourage Kiwis to travel for business and leisure. Importantly,
digital will be at the core of all we do. Air New Zealand’s customer experience of tomorrow must mirror that
which consumers expect of a leading digital company, otherwise, we will not be relevant, and we’ll fail to meet
our full potential.

So, Thrive

We, like many of you, are determined to get through the next 800 days, so that by August 2022 we hit the
Thrive section of our plan, when we will be a digital company that monetises through aviation and tourism in
a very sustainable manner. This will be a time where our customers, stakeholders, shareholders and all Air
New Zealanders benefit from the hard work and innovation of the Survive and Revive phases of our journey.

As we Thrive we will not focus on size, but on quality. We will be smaller, flying fewer routes but we will not
change our outstanding reputation for care, compassion and heart. The pride that comes with being our
country’s national carrier. These values stand us apart. We will also lead in areas relating to climate change,
particularly carbon emissions.

Our airline will operate with precision and humanity. Our domestic jet and regional operations are highly
efficient and need to be for our business customers. The Tasman and Pacific Islands offer the best value
option for all our customers. International is focused on an excellent product offering and delivery for our
business and premium leisure customers. Supported by best in class digital products across all fleets, allowing
for seamless customer and staff interaction which improves the experience and reduces our costs. We will
not only recognise our customers but understand them and know how they feel, which will allow us to offer
world class service always and to exceed expectations wherever it matters most in their journey with us. If we
can nail all that, I am hopeful we may even be a bit bigger than the 70% of our former size we are preparing
for. And we owe it to all the Air New Zealanders who have left us through redundancy, or who are on furlough,
or who are on reduced hours, to achieve that and to get them back into the airline full time. They are our
whānau.

Every airline in the world has been stunned by the COVID-19 pandemic. This event is not a hiccup; very few
airlines will return to the former ways of working. The survivors will be more focused, lower cost and provide
better customer service. We want to thrive in this environment, realising our ambition to take care better than
any other airline on earth. Together, we can make this happen.

Thank you for all you do and your ongoing support of our airline and each other in this difficult time.

Ngā mihi nui,
Greg


Media Releases
(during the period 2 June to 26 June 2020)

Air New Zealand adds extra capacity for school holidays 18 June 2020

Air New Zealand’s 787-9 Dreamliner will take to the skies over New Zealand during the school holidays.

The airline is adding more capacity to its domestic schedule for the July school holidays, with the 302-seat
Dreamliner to operate between Auckland and Christchurch during this time.

Air New Zealand General Manager Networks Scott Carr says the Dreamliner will operate 16 return passenger
services between Auckland and Christchurch between 1 July and 19 July, reflecting almost 10,000 additional
seats on this route.

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“We’ll also add capacity of all of our other main trunk routes – from Auckland to Wellington, Dunedin and
Queenstown, as well from Wellington to Christchurch, Dunedin and Queenstown through either extra flights
or by upgauging to larger aircraft.

“When it comes to our Auckland-Queenstown route, we’ll be offering even more capacity over the school
holidays than we did during the same time last year through upgauging 140 return services from our A320 to
our larger A321neo aircraft between 29 June and 26 July. This is great news for tourism and those wanting
to hit the slopes.

“We’ll also be adding a number of extra services on our regional routes in the week leading up to the school
holidays including to and from Blenheim, Dunedin, Gisborne, Hamilton, Invercargill, Kerikeri, Napier, New
Plymouth, Nelson, Palmerston North, Rotorua and Tauranga.”

The airline is currently working on additional flights for its regional ports for during the school holidays.

Air New Zealand to resume Auckland-Shanghai service 16 June 2020

Air New Zealand has resumed passenger flights between Auckland and Shanghai, with passengers subject
to government border controls in each direction.

Pre-Covid-19 Air New Zealand operated seven services per week on its Auckland-Shanghai route, however
the route has been suspended since early February due to the outbreak.

Air New Zealand General Manager Networks Scott Carr says the airline will operate one return service per
week on its Auckland-Shanghai route with the first flight departing Auckland on 22 June.

“Shanghai was the first route to be impacted by the Covid-19 pandemic and government travel restrictions,
so it’s pleasing to be able to resume operating passenger services on this route from Monday.”

“While we have been operating some dedicated cargo flights between Auckland and Shanghai, it’s great to
be able to now open these services up for passengers to book and we expect Chinese nationals in New
Zealand wanting to return to China, or New Zealanders in China seeking to return home, will look to use these
services.”

The schedule for Auckland-Shanghai is as follows:

Date Flight No. Aircraft Departs Arrives Frequency
From 22
June
NZ289 787-9 Dreamliner Auckland
11:00pm
Shanghai
7:15am
Monday
From 24
June
NZ288 787-9 Dreamliner Shanghai
2:15pm
Auckland
5:45am
Wednesday

The airline announced last week it will resume services to Narita, Tokyo from 25 June with one return service
a week to operate on that route. Customers travelling on this service will also be subject to government border
controls.

What to expect from Air New Zealand at Alert Level 1 8 June 2020

Air New Zealand has shared what customers can expect while travelling with the airline when the country
moves to Alert Level 1.

Air New Zealand General Manager Customer Experience Nikki Goodman says Alert Level 1 will mark a return
to normal with regards to domestic flying.

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“Social distancing is no longer a requirement, unaccompanied minors will once again be able to travel
domestically, and customers will be able to travel around New Zealand again with pets as checked baggage.
“Customers are still encouraged to check-in for their flight via the Air New Zealand mobile app
to save time
at the airport. We recommend allowing plenty of time to process through the airport as we expect to see more
people travelling at this level. As we’ve adapted our processes to support customers through Alert Level 2,
we’ve gained some great insight into changes that we will adopt going forward, and customers can expect to
see some of these as they travel.

“Our domestic lounges are open except for Auckland Domestic, which is undergoing refurbishment, and
Wellington and Christchurch regional lounges which remain closed at this stage. Hot food will be available
again and served to our customers, while other food will be pre-portioned and available at the buffet. Inflight,
customers would have noticed our food and beverage service resumed under Alert Level 2 with the exception
of Koru Hour. We are working closely with our partners and suppliers to bring this back over the coming
weeks.

“As always, our top priority is ensuring we keep our customers and people safe, so high touch surfaces on
board and in our lounges and airport spaces will continue to be cleaned regularly. Our jet aircraft are fitted
with hospital-grade air systems that filter out viruses, and hand sanitiser will continue to be available across
the airport, kiosks, service desks and all our aircraft for customers and staff to use as they wish.

“As we get back into more frequent flying, please be patient with us, as our contact centre and customer care
teams continue to receive a high volume of enquiries. If your travel isn’t urgent, we’d appreciate if you would
wait to contact us so that those with imminent travel can be prioritised. We’re thrilled to welcome more people
on board, but please remember to be kind to our frontline employees – and if you are unwell or have Covid-
19 symptoms please do not travel.”

Further details on the customer journey for Alert Level 1 can be found on the COVID-19 hub on the Air New
Zealand website.

The airline plans to operate around 55 percent of its usual domestic capacity (compared to pre-COVID-19
levels) from July and August. On Monday the airline began operating to all 20 of the domestic ports it
previously flew to.

Air New Zealand’s Taupō and Timaru services get underway 8 June 2020

Air New Zealand Head of Tourism and Regional Affairs Reuben Levermore says it’s great to be flying back
to Taupō and Timaru.

“Restarting both our Taupō-Auckland and Timaru-Wellington routes today is great news for these towns and
their wider regions and we hope locals get behind these services. The resumption of these routes also means
that as of today we are operating to all 20 of the domestic destinations we serviced pre-COVID-19.

“Initially we will operate three return services a week on both routes on Monday, Wednesday and Friday.
From 6 July this will increase to nine return services per week on both our Taupō and Timaru routes.”

Taupō Mayor David Trewavas says, “The resumption of domestic air travel is great for the country and
fantastic for the Taupō District. Our airport remained open throughout the lockdown period, receiving flights
carrying essential workers and medical staff, but being able to welcome back visitors from around the country
is what we’ve all been waiting for. I’d like to thank Air New Zealand for resuming this very important service,
and I’d like to invite everyone from around the country to come on over for a warm Taupō District welcome.”
Timaru Mayor Nigel Bowen says, "We are so excited to have the first flights returning to Timaru, this means
so much to our greater region for both tourism and commerce. I look forward to welcoming passengers back
to Timaru".

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Air New Zealand jets back to Invercargill 4 June 2020

Air New Zealand’s direct A320 jet service between Auckland and Invercargill will resume on 6 July.

The airline has today released its domestic schedule for July and August with the airline to operate four return
jet services a week on its Auckland-Invercargill route. The airline resumed flights between Christchurch and
Invercargill at the start of Alert Level 2 with that route operated by its 68-seat turboprop aircraft.

Air New Zealand Head of Tourism and Regional Affairs Reuben Levermore says the airline is thrilled to be
heading back to Invercargill using its A320 jet.

“When we launched the jet service in August last year, we had such an enthusiastic response from the
Southland community who had long sought a direct connection to Auckland. Although times have since
become more challenging, we are ready to resume the service and work with our partners in the region to
enable tourism and broader economic recovery.”

“In addition to the Auckland-Invercargill jet service, we will also be resuming services between Invercargill
and Wellington from 6 July, with one daily return service operated by our 50-seat Q300 turboprop aircraft
throughout the week.”

The new Auckland-Invercargill jet schedule will operate on Monday, Thursday, Friday and Sunday. The flight
will depart Auckland at 10:35am, arriving in Invercargill at 12:40pm. The return flight will leave Invercargill at
1:20pm, arriving in Auckland at 3:20pm.