Air New Zealand 2023 Interim Results
Media release
23 February 2023
Air New Zealand – demand driving strong recovery
1H 2023 Financial summary
• Statutory earnings before taxation of $299 million
1
, compared to a loss of $376
million for the equivalent six-month period last year
• Operating revenue of $3.1 billion driven by strong demand particularly across
the peak summer period
• Flew eight million passengers compared to three million for the same period last
year
• Domestic capacity at 94% of pre-Covid levels, and International at 60% capacity
• 3,000 people recruited since January 2022, 2,000 of which were recruited in the
six months to 31 December – biggest recruitment drive in the airline's history
Air New Zealand’s recovery is well underway, with the airline today announcing statutory earnings
before taxation of $299 million
1
and revenue of $3.1 billion for the six months ending 31 December
2022 – progress that will enable the airline to support New Zealand’s economic recovery.
Following three years of Covid-related losses, Air New Zealand’s interim result reflects sustained
demand strength, particularly across the summer peak period, a return in business travel and
overseas tourists, as well as cargo revenues above pre-Covid levels.
Air New Zealand Chair Dame Therese Walsh says she is incredibly proud of the Air New Zealand
whānau and their determined efforts to get New Zealanders flying again, especially given the
challenges of restarting an airline amid Covid.
“Today’s result reflects an important milestone in our recovery and places us in a strong position
to deliver on our strategy,” says Dame Therese.
“When New Zealand’s borders reopened much earlier than expected, our people rose to the
occasion, moving swiftly to return aircraft to service, relaunch 29 routes and onboard more than
3,000 employees to support the eight million customers we flew between July and December – the
busiest period we’ve seen in over three years.
“Despite some turbulence, we’ve stayed focused on getting our customers where they needed to
go while keeping our eyes on the future. This result means we can continue to invest in our fleet,
1
For the six months to 31 December 2022, earnings before other significant items and taxation was also $299 million. Earnings before other
significant items and taxation represents earnings stated in compliance with NZ IFRS (Statutory Earnings) after excluding items which due to their
size or nature warrant separate disclosure to assist with understanding the underlying financial performance of the Group. Earnings before other
significant items and taxation is reported within Note 4 of the 2023 condensed Group interim financial statements.
our people and our decarbonisation goals, to deliver the customer experience Air New Zealand is
world-renown for.
“But we must acknowledge these results are being announced in the wake of the devastation that
the Auckland floods and Cyclone Gabrielle have left behind. Both of these catastrophic events
have heavily impacted several regions we fly to, and our hearts go out to all those impacted. We’re
committed to supporting those regions however we can.”
Air New Zealand Chief Executive Officer Greg Foran echoed Dame Therese’s comments and
praised teams across the business who worked quickly to ensure the safety of our customers and
our people.
On the financial performance for the half, Mr Foran noted the result was delivered against a
backdrop of significant labour, supply chain and operational pressures that have challenged the
airline, and the entire global aviation system.
“Our recovery is well underway and operating performance is improving steadily, but like most
airlines globally, we continue to experience challenges that make it hard at times for our fantastic
team to deliver the level of service we expect of ourselves, and our customers expect of us,” says
Mr Foran.
“We know we have more work to do to tackle customer concerns like long wait times at our call
centres, getting planes to depart and arrive on time, lost baggage and getting refunds back in a
timely manner. We want to thank customers for bearing with us through these and other challenges
since we restarted flying. We’re very aware that flying is not currently the pain-free experience it
should be and getting back into shape is a key priority.
“On top of this, air fares are higher than they were pre-Covid. Like many businesses, we’re facing
a high inflation environment with increased fuel, labour and other supplier costs at a time when
more customers are wanting to travel, and that flows through to ticket prices.
“A key focus for the team has been bringing back much needed capacity to minimise the impact of
higher prices on customers. With six Boeing 777-300ER widebody aircraft now returned into
service, three new domestically configured A321neo aircraft delivered and a fully crewed leased
aircraft to serve the Auckland-Perth route, we are adding capacity back at pace.”
Alongside this, the airline is also working to extend lease agreements, where appropriate, on
existing aircraft and making tactical changes to the network to deliver an additional 2.7 million
seats, or an extra 10,000 seats a day for the coming northern summer period, which runs from the
end of March until the end of October.
“I’m incredibly proud of our people because, despite the challenges we’ve faced, we have fully
reopened our international network, launched our flagship service to New York, and improved our
onboard food service. We’ve also upgraded our mobile app, grown our Airpoints Store six-fold
since 2019 and taken bold steps towards becoming a more sustainable airline. That is no small
ask.
“We’re investing in our people, recruiting 2,000 employees in the last six months alone, increasing
our lowest wages and supporting new parents by improving parental leave.”
Dame Therese highlighted the airline’s ability to take a long-term view despite the short-term
operational challenges, by delivering digital enhancements, beginning construction on a new
hangar at Auckland airport, and taking meaningful steps on its decarbonisation journey – all
supported by the everyday efforts of a special team.
“We’ve short-listed four world-leading innovators, along with five long-term partners, to help us
deliver on our mission to have our first zero-emissions demonstrator flight in the skies in 2026, and
a new regional Q300 turboprop fleet from 2030.
“We’ve also welcomed our first shipment of imported Sustainable Aviation Fuel into Aotearoa,
which was a huge milestone for us. We’re committed to finding a more sustainable way to connect
with the world and know that the future of travel relies on low-carbon air transport.
“As we look ahead to the second half of this financial year, macroeconomic challenges are front of
mind, including the financial impact of inflationary pressures and geopolitical uncertainty. At this
moment, however, we are observing demand trends that are offsetting these macro headwinds.
Air travel is still in the Covid recovery phase with high levels of demand, and the current capacity
and supply chain constraints will limit supply at least in the short-term. The new hybrid work
environment has also enabled greater freedom and flexibility for customers which we believe will
continue to drive domestic leisure bookings.
“While we cannot predict the future, we know this new normal we find ourselves in requires great
skill and dexterity to navigate. Having now spent the better part of three years dealing with constant
change and flux, our people are the very best in the business to deal with anything that comes our
way.”
Distributions
At the capital raise in May 2022, the Board outlined its intention to consider dividends to
shareholders no earlier than the 2026 financial year, based on a number of factors including the
expected trajectory of demand recovery and the airline’s financial performance.
Air New Zealand has experienced a stronger and faster recovery than initially expected, with
borders reopening early, and strong and sustained levels of demand. On this basis, the Board will
consider distributions to shareholders in August when the airline announces its 2023 annual
financial results.
Outlook for 2023
Looking to the remainder of the financial year, we are optimistic about the levels of demand we
continue to observe but acknowledge there is significant uncertainty regarding the overall economic
outlook both domestically and internationally, with increasing inflationary pressures, tighter
monetary policy and other macroeconomic factors. We also note that the second half of the
financial year is typically weaker than the first half.
Against this backdrop and based on the assumption of an average jet fuel price of US$105 per
barrel for the second half of the financial year, 2023 earnings before other significant items and
taxation are expected to be in the range of $450 million to $530 million. This guidance includes a
preliminary estimate of the impact of the Auckland floods and Cyclone Gabrielle.
Supplementary table – Summary data from the interim financial statements
1H 2023
$M
1H 2022
$M
Operating revenue 3,078 1,125
Earnings/(loss) before other
significant items and taxation
299 (367)
Statutory earnings/(loss) before
taxation
299 (376)
Net profit/(loss) after taxation 213 (272)
Ends
Issued by Air New Zealand Public Affairs ph +64 21 747 320
---
INTERIM
FINANCIAL
REPORT
2023
AIR NEW ZEALAND GROUPAIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023
2
Against the backdrop
of strong and sustained
demand for air travel
following the removal of
Covid-19 related border
restrictions, Air New Zealand
is proud to deliver its first
period of profitability since
the pandemic began.
LETTER FROM THE CHAIR AND CHIEF EXECUTIVE OFFICERCONTENTS
Since New Zealand’s borders
reopened, it has become clear
that the desire to travel and the
need for connection remains
stronger than ever. It has been
terrific to see so many customers
out on our network, some using
their passports for the first time
in several years.
While we always expected our customers to
return to the skies with great enthusiasm,
no one expected the level of demand we
have seen across the past year, or that
borders would open as early as they did.
Like most airlines around the world,
we ramped up our operations quickly
to meet this demand, and to fulfill our
purpose of connecting New Zealanders
to each other and to the world.
We are proud of what we have achieved,
especially when you consider that this
time a year ago, we were flying as little
as 20 percent of our entire network
with national alert level restrictions and
extended Auckland lockdowns.
3
Dame Therese Walsh — Chair
Greg Foran — Chief Executive Officer
2
3 Letter from the Chair and Chief Executive Officer
10 Financial Commentary
12 Change in Earnings
13 Condensed Interim Financial Statements
22 Independent Auditor's Review Report
23 Shareholder Enquiries
The start of 2023 has been
incredibly tough for many
New Zealanders, particularly
those across Te Ika-a-Māui
who have been significantly
impacted by the recent
weather events.
The Auckland floods and Cyclone
Gabrielle represent two of the most
significant weather events New Zealand
has ever seen and our hearts go out to
all those who are now dealing with the
devastating aftermath.
I want to acknowledge the tremendous
efforts of Air New Zealanders across the
business who sprang into action, making
proactive changes to our schedule,
contacting customers, and repositioning
aircraft and crew to keep our customers
and our people safe.
Following both of these events, our
immediate focus has been on getting
services back up and running to
reconnect the regions as soon as
possible. In the Auckland region
we added extra flights and larger
planes wherever we could, converted
cargo flights and worked with Star
Alliance partners to get impacted
customers where they needed to go.
In Napier and Gisborne, we deployed
special assistance flights, carrying
communication support, emergency
supplies and airport operational staff
to help those on the ground. We also
offered fare flexibility and reduced fares
to support those needing to urgently get
in or out of the impacted regions.
Extreme weather events are sadly
becoming the new normal, with families,
homes and livelihoods being put at risk.
At Air New Zealand we are acutely aware
of the significant impact climate change
will continue to have on our country and
our operations. These recent weather
events are a stark reminder of the
importance of taking meaningful steps
to not only decarbonise the airline and
roll out our wider sustainability agenda,
but to adapt to the changing context that
climate change is already bringing.
Dame Therese Walsh
Chair
Mali — Flight Attendant Mid-Haul
Profi t drivers
Grow
Domestic
Profitably grow and enhance our iconic
domestic offering, providing New
Zealanders with even more choice as the
best-connected country in the world
Optimise
International
Connecting New Zealanders and
our exports to the world through an
optimal international network and
premium leisure product
Lift
Loyalty
Increase products and benefits
members value from our Airpoints™
programme, supercharging the loyalty
ecosystem for the airline
Our Kia Mau strategy is focused on 3 clear drivers
of value creation, executed through excellence
and innovation across 4 key business enablers.
Enabled by strong culture and focused investment
Brilliant
Basics
Operational excellence that
provides a seamless travel
experience for our customers –
do it right, first time, every time
Serious about
Sustainability
Committed to meaningful
action to reduce our
carbon impact
Digital
Dexterity
Technology focused on delivering
a world-class experience for
our people and customers while
driving efficiencies
Prioritising
People & Safety
Putting people, health
and safety first
This is our plan for Air New Zealand to thrive.
AIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023AIR NEW ZEALAND GROUP
54
It has been an eventful six months
across all aspects of the airline.
We fully reopened our international
network of 29 ports, launched our
long-awaited direct service to New
York and rolled out a new inflight
culinary offering for our customers.
We celebrated the launch of our
upgraded mobile app, which allows
us to be more responsive with
improvements and upgrades, and will,
over time, empower our customers to
self-serve more seamlessly. We are
excited to roll out several new features
in the coming months, including the
pilot of a baggage tracking feature,
a new Home screen and express
check-in functionality.
We made adjustments to our schedules
and rosters to build much needed
buffer into the operation, lifted our
lowest wages and ratified 14 collective
agreements with the unions. We
announced a group of world-leading
innovators who will partner with us to
deliver on our mission to have a zero-
emissions demonstrator flight in the
skies in 2026, and we welcomed our
first shipment of imported Sustainable
Aviation Fuel (SAF) into Aotearoa, as we
further intensify our focus to find more
sustainable ways to fly. These actions
provide us with a strong foundation as
we look ahead to the future.
However, operationally, Air New
Zealand has not been immune to the
pressures facing the global aviation
ecosystem. From difficulties in
hiring staff, to widespread sickness
across our workforce and that of our
suppliers, to backlogs with airline
manufacturers and beyond – the
global supply chain continues to be
stretched due to the pace of the
rebuild. To date, this has resulted
in a constrained supply of aircraft
and the support structures that
allow them to fly, which in turn has
contributed, alongside high inflation
and fuel costs, to elevated airfares
for our customers.
Our teams have been focused on
alleviating capacity pressures and
adding much needed supply into
the market. We have inducted a
temporary, fully crewed leased Airbus
A330 aircraft into operation through
to October 2023 on our Perth route.
Three domestic Airbus A321neo
aircraft, which have 46 more seats
than our existing Airbus A320 aircraft
have been delivered to support
demand on domestic trunk routes.
Six Boeing 777-300ER widebody
aircraft have returned to service to
support our international network,
with the remaining aircraft due back
in May. On top of this, we are working
LETTER FROM THE CHAIR AND CHIEF EXECUTIVE OFFICER
(CONTINUED)
KIA MAU
Guiding every decision we make
is our Kia Mau strategy. It’s the
flight plan that helped us navigate
through Covid-19 and the path
that still guides us today.
Crucial to this plan is a robust domestic
business, which we continue to
strengthen, ramping back up to almost
100 percent of pre-Covid² capacity,
offering different time slots and adding
products and services, such as our new
hot food offering at regional lounges, to
improve the customer journey.
We have shifted the focus of our
international network, concentrating on the
locations we know customers want to fly
to and offering better schedules to those
destinations. With all our international
ports now reopened, we are going deeper
and more frequently into those markets
where we have a competitive advantage.
Loyalty is a source of untapped
potential for new revenue and a superb
channel to deliver on our promise of
differentiation, driving additional value
for our customers and in turn our
shareholders. We have made progress
on some exciting innovations we hope to
share with you soon, as well as making
significant headway elevating our
Airports™ store, growing our range of
products six-fold since 2019 and adding
major global brands such as Apple and
Samsung, and premium New Zealand
brand Deadly Ponies.
1. Northern Summer being the end of March
2023 to the end October 2023.
2. All references to pre-Covid refer to the equivalent period in the 2019 financial year,
being the period 1 July 2018 to 31 December 2018.
Astral — Brand & Marketing Specialist,
volunteering at the airport following
the Auckland floods
to extend lease agreements, where
appropriate, on existing aircraft.
These actions, alongside tactical
changes to our network, will mean
we have an additional 2.7 million
seats, or an extra 10,000 seats a day
available for the coming northern
summer period¹.
To support the additional capacity,
we have been working tirelessly in a
tight labour market to hire and train
more than 3,000 new staff, 2,000
of which have been in the last six
months. To put this into context,
that’s around 20 percent of our
entire workforce, largely across
operational areas of the business.
It has been a significant endeavour
to get this volume of people inducted
and serving our customers as
quickly as we can safely achieve.
Operational integrity and delivering
for customers are the foundations
of a strong airline, and as we look to
the remainder of the financial year,
we are focused on balancing our
rebuild with consistent delivery of
the Air New Zealand experience our
customers expect from us.
We know we have more work to do
to tackle customer concerns like call
centre wait times, on time arrival and
departure of our planes, baggage
handling and getting refunds back in
a timely manner. I want to thank our
customers for bearing with us through
these and other challenges across
the past few months. We know that
flying is not currently the pain-free
experience it should be and getting
back into shape is a top priority.
E poho kererū ana māua
i te whānau whānui o
Araraurangi me tō rātou
manaaki me tō rātou tiaki
anō hoki i ā mātou kiritaki i
raro i ngā taumahatanga o te
wā, e kī ana te kōrero ehara
taku toa i te toa takitahi
engari he toa takitini.
We are incredibly proud of
the entire Air New Zealand
whānau for the way they
have navigated through
this environment with
manaakitanga and dedication
to delivering the Air New
Zealand experience to our
customers through a very
challenging period.
AIR NEW ZEALAND GROUPAIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023
We want to become the
world's leading digital airline,
revamping our app and
delivering digital enhancements
across the whole airline.
We have been trialling biometric facial
recognition at select ports in the
US, as part of our plan to take the
friction out of travel. We also rolled
out a new flight planning system
which will deliver more efficient and
effective flight planning, helping us
run the airline like a Swiss watch with
improved operational performance
and an uncompromising focus on
safety and on-time performance.
We are acutely aware that we
must play our part in addressing
the impact of aviation on climate
change and focus on reaching net
zero carbon emissions by 2050.
During the year, we made meaningful
progress on our decarbonisation
journey, setting an interim 2030
science-based emissions reduction
target to guide us and keep us
accountable. We also tested the SAF
supply chain, which will be key to
achieving this ambitious target.
The organisational transformation
journey we have been on in the last
12 months has empowered our people
to be themselves, do the right thing and
deliver exceptional service and products
for our customers. We have seen faster
decision making, greater coordination
across the business and the ability to
make decisions almost immediately
to deliver brilliant basics.
These pillars are essential to rebuilding
as a stronger, more nimble airline. We
know we have the right strategy in place
and the right team to deliver on it.
FINANCIAL OVERVIEW
Returning to profitability after
almost three years of pandemic
related losses is a hugely
significant milestone in our
recovery, with earnings before
other significant items and
taxation of $299 million for the first
six months of the 2023 financial
year. This compares to a loss of
$367 million for the same period
last year. Statutory earnings before
taxation were also $299 million.
Operating revenue performed strongly,
up 5 percent on pre-Covid levels to
$3.1 billion, driven by a higher yield
environment as demand for leisure
travel continued through the summer
period. Cargo revenues of $378
million were also elevated compared
to historic levels, despite government
subsidies easing off as passenger
demand returned. Capacity increased
substantially as the airline’s international
markets began to reopen, now at 72
percent of pre-Covid levels. Fuel, which
represents the airline’s largest cost line
this year, increased to $754 million,
76
LETTER FROM THE CHAIR AND CHIEF EXECUTIVE OFFICER
(CONTINUED)
Earnings before
taxation of
$
299
million
Operating
revenue of
$
3.1
billion
Cargo
revenue of
$
378
million
Liquidity
at
$
2.6
billion
Free
cash flow of
$
655
million
as global unrest and macroeconomic
volatility impacted commodity markets.
Other costs, including labour are also
significantly up as inflationary pressures
continue to impact the entire cost base
as we rebuild the network.
Liquidity remains strong at $2.6 billion
as at 31 December 2022, and is now
up at $2.7 billion as at 20 February
2023. This consists of approximately
$2.3 billion in cash and $400 million
of available funds on an unsecured
standby loan facility with the Crown.
Given higher cash levels and the
strength of our recovery, we repaid and
cancelled $200 million of Redeemable
Shares to the Crown during the period.
We also expect cash levels to reduce
further as sales are availed, and as we
make payments for planned capital
expenditure in the coming months.
Gearing levels are at 32.7 percent
for the first half of the financial year,
currently below our target range of
45 to 55 percent. We also reported
positive free cash flow of $655 million
for the half, allowing reinvestment
into the business of $317 million and
resulting in a $489 million reduction in
net debt. Our balance sheet strength,
cash position and earnings trajectory
position us well to drive our Kia Mau
strategy forward and fortify our
operational reliability and resilience.
Romeo and Anne-Maree— Flight Attendants
AIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023AIR NEW ZEALAND GROUP
98
LETTER FROM THE CHAIR AND CHIEF EXECUTIVE OFFICER
(CONTINUED)
CONSIDERATION OF DISTRIBUTIONS
At the capital raise in May 2022, the Board outlined its
intention to consider dividends to shareholders no earlier than
the 2026 financial year, based on a number of factors including
the expected trajectory of demand recovery and the airline’s
financial performance.
Air New Zealand has experienced a stronger and faster recovery
than initially expected, with borders reopening early, and strong
and sustained levels of demand. On this basis, the Board will
consider distributions to shareholders in August when the airline
announces its 2023 annual financial results.
OUTLOOK
Looking to the remainder of the financial
year, we are optimistic about the levels
of demand we continue to observe
but acknowledge there is significant
uncertainty regarding the overall
economic outlook both domestically and
internationally, with increasing inflationary
pressures, tighter monetary policy and
other macroeconomic factors. We also
note that the second half of the financial
year is typically weaker than the first half.
Against this backdrop and based on
the assumption of an average jet fuel
price of US$105 per barrel for the
second half of the financial year, 2023
earnings before other significant items
and taxation are expected to be in the
range of $450 million to $530 million.
This guidance includes a preliminary
estimate of the impact of the Auckland
floods and Cyclone Gabrielle.
OUR CLOSING THOUGHTS
As we look ahead to the second half
of this financial year, macroeconomic
challenges and geopolitical uncertainty
are front of mind. We do however see
demand trends that are, at least for
the moment, offsetting these macro
headwinds. Air travel is still in the Covid
recovery phase with high levels of
demand, and the current capacity and
supply chain constraints will limit supply
at least in the short-term. The new hybrid
work environment has also enabled
greater freedom and flexibility for
customers which we believe will continue
to drive domestic leisure bookings.
While we cannot predict the future, what
we do know for certain is that the new
normal we find ourselves in requires
great skill and dexterity to navigate
and the reality is, having now spent the
better part of three years dealing with
constant change and flux, our people
are the best in the business to deal with
anything that comes our way.
Ngā mihi nui
Dame Therese Walsh
Chair
Greg Foran
Chief Executive Officer
23 February 2023
Hayden — Flight Attendant
Jason — On Job Trainer
AIR NEW ZEALAND GROUPAIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023
International long-haul RASK increased
by 134 percent excluding the impact of
foreign exchange. Changes in currency
provided a 3.5 percent improvement in
RASK during the period.
International short-haul capacity
increased by almost 600 percent, as
Trans-Tasman and Pacific Islands borders
reopened and load factors increased
33.2 percentage points to 87.2 percent.
International short-haul RASK was up
104 percent, with foreign exchange
driving an additional 1.9 percent benefit.
Domestic capacity increased 65 percent
due to the prior year being impacted
by Covid-19 travel restrictions in New
Zealand and the closure of Auckland’s
regional boundary from mid-August
2021 to mid-December 2021. Demand
increased by almost 100 percent, with
load factors improving 14.7 percentage
points to 87.3 percent. Domestic RASK
was up 40 percent.
Cargo revenue was $378 million, a
decrease of 22 percent. The decrease
was driven by reduced flying under
the New Zealand and Australian
Government’s air freight schemes (the
Maintaining International Air Connectivity
scheme and the International Freight
Assistance Mechanism) as international
passenger flights ramped up. Freight
yields improved 9.6 percent, reflecting
a higher fuel cost as well as operational
constraints with fewer international
carriers in the New Zealand market.
Foreign exchange had a nominal impact.
Contract services and other revenue
was $165 million, an increase of 38
percent, driven primarily by increased
passenger activity including the
reopening of international lounges and
valet operations which were closed for
the majority of the prior period, offset by
a reduction in third-party maintenance
in advance of the closure of the Gas
Turbines business. There was a 2.5
percent benefit from foreign exchange.
EXPENSES
Operating expenditure more than doubled
to $2.4 billion compared to the first
half of last year, reflecting substantially
higher flying activity compared to the
prior period. Costs increased in most
areas as the airline rebuilt its network and
operational support base. Reported costs
per ASK (CASK) increased 13.8 percent,
largely as a result of increased fuel prices.
Underlying CASK, which excludes the
impact of fuel price, foreign exchange
and third-party maintenance as well as
the reduction in wage support subsidies,
improved by 25.4 percent. This was a
result of efficiencies from greater network
activity partly offset by non-fuel price
inflation and an unfavourable change
in the flying mix due to a reduction in
lower cost cargo-only services and a
proportionally higher increase in long-
haul and short-haul passenger flights.
Labour costs were $687 million,
increasing by $254 million or 59 percent.
Foreign exchange had a nominal impact.
Full-Time Equivalent labour (FTE)
increased 31.4 percent to approximately
10,450 compared to the prior period.
The increase in FTE was driven primarily
by the recall and hiring of operational
workforce to support the build back in
capacity and reopening of the remainder
of our international ports. In addition to
increased staffing levels, salary increases,
a provision for incentive payments and a
reduction in government wage subsidies
received contributed to the higher costs.
Fuel costs were $754 million for the
period, increasing by $580 million
compared to last year. Fuel prices,
higher levels of consumption and
foreign exchange movements, drove this
movement. A 55 percent increase in the
underlying Singapore Jet fuel price, and
to a lesser extent, increases in the price
of domestic carbon offsets, along with
fewer hedging gains contributed $278
million of the additional cost relative
to the prior period. Fuel consumption
increased 100 percent due to greater
levels of capacity, resulting in an
additional $206 million in costs. A weaker
New Zealand dollar contributed $96
million to the increase in fuel costs.
Aircraft operations, passenger services
and maintenance costs were $677 million,
representing a 95 percent increase
driven by increased flying and the
recommencement of international routes.
Sales, marketing and other expenses
were $310 million, growing 86 percent.
Increased commissions, brand activity,
and digital services including Contact
Centre costs related to disrupt support
and schedule activity drove the increase.
Ownership costs were $383 million,
a nominal increase compared to the
prior period. Increased depreciation
costs were associated with new aircraft
deliveries and the recommencement
of depreciation following the reversal
of impairment of previously grounded
Boeing 777 widebody aircraft. This was
partially offset by lower net interest
costs due to increased income from
higher cash levels. Foreign exchange
had a nominal impact on ownership
costs during the period.
The impact of foreign exchange rate
changes on the revenue and cost base
in the period resulted in an unfavourable
foreign exchange movement of $103
million. After taking into account a
$14 million favourable movement in
hedging, overall foreign exchange had
a net $89 million negative impact on the
Group result for the period.
SHARE OF EARNINGS
O F A S S O C I AT E S
Share of earnings of associates at $18
million, increased by $6 million due to
favourable foreign exchange movements
and hedging gains in the period.
OTHER SIGNIFICANT ITEMS
Other significant items were nil, an
improvement of $9 million relative to the
prior period. Unrealised foreign exchange
losses on foreign debt were offset by the
reversal of impairment on Boeing 777-
200ER aircraft sold during the period.
CASH AND FINANCIAL
POSITION
Cash on hand at 31 December 2022 was
$2.2 billion, an increase of $367 million
since 30 June 2022. The increase reflects
operating cash flows and proceeds
from the New Zealand retail bond
issued during the period, partially offset
by the repayment of $200 million in
Redeemable Shares and asset purchases.
Operating cash flows were a net inflow
of $972 million, reflecting positive cash
earnings and favourable working capital
movements, including revenue received
for ticket sales in advance of flying.
Net gearing improved 12.7 percentage
points to 32.7 percent compared to
30 June 2022, driven primarily by
profitability during the period offset by
cash purchases of aircraft.
1011
The half year result reflects
strong passenger demand over
a period where, for the first
time in more than two years,
the airline’s operations were
not directly impacted by the
Covid-19 pandemic. In the prior
comparative period, Covid-
related travel restrictions in
New Zealand impacted financial
performance. The phased
removal of those restrictions
from March to July 2022 has
resulted in significant movements
when making comparisons
between periods.
1. Earnings/(loss) before other significant items and taxation represent Earnings stated in compliance with NZ IFRS (Statutory Earnings) after excluding items
which, due to their size or nature, warrant separate disclosure to assist with the underlying financial performance of the Group. Earnings/(loss) before other
significant items and taxation is reported within the condensed Group interim financial statements which are subject to review by the external auditors. Further
details are contained within Note 4 of the condensed Group interim financial statements.
Air New Zealand’s statutory
earnings and earnings before other
significant items and taxation for
the first six months of the
2023 financial year were
$299 million
1
. Net profit after
taxation was $213 million.
FINANCIAL COMMENTARY
REVENUE
Operating revenue for the period
reflected the opening of New Zealand’s
borders and strong passenger demand,
with revenue increasing almost threefold
to $3.1 billion compared to $1.1 billion in
the prior period. There was a 2.4 percent
positive impact from foreign exchange.
Total capacity (Available Seat Kilometres,
ASK) including cargo-only flights,
increased 89 percent, reflecting the
ramp-up of the airline’s network following
the removal of travel restrictions.
Passenger revenue grew to $2.5 billion
as capacity, excluding cargo-only flights,
more than tripled driven by increased
long-haul flying. Demand (Revenue
Passenger Kilometres, RPK) increased
significantly more than capacity, resulting
in a load factor of 87.5 percent, an
increase of 29 percentage points on the
prior period. Revenue per Available Seat
Kilometre (RASK) increased 17.7 percent
excluding FX, a reflection of constrained
capacity, strong customer demand and
the return of corporate travellers.
International long-haul capacity
substantially ramped up over the period
following the relaxation of border
restrictions into New Zealand and the
majority of international ports operated
by the airline. Demand on international
long-haul routes relative to capacity
growth saw load factors increase
58 percentage points to 87.9 percent.
Tu i — Cargo Support Consultant
AIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023AIR NEW ZEALAND GROUP
NOTES
6 MONTHS TO
31 DEC 2022
$M
6 MONTHS TO
31 DEC 2021
$M
Operating Revenue
Passenger revenue
Cargo
Contract services
Other revenue
2(b)
2,535
378
65
100
523
482
66
54
Operating Expenditure
Labour
Fuel
Maintenance
Aircraft operations
Passenger services
Sales and marketing
Foreign exchange gains
Other expenses
3
2(b)
3,078
(687)
(754)
(187)
(340)
(150)
(133)
14
(177)
1,125
(433)
(174)
(123)
(180)
(45)
(41)
-
(126)
(2 ,414)(1,122)
Operating Earnings (excluding items below)
Depreciation and amortisation
664
(355)
3
(344)
Earnings/(Loss) Before Finance Costs, Associates,
Other Significant Items and Taxation
Finance income
Finance costs
Share of earnings of associates (net of taxation)
2(b)
2(a)
309
46
( 74)
18
(341)
3
(41)
12
Earnings/(Loss) Before Other Significant Items and Taxation
Other significant items4
299
-
(367)
(9)
Earnings/(Loss) Before Taxation
Ta xation (expense)/credit
299
(86)
(376)
104
Net Profit/(Loss) Attributable to Shareholders of Parent Company213(272)
Per Share Information:
Basic and diluted earnings per share (cents)
Net tangible assets per share (cents)
6.3
46
(24.2)
48
These condensed financial statements have not been audited. They have been the subject of review by the auditor pursuant to NZ SRE 2410 (Revised) Review
of Financial Statements Performed by the Independent Auditor of the Entity, issued by the External Reporting Board. The accompanying notes form part of
these financial statements.
1213
STATEMENT OF FINANCIAL PERFORMANCE (UNAUDITED)
For the six months to 31 December 2022
December 2021 loss
before taxation
Passenger capacity
$910m
- Capacity increased by 308 percent (excluding cargo-only flights) due to the relaxation
of travel restrictions and reopening of borders. Including cargo-only flights capacity
increased by 89 percent.
- Domestic capacity increased by 65 percent following nationwide lockdowns and
extended non-essential travel restrictions in the Auckland region in the prior period which
eased from mid December 2021.
- International short-haul capacity increased by 561 percent. The prior year was impacted
by border restrictions and isolation requirements for most of the period. Staged border
reopenings and relaxation of travel restrictions saw strong customer demand and an
increase in passenger services from March 2022.
- International long-haul capacity increased 653 percent due to the removal of travel
restrictions and border reopenings in the latter half of the 2022 financial year.
Passenger RASK
$1,079m
- Overall Group RASK increased by 17.7 percent excluding FX and was impacted by strong
recovery of passenger demand and greater flight activity compared to the prior year when
there was limited flying, mainly for essential or repatriation international travel, as well as
domestic travel restrictions following closure of the Auckland boundary. Loads increased
by 29.0 percentage points to 87.5 percent.
- Domestic Revenue per Available Seat Kilometre (RASK) increased by 40 percent excluding
FX with load factor increasing 14.7 percentage points to 87.3 percent.
- International short-haul RASK improved by 104 percent excluding FX with load factor
increasing 33.2 percentage points to 87.2 percent.
- International long-haul RASK increased by 134 percent excluding FX with load factor
increasing 57.9 percentage points to 87.9 percent. In the prior period there were
limited passenger services, primarily for essential travel and repatriations, which
supplemented cargo services.
Cargo revenue
-$105m
- Cargo revenue declined following a reduction in cargo subsidies ($111 million) provided
under the New Zealand Government Maintaining International Air Connectivity scheme
(MIAC), and Australian International Freight Assistance Mechanism (IFAM) scheme,
as borders reopened and passenger demand recovered.
Contract services and
other revenue
$42m
- Recovery of ancillary revenue following an increase in customer activity, including
reopening of international lounges and valet parking which were closed for the majority
of the prior period, offset by a reduction in third-party maintenance as a result of
wind-down of the gas turbines operation as the business nears closure.
Labour
-$206m
- Higher labour costs due to a significant increase in operating activity as borders
reopened and customer demand recovered strongly, wage inflation and an increase in
staff incentive provisions.
Wage subsidy support
-$46m
- Receipt of higher wage subsidies in the prior period as a result of regional lockdowns and
national Covid-19 restrictions.
Fuel
-$484m
- MOPS price increased by 55 percent. The average fuel price net of hedging increased
89 percent compared to the prior year resulting in an increase in costs of $278 million.
Consumption increased by 100 percent ($206 million) compared to an increase in capacity
of 89 percent.
Maintenance, aircraft
operations and
passenger services
-$307m
- Higher costs related to an increase in flying activity and recommencement of
international routes.
Sales and marketing and
other expenses
-$131m
- Higher market development and brand spend to support sales activity and increased sales
commissions as well as higher customer activity related to customer contact centre and
digital spend.
Ownership costs
-$3m
- Recommencement of depreciation on a grounded widebody aircraft fully impaired in
the prior year and new aircraft deliveries offset by higher interest income on increased
cash holdings.
Net impact of foreign
exchange movements
-$89m
- Net unfavourable impact of foreign exchange from currency movement impact on revenue
and costs offset by increased hedging gains.
Share of earnings of
associates
$6m
- Increase in earnings from Christchurch Engine Centre driven by hedging gains and foreign
exchange movements.
Other significant items
$9m
- Reversal of aircraft impairment on disposed widebody aircraft offset by increased foreign
exchange losses on uncovered debt.
December 2022
earnings before
taxation
-$376m
CHANGE IN EARNINGS
The key changes in earnings, after isolating the impact of foreign exchange movements, are set out in the table below*:
* The numbers referred to in the Financial Commentary on the previous page have not isolated the
impact of foreign exchange.
$299m
AIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023AIR NEW ZEALAND GROUP
NOTES
SHARE
CAPITAL
$M
HEDGE
RESERVES
$M
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$M
GENERAL
RESERVES
$M
TOTAL
EQUITY
$M
Balance as at 1 July 2022 3,373 (42) (10) (1,644) 1,677
Net profit for the period
Other comprehensive loss for the period
-
-
-
(34)
-
(1)
213
2
213
(33)
Total Comprehensive Income for the Period- (34)(1)215180
Transactions with Owners:
Equity-settled share-based payments
(net of taxation)
Equity settlements of staff share
award obligations
2(g)
3
(2)
-
-
-
-
-
-
3
(2)
Total Transactions with Owners 1 - - - 1
Balance as at 31 December 20222(h) 3 , 374 (76) (11)(1,429)1,858
NOTES
SHARE
CAPITAL
$M
HEDGE
RESERVES
$M
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$M
GENERAL
RESERVES
$M
TOTAL
EQUITY
$M
Balance as at 1 July 2021 2,213 (49) (17) (1,049) 1,098
Net loss for the period
Other comprehensive loss for the period
-
-
-
(18)
-
1
(272)
-
(272)
(17)
Total Comprehensive Loss for the Period- (18)1(272)(289)
Transactions with Owners:
Equity-settled share-based payments
(net of taxation)
Equity settlements of staff share
award obligations
2(g)
6
(4)
-
-
-
-
-
-
6
(4)
Total Transactions with Owners 2 - - - 2
Balance as at 31 December 2021 2,215 (67) (16)(1,321)811
These condensed financial statements have not been audited. They have been the subject of review by the auditor pursuant to NZ SRE 2410 (Revised),
issued by the External Reporting Board. The accompanying notes form part of these financial statements.
1415
These condensed financial statements have not been audited. They have been the subject of review by the auditor pursuant to NZ SRE 2410 (Revised),
issued by the External Reporting Board. The accompanying notes form part of these financial statements.
6 MONTHS TO
31 DEC 2022
$M
6 MONTHS TO
31 DEC 2021
$M
Net Profit/(Loss) for the Period
Other Comprehensive Loss:
Items that will not be reclassified to profit or loss:
Actuarial gains on defined benefit plans
Taxation on above reserve movements
213
3
(1)
(272)
-
-
Total items that will not be reclassified to profit or loss2-
Items that may be reclassified subsequently to profit or loss:
Changes in fair value of cash flow hedges
Transfers to net profit/(loss) from cash flow hedge reserve
Changes in cost of hedging reserve
Taxation on above reserve movements
(13)
(20)
(14)
12
20
(45)
-
8
Total items that may be reclassified subsequently to profit or loss(35)(17)
Total Other Comprehensive Loss for the Period, Net of Taxation(33)(17)
Total Comprehensive Income/(Loss) for the Period, Attributable to Shareholders
of the Parent Company180(289)
STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
For the six months to 31 December 2022
STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
For the six months to 31 December 2022
AIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023AIR NEW ZEALAND GROUP
These condensed financial statements have not been audited. They have been the subject of review by the auditor pursuant to NZ SRE 2410 (Revised),
issued by the External Reporting Board. The accompanying notes form part of these financial statements.
NOTES
6 MONTHS TO
31 DEC 2022
$M
R E S TAT E D
6 MONTHS TO
31 DEC 2021
$M
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Interest received
1
3,235
(2,228)
(66)
31
1,17 7
(1,083)
(35)
3
Net Cash Flow from Operating Activities97262
Cash Flows from Investing Activities
Disposal of property, plant and equipment, intangibles and assets held for resale
Distribution from associates
Acquisition of property, plant and equipment, right of use assets and intangibles
Interest-bearing asset receipts
Investment in associate
1
21
16
(287)
(67)
-
10
32
(256)
17
(8)
Net Cash Flow from Investing Activities(317)(205)
Cash Flows from Financing Activities
Interest-bearing liabilities drawdowns
Lease liabilities drawdowns
Equity settlements of staff share awards
Interest-bearing liabilities payments
Lease liabilities payments
Redemption of redeemable shares
Rollover of foreign exchange contracts*
2(g)
2(f)
100
95
(2)
(149)
(157)
(200)
25
313
-
(4)
(83)
(200)
-
7
Net Cash Flow from Financing Activities(288) 33
Increase/(Decrease) in Cash and Cash Equivalents
Cash and cash equivalents at the beginning of the period
367
1,793
(110)
266
Cash and Cash Equivalents at the End of the Period 2 ,160 156
Reconciliation of Net Profit/(Loss) Attributable to Shareholders to Net Cash Flows
from Operating Activities:
Net profit/(loss) attributable to shareholders
Plus/(less) non-cash items:
Depreciation and amortisation
Loss on disposal of property, plant and equipment, right of use assets and assets
held for resale
Impairment (reversal)/expense on property, plant and equipment and assets
held for resale
Foreign exchange losses on uncovered interest-bearing liabilities and
lease liabilities
Share of earnings of associates
Movements on fuel derivatives
Other non-cash items
4
4
2(a)
213
355
4
(13)
12
(18)
(17)
37
(272)
344
4
3
6
(12)
1
8
Net working capital movements:
Assets
Revenue in advance
Liabilities
573
(75)
206
268
82
(32)
48
(36)
399(20)
Net Cash Flow from Operating Activities97262
*Relates to gains/losses on rollover of foreign exchange contracts that hedge exposures in other financial periods.
1617
These condensed financial statements have not been audited. They have been the subject of review by the auditor pursuant to NZ SRE 2410 (Revised),
issued by the External Reporting Board. The accompanying notes form part of these financial statements.
NOTES
31 DEC 2022
$M
R E S TAT E D
30 JUN 2022
$M
Current Assets
Bank and short term deposits
Trade and other receivables
Inventories
Derivative financial assets
Intangible assets
Other assets
1
1
2 ,160
429
108
65
27
51
1,793
363
98
165
21
57
Total Current Assets 2,840 2,497
Non-Current Assets
Trade and other receivables
Property, plant and equipment
Right of use assets
Intangible assets
Investments in other entities
Derivative financial assets
Deferred taxation
Other assets
1
2(a)
2(d)
1, 2(c)
33
3,189
1 ,74 8
188
163
135
91
435
36
3,190
1,617
174
164
143
164
365
Total Non-Current Assets 5,982 5,853
Total Assets 8,822 8,350
Current Liabilities
Trade and other payables
Revenue in advance
Interest-bearing liabilities
Lease liabilities
Derivative financial liabilities
Provisions
Income taxation
Other liabilities
2(e)
676
1 ,749
197
378
122
121
2
240
497
1,635
248
342
63
169
2
215
Total Current Liabilities 3,485 3,171
Non-Current Liabilities
Revenue in advance
Interest-bearing liabilities
Derivative financial liabilities
Lease liabilities
Redeemable shares
Provisions
Other liabilities
2(e)
2(f)
311
1,544
165
1,293
-
131
35
219
1,595
159
1,183
200
118
28
Total Non-Current Liabilities 3,479 3,502
Total Liabilities 6,964 6,673
Net Assets 1,858 1,677
Equity
Share capital
Reserves2(h)
3 , 374
(1,516)
3,373
(1,696)
Total Equity 1,858 1,677
Dame Therese Walsh
CHAIR
For and on behalf of the Board, 23 February 2023
Alison Gerry
DIRECTOR
STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at 31 December 2022
STATEMENT OF CASH FLOWS (UNAUDITED)
For the six months to 31 December 2022
AIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023AIR NEW ZEALAND GROUP
2. GENERAL DISCLOSURES (CONTINUED)
6 MONTHS TO
31 DEC 2022
$M
6 MONTHS TO
31 DEC 2021
$M
Amounts recognised in Cargo revenue for government grants and assistance:
- New Zealand
- Other regions
83
-
182
12
Total cargo grants and assistance83194
Given the significant impact that Covid-19 has had on the New Zealand economy the New Zealand Government through the
Ministry of Social Development provided wage subsidies for periods where there was alert level restrictions and businesses could
demonstrate a decline in revenues as a result of the pandemic. Additional subsidies were received from other governments in the
prior year related to offshore offices including the United States of America, Singapore and the Cook Islands. The wage subsidies
were recognised within Labour expenses as an offset to the underlying labour cost. Conditions attached to the government
subsidies which have been recognised in the Statement of Financial Performance have been satisfied.
6 MONTHS TO
31 DEC 2022
$M
6 MONTHS TO
31 DEC 2021
$M
Government grants and subsidies recognised in Operating Expenditure include wage
subsidies (recognised within 'Labour'):
- New Zealand
- Other regions
1
-
46
1
Total wage subsidies147
Financing costs of $8 million were recognised during the six months ended 31 December 2022 in relation to distributions on
redeemable shares and commitment fees on a Government provided standby loan facility (CSF2 Loan Facility). Interest and
commitment fees of $14 million were recognised on a Government provided standby loan facility for the period ended
31 December 2021 (CSF1 Loan Facility).
Interest-bearing assets
(c) Non-current "Other assets" include interest-bearing assets of $430 million (30 June 2022: $360 million). Interest-bearing assets
are measured at amortised cost, using the effective interest method, less any impairment. The fair value of interest-bearing
assets as at 31 December 2022 was $432 million (30 June 2022: $373 million) and are subject to fixed and floating interest rates.
Fixed interest rates in the six months to 31 December 2022 ranged from 0.6% per annum to 4.6% per annum (six months to
31 December 2021: 0.04% per annum to 3.6% per annum).
Deferred taxation
(d) The Group recognised a deferred tax asset as at 31 December 2022 of $91 million (30 June 2022: $164 million). Cash flow
projections used to model the Group's anticipated recovery timeframe were used to inform judgement around the recognition and
recoverability of the net deferred tax asset relating to income tax losses.
Interest-bearing liabilities
(e) Interest-bearing liabilities of $1,741 million (30 June 2022: $1,843 million) are recognised initially at fair value and subsequently
measured at amortised cost, with the changes in market interest rates on certain interest-bearing liabilities measured at fair
value. The fair value at 31 December 2022 is $1,791 million (30 June 2022: $1,852 million).
Interest-bearing liabilities include unsecured bonds of $101 million (30 June 2022: $50 million), secured borrowings of $1,075
million which are secured over aircraft assets (30 June 2022: $1,185 million) and unsecured Australian Medium Term Notes of
$565 million (30 June 2022: $608 million). Secured borrowings are subject to both fixed and floating interest rates. Fixed interest
rates on secured borrowings were 1.0% per annum in the six months to 31 December 2022 (six months to 31 December 2021: 1.0%
to 4.4% per annum). Australian Medium Term Notes were issued on 25 May 2022 and have a fixed coupon between 5.7% and 6.5%
per annum payable semi-annually (six months to 31 December 2021: Nil).
On 27 October 2022, the Group issued $100 million of unsecured, unsubordinated fixed rate bonds with a maturity date of 27 April
2028 and an interest rate of 6.61% per annum payable semi-annually. The Group entered into an interest rate swap to manage the
interest rate risk in relation to the bond which was designated in a fair value hedge relationship. The hedging instrument (interest
rate swap) and the hedged item (bond) are recognised at fair value with changes in the fair value of both items offset in the
Statement of Financial Performance to the extent the hedging relationship is effective.
The Group repaid $50 million of five year unsecured unsubordinated fixed rate bonds at the maturity date of 28 October 2022.
The bonds had a fixed interest rate of 4.25% per annum which was payable semi-annually.
On 30 March 2022 an unsecured committed revolving standby loan facility (CSF2 Loan Facility) was entered into with the New
Zealand Government for up to $400 million for a period through to 30 January 2026 for the purpose of providing additional liquidity,
if required, as the airline recovered from the effects of the pandemic. No amounts have been drawn down under the facility.
1819
1. FINANCIAL STATEMENTS
The financial statements presented are those of the consolidated Air New Zealand Group (the 'Group'), including Air New Zealand Limited
and its subsidiaries, joint ventures and associates.
The parent company, Air New Zealand Limited, is a profit-oriented entity, domiciled in New Zealand, registered under the Companies
Act 1993 and listed on the New Zealand and Australian Stock Exchanges. The Company is an FMC Reporting Entity under the Financial
Markets Conduct Act 2013 and the Financial Reporting Act 2013.
Air New Zealand prepares its condensed Group interim financial statements ("financial statements") in accordance with New Zealand
Generally Accepted Accounting Practice (“NZ GAAP”) as it applies to the interim period. NZ GAAP consists of New Zealand equivalents
to International Financial Reporting Standards (“NZ IFRS”) and other applicable financial reporting standards as appropriate to profit-
oriented entities.
These financial statements have not been audited. The financial statements comply with NZ IAS 34: Interim Financial Reporting and IAS
34: Interim Financial Reporting and have been the subject of review by the auditor, pursuant to NZ SRE 2410 (Revised) Review of Financial
Statements Performed by the Independent Auditor of the Entity, issued by the External Reporting Board.
The financial statements should be read in conjunction with the Annual Report for the year ended 30 June 2022.
Significant accounting policies
The accounting policies and computation methods used in the preparation of the financial statements are consistent with those used as
at 30 June 2022 and 31 December 2021 except as outlined below.
Comparative information has been reclassified to achieve consistency in disclosure with the current financial period. Within the
Statement of Financial Position, carbon credits of $21 million (current assets) and $27 million (non-current assets) have been reclassified
from Other Assets to Intangible Assets as at 30 June 2022. In addition, purchases of $22 million were reclassified in the Statement
of Cash Flows from Payments to suppliers and employees to Acquisition of property, plant and equipment, right of use assets and
intangibles. The reclassification is considered to better reflect the underlying nature of carbon credit units held. Total carbon credits held
as at 31 December 2022 were $76 million (comprising of $27 million of current assets and $49 million of non-current assets).
The External Reporting Board (‘XRB’) of New Zealand issued three Climate Standards that set requirements for: Climate-related
Disclosures (Aotearoa New Zealand Climate Standard 1 (NZ CS 1)); First-time adoption of Aotearoa New Zealand Climate Standards (NZ
CS 2); and General Requirements for Climate-related Disclosures (NZ CS 3). The Climate Standards are effective from 1 January 2023,
with mandatory assurance required on the Greenhouse Gas emissions included in the Climate Statements for the 2025 Group Annual
Report. The Group expects to adopt the Climate Standards for the year ended 30 June 2024. Voluntary Climate-related Disclosures are
currently prepared that follow the principles outlined in the international Task Force on Climate-related Financial Disclosures (TCFD).
The Group has commenced work to build upon the TCFD disclosures to ensure full compliance with the new Climate Standards.
Impact of Covid-19 on business performance
During the Covid-19 pandemic the Group significantly reduced its network as demand declined following border closures and
international travel restrictions. In response to the impact, the Group took a number of actions resulting in a reduction in flight capacity
and labour, being awarded grants for providing international airfreight services and received wage subsidies. The Government relaxed
travel restrictions into New Zealand from March 2022. Following the removal of these restrictions, along with other international border
relaxations, the airline experienced increased bookings which has resulted in stronger net cash inflows from customer activity compared
to the first six months of the 2022 financial year, and a significant improvement in operating performance.
2. GENERAL DISCLOSURES
Group composition
(a) The Group has a 49% interest in the Christchurch Engine Centre ("CEC") and a 21% interest in Drylandcarbon One Partnership LLC
which are recognised as investments in associates. The Group's share of equity accounted earnings from the CEC was $18 million
(31 December 2021: $12 million).
Government grants, subsidies and other related party transactions
(b) The Group was awarded grants to supply international airfreight services by the New Zealand Government through the Ministry of
Transport as part of its efforts to ensure the supply of critical imports and maintain economic benefits of high value New Zealand
exports during the Covid-19 pandemic. The arrangements were for a period from 30 April 2020 through to 31 March 2023.
The awards were negotiated on an arm’s length basis using standard commercial terms. The Group was awarded from August
2020 to June 2022 contracts to provide international freight services on certain ports from Australia to the United States under
the Australian Government International Freight Assistance Mechanism (IFAM). IFAM was intended to restore critical supply
chains due to the impact of the global pandemic. Conditions attached to the grants recognised in the Statement of Financial
Performance have been satisfied as at balance date.
CONDENSED NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
As at and for the six months to 31 December 2022
CONDENSED NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
As at and for the six months to 31 December 2022
AIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023AIR NEW ZEALAND GROUP
4. OTHER SIGNIFICANT ITEMS (CONTINUED)
Aircraft impairment and reversal
As a result of Covid-19 the Group significantly reduced its network capacity following border closures and international travel
restrictions. Due to the severe impact that the pandemic had on global demand for international air travel in prior years, the
Boeing 777-200ER fleet and one Boeing 777-300ER aircraft were grounded for an indefinite period into the future. The Group
has since reactivated the Boeing 777-300ER aircraft and the impairment provision held in relation to this aircraft was reversed
as at 30 June 2022. Four Boeing 777-200ER aircraft were disposed in the six months to 31 December 2022 with the remaining
assets expected to be disposed by March 2023. In the comparative financial period the fair values were determined based on
expressions of interest from third-parties. An impairment reversal of $12 million was recognised in the Statement of Financial
Performance in relation to these assets (31 December 2021: Nil).
In prior years the Group exited from service the ATR72-500 fleet following a scheduled replacement. As at 31 December 2021 two
aircraft were classified as held for resale and were carried at the lower of their previous book value at the date of transfer or fair
value less costs to sell. During the six months ended 31 December 2021 an impairment expense of $3 million was recognised in
the Statement of Financial Performance. The aircraft were disposed in the 2022 financial year.
5. COMMITMENTS
31 DEC 2022
$M
30 JUN 2022
$M
Capital commitments
Aircraft and engines
Other assets
2,665
127
2,815
18
2 ,7922,833
In December 2022, the Group was advised of a delay in the delivery of one Airbus A321neo aircraft from the 2023 to the 2024
financial year. In February 2023, the delivery dates of eight Boeing 787 aircraft were deferred from the 2024 to 2028 financial
years to the 2025 to 2028 financial years which is reflected in the table above.
Capital commitments as at reporting date include eight Boeing 787 aircraft (contractual delivery from 2025 to 2028 financial
years) and five Airbus A321neos (delivery from second half of the 2023 financial year to 2027 financial years).
6. CONTINGENT LIABILITIES
All significant legal disputes involving probable loss that can be reliably estimated have been provided for in the financial statements.
No other significant contingent liability claims are outstanding at balance date.
Outstanding letters of credit total $24 million (30 June 2022: $20 million).
The Group has a partnership agreement with Pratt and Whitney in which it holds a 49% interest in the CEC. By the nature of the
agreement, joint and several liability exists between the two parties. Total liabilities of the CEC are $110 million (30 June 2022:
$154 million).
2021
2. GENERAL DISCLOSURES (CONTINUED)
Redeemable shares
(f) On 28 November 2022 the Group redeemed $200 million of redeemable shares to the New Zealand Government.
No outstanding amounts remain on issue and no further issues can be made under the subscription agreement.
Share capital
(g) During the six months ended 31 December 2022 the Group funded the purchase on-market of 2,016,383 shares for $2 million
(31 December 2021: 2,279,412 shares for $4 million). The shares were used to settle obligations under staff share award
schemes. The total cost of the purchase including transaction costs has been deducted from Share Capital.
Hedge reserves
(h) As at 31 December 2022, $62 million of losses (30 June 2022: $38 million of losses) were held in the cash flow hedge reserve
and $14 million of losses (30 June 2022: $4 million of losses) in the costs of hedging reserve. These reserves are combined
within the Statement of Changes in Equity as "Hedge reserves".
3. SEGMENTAL INFORMATION
Air New Zealand operates predominantly 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. Resource allocation decisions across the network are
made to optimise the consolidated Group's financial result.
Geographical
An analysis of revenue by geographical region of original sale is provided below.
6 MONTHS TO
31 DEC 2022
$M
6 MONTHS TO
31 DEC 2021
$M
Analysis of revenue by geographical region of original sale
New Zealand
Australia and Pacific Islands
Asia, United Kingdom and Europe
Americas
2,019
412
288
359
867
66
103
89
Total Operating Revenue3,0781,125
The principal non-current asset of the Group is the aircraft fleet which is registered in New Zealand and employed across the
worldwide network. Accordingly, there is no reasonable basis for allocating the assets to geographical segments.
4. OTHER SIGNIFICANT ITEMS
Other significant items are items of revenue or expenditure which due to their size or nature warrant separate disclosure to assist
with the understanding of the underlying financial performance of the Group.
6 MONTHS TO
31 DEC 2022
$M
6 MONTHS TO
31 DEC 2021
$M
Foreign exchange losses on uncovered interest-bearing liabilities and lease liabilities
Reversal of aircraft impairment / (aircraft impairment)
(12)
12
(6)
(3)
-(9)
Foreign exchange losses on uncovered interest-bearing liabilities and lease liabilities
Group policy is to manage foreign currency exposures arising from foreign currency denominated liabilities. Due to a significant decline
in forecast foreign currency revenue as a result of Covid-19, the Group was required to de-designate revenue hedges in the 2020 financial
year which resulted in certain foreign currency debt and lease obligations becoming unhedged. Foreign currency translation gains/
losses arising on these obligations were recognised in the Statement of Financial Performance.
Following the phased reopening of borders into New Zealand and other overseas ports, and recovery of international passenger demand,
in November 2022 the Group established new USD and EUR forecast foreign currency revenue hedges. From the date of designation of
the hedges, the translation gains/losses arising on the obligations were recognised in Other Comprehensive Income and accumulated
within the cash flow hedge reserve. These amounts will be released to Earnings at the time of the respective interest-bearing liabilities
and lease liabilities repayments. The Group expects to designate JPY hedges in the latter half of the 2023 financial year. Following this
time no further amounts will be recognised within Other Significant Items.
CONDENSED NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
As at and for the six months to 31 December 2022
CONDENSED NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
As at and for the six months to 31 December 2022
AIR NEW ZEALAND GROUPAIR NEW ZEALAND INTERIM FINANCIAL REPORT 2023
The Auditor-General is the auditor of Air New Zealand Limited
('the Company’) and its subsidiaries (‘the Group’). The Auditor-
General has appointed me, Melissa Collier, using the staff and
resources of Deloitte Limited, to carry out the review of the
condensed consolidated interim financial statements (‘interim
financial statements’) of the Group on his behalf.
Conclusion
We have reviewed the interim financial statements of the
Group on pages 13 to 21, which comprise the Statement of
Financial Position as at 31 December 2022, and the Statement
of Financial Performance, Statement of Comprehensive Income,
Statement of Changes in Equity and Statement of Cash Flows
for the six months ended on that date, and condensed notes
to the interim financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements of
the Group do not present fairly, in all material respects, the
financial position of the Group as at 31 December 2022, and
its financial performance and cash flows for the six months
ended on that date, in accordance with NZ IAS 34 Interim
Financial Reporting and IAS 34 Interim Financial Reporting.
Basis for Conclusion
We conducted our review in accordance with NZ SRE 2410
(Revised) Review of Financial Statements Performed by the
Independent Auditor of the Entity (‘NZ SRE 2410 (Revised)’).
Our responsibilities are further described in the Auditor’s
Responsibilities for the Review of the Interim Financial
Statements section of our report.
We are independent of the Group in accordance with the
Auditor-General’s ethical requirements relating to the audit
of the annual financial statements, which incorporate the
independence requirements issued by the New Zealand
Auditing and Assurance Standards Board, and we have
fulfilled our other ethical responsibilities in accordance
with these requirements.
In addition to this review and the audit of the Group’s
annual financial statements, we have carried out assurance
services relating to greenhouse gas emissions inventory and
compliance with student fee protection rules. In addition we
provide non-assurance services to the Corporate Taxpayers
Group of which the Group is a member. Principals and
employees of our firm deal with the Group on normal terms
within the ordinary course of trading activities of the Group.
These engagements and trading activities have not impaired
our independence as auditor of the Group.
Other than these engagements and trading activities,
we have no relationship with, or interests in, the Group.
Directors’ Responsibilities for the Interim
Financial Statements
The directors are responsible, on behalf of the Group, for the
preparation and fair presentation of these interim financial
statements in accordance with NZ IAS 34 Interim Financial
Reporting and IAS 34 Interim Financial Reporting and for
such internal control as the Board of Directors determine is
necessary to enable the preparation and fair presentation of
the interim financial statements that are free from material
misstatement, whether due to fraud or error.
The directors are also responsible for the publication of
the interim financial statements, whether in printed or
electronic form.
Auditor’s Responsibilities for the Review of the
Interim Financial Statements
Our responsibility is to express a conclusion on the interim
financial statements based on our review. NZ SRE 2410
(Revised) requires us to conclude whether anything has come
to our attention that causes us to believe that the interim
financial statements, taken as a whole, are not prepared, in
all material respects, in accordance with NZ IAS 34 Interim
Financial Reporting and IAS 34 Interim Financial Reporting.
A review of the interim financial statements in accordance
with NZ SRE 2410 (Revised) is a limited assurance
engagement. We perform procedures, primarily consisting
of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical
and other review procedures. The procedures performed in
a review are substantially less than those performed in an
audit conducted in accordance with International Standards
on Auditing (New Zealand) and consequently does not enable
us to obtain assurance that we would become aware of
all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion on these
interim financial statements.
Melissa Collier
Partner
for Deloitte Limited
On behalf of the Auditor-General
23 February 2023
Auckland, New Zealand
2322
SHAREHOLDER ENQUIRIESINDEPENDENT AUDITOR’S REVIEW
REPORT TO THE SHAREHOLDERS OF
AIR NEW ZEALAND LIMITED
For the six months ended 31 December 2022
Shareholder Communication
Air New Zealand’s investor website
www.airnzinvestor.co.nz provides shareholders
with information on monthly operating statistics,
financial results, stock exchange releases,
corporate governance, annual meetings,
investor presentations, important dates and
contact details. Shareholders can also view
webcasts of key events from this site.
Shareholders who would like to receive
electronic news updates can register online
at www.airnzinvestor.co.nz or email Investor
Relations directly on investor@airnz.co.nz
Share Registrar
Link Market Services Limited
Level 11, Deloitte Centre
80 Queen Street, Auckland, 1010, New Zealand
PO Box 91976, Auckland 1142, New Zealand
Phone: (64 9) 375 5998 (New Zealand)
(61) 1300 554 474 (Australia)
Fax: (64 9) 375 5990
Email: enquiries@linkmarketservices.co.nz
Investor Relations
Private Bag 92007
Auckland 1142, New Zealand
Phone: 0800 22 22 18 (New Zealand)
(64 9) 336 2607 (Overseas)
Fax: (64 9) 336 2664
Email: investor@airnz.co.nz
Website: www.airnzinvestor.com
Sam and Kiri — Flight Attendants
---
All information is private and confidential
Investor presentation
23 February 2023
2023
Interim
Financial
Results
AIR NEW ZEALAND 2023 INTERIM RESULT
2
This presentation is given on behalf of Air New Zealand Limited (NZX: AIR
and AIR020; ASX: AIZ). The information in this presentation:
•Is provided for general purposes only and is not an offer or invitation
for subscription, purchase, or a recommendation of securities in
Air New Zealand
•Should be read in conjunction with, and is subject to, Air New Zealand’s
condensed interim financial statements for the half year ended 31
December 2022, prior annual and interim reports and Air New Zealand’s
market releases on the NZX and ASX
•Is current at the date of this presentation, unless otherwise stated.
Air New Zealand is not under any obligation to update this presentation
after its release, whether as a result of new information, future events
or otherwise
•May contain information from third-parties. No representations or
warranties are made as to the accuracy or completeness of such
information
•Refers to the half year ended 31 December unless otherwise stated
•Contains forward-looking statements 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.
These statements are susceptible to uncertainty and changes in
circumstances. Air New Zealand’s actual future results may vary
materially from those expressed or implied in its forward-looking
statements and undue reliance should not be placed on any forward-
looking statements
•Contains statements relating to past performance which are provided
for illustrative purposes only and should not be relied upon as a reliable
indicator of future performance
•Is expressed in New Zealand dollars unless otherwise stated and
figures, including percentage movements, are subject to rounding
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. Nothing in
this presentation constitutes financial, legal, regulatory, tax or other advice.
Non-GAAP financial information
The following non-GAAP measures are not audited: CASK, Gearing, Net
Debt, Gross Debt, EBITDASA and RASK. Amounts used within the
calculations are derived from the condensed Group interim financial
statements where possible. The interim financial statements are subject to
review by the Group’s external auditors.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.
Refer to slide 31 for a glossary of the key terms used in this presentation.
Forward-looking statements and disclaimer
AIR NEW ZEALAND 2023 INTERIM RESULT
All information is private and confidential
Greg Foran
Chief Executive Officer
Business
update
AIR NEW ZEALAND 2023 INTERIM RESULT
Sustained demand has driven a strong recovery in 1H 2023
WithAir New Zealand delivering its first profit since the Covid-19 pandemic began
1
Refers to both earnings before taxation and earnings before other significant items and taxation. Refer to slide 22 for further details.
2
This represents total 1H 2023 capacity including cargo-only flying as a percentage of pre-Covid capacity (1H 2019). FY2019 excludes the now suspended Auckland-London service.
$299M profit
1
for 1H 2023
Driven by strong demand and
capacity constraints
$213M
NPAT
Mission Next Gen Aircraft
partners announced
Helping advance our mission to have a zero-emissions
demonstrator aircraft in the skies from 2026
1.4 million
At 94% & 60%
of pre-Covid capacity
2
For Domestic and International
networks respectively in 1H 2023
$378M cargo
Continues to be elevated above
pre-Covid levels
8M passengers
Flown across our network
Compared to 3M passengers in the first half last year
Over 10k seats a day
Added to the coming Northern Summer schedule due
to fleet management actions taken in 1H 2023 to
alleviate supply constraints
~3K new recruits
This represents the biggest
recruitment drive in our history
for 1H 2023
revenue
2K of which in 1H 2023
4
activeusers
of the new generation
two Air New Zealand
app
AIR NEW ZEALAND 2023 INTERIM RESULT
Near term demand remains robust, offsetting macro headwinds
Industry
pressures
Domestic bookings at ~95%
of pre-Covid levels
•Overall market capacity at
-90% of pre-Covid despite
Air New Zealand being
back at ~95%
•Strong leisure and visiting
friends & relatives demand
•Corporate revenue
above pre-Covid levels,
with strong demand in
particular from our SME
customers.
International bookings at ~75%
of pre-Covid levels
•Reactivated 14
international routes in 16
days in July, now flying to
all 29 offshore ports
•Tasman demand remains
elevated for inbound and
outbound travel
•Significant demand for
travel to Singapore and
Japan, and more recently
China as well
•Strong inbound demand
from North America
• Staff shortages
and sickness
• Manufacturing
and supply chain
delays
• Industry-wide
capacity
constraints
• High inflation and
cost environment
However, the global aviation eco-system remains under significant pressure
Current
bookings
~95%
pre-Covid-19
levels
Current
bookings
~75%
pre-Covid-19
levels
5
AIR NEW ZEALAND 2023 INTERIM RESULT
Our key priority is reinforcing our operational resilience and
delivering for our stakeholders
Our customers
Our people
Our shareholdersOur suppliersOur communities
•Ramping up capacity as
resource allows
•Investing in contact centre
resource and technology
•Continued review and
refresh of flexibility settings
•New seat and product
offering on incoming
Boeing 787 aircraft
•Rehiring >3,000 people, 2,000
of which in 1H 2023
•Good jobs strategy rollout
•Parental leave enhancements
•New agile ways of working
•Ratified 14 collective union
agreements
•Fortifying balance sheet
strength and financial
resilience
•Securing competitive
sources of funding
•Investing in our strategy
•Announcement and
engagement with Mission
Next Gen Aircraft partners
•Development of supplier
diversity programme
•Tūhono supplier
recognition awards
•Special low fares offered to
Cyclone impacted regions
•Updated sponsorship deal
with New Zealand Rugby
•Extension of DOC
partnership
6
All information is private and confidential
Richard Thomson
Chief Financial Officer
Financial
update
AIR NEW ZEALAND 2023 INTERIM RESULT
•Operating revenue of $3.1 billion
•Earnings before taxation
1
of$299 million
•Net profit after taxation of $213 million
•Liquidity of $2.6 billion
2
•Gearing at 32.7%
•Net debt of $903 million
•Free cash flow of $655 million
1
Earnings before other significant Items and taxation is also $299 million. Refer to slide 22for further details of other significant Items, which net to zero for 1H 2023.
2
As at 31 December 2022, includes $2.2 billion cash and remaining $400 million undrawn funds from the Crown Facility.
Covid-19 impacted
period
Earnings/(Loss) before other significant items and taxation
($ millions)
217
198
299
1H 20211H 20191H 20201H 2022
(367)
1H 2023 financial summary
(186)
1H 2023
8
AIR NEW ZEALAND 2023 INTERIM RESULT
1For further details on fuel cost movement, refer to slide 28.
2Full-time equivalent staff levels increased 31% to ~ 10,450, which represents approximately 94% of FTE labour compared to pre-Covid levels.
Profitability waterfall
•Labour costs up $206 million or 48% as
the airline undertook the largest
recruitment drive in its history, scaling
up to meet demand and employing
2,000 people across 1H 2023
2
•Maintenance, aircraft operations and
passenger services costs excluding FX
increased 88%, reflecting increased
flying and recommencement of
remaining international routes.
•Sales, marketing and other expenses
grew 78% due to increased brand
activity, sales commissions and digital
costs which includes Contact Centre
costs related to disrupt support.
•Ownership costs remained stable due to
recommencement of depreciation on a
grounded widebody aircraft fully
impaired in the prior year and new
aircraft deliveries, offset by increased
interest income on higher cash
balances
9
AIR NEW ZEALAND 2023 INTERIM RESULT
Driving significant improvements in net debt and financial resilience metrics
Strong liquidity and balance sheet
Cash movements
($ millions)
10
•$100m NZ bond issuance offset by
$50m bond repayment
•$95m aircraft financing raised
•$256m interest-bearing and lease
liability repayments
AIR NEW ZEALAND 2023 INTERIM RESULT
12.79
14.56
Dec 2021 CASKDec 2022 CASK
1
Excluding fuel price movement, foreign exchange, third-party maintenance and reduction in wage support subsidies.
•Reported CASK increased 13.8%, largely due to fuel
• Excluding the impact of fuel price movement, foreign exchange, third-
party maintenance and reduction in wage support subsidies,
underlyingCASK decreased 25.4%
• Underlying CASK has decreased compared to 1H 2022 due to:
• Improved economies of scale, with capacity growing at a greater
rate than underlying costs
1
• Partially offset by
• non-fuel price inflation of ~7%
• Unfavourable mix of flying due to a significant reduction in the
proportion of lower unit cost cargo-only flying, as passenger
services increased in response to border reopenings
CASK movement
11
12.79
9.54
Dec 2021 CASKDec 2022 CASK
UNDERLYING
CASK
IMPROVEMENT OF
25.4%
CASK (cents)
REPORTED
CASK
INCREASE OF
13.8%
CASK (cents)
AIR NEW ZEALAND 2023 INTERIM RESULT
2023E
Fuel cost outlook and sensitivities for the remainder
of FY2023
174
386
560
754
~765
1
~1,520
2
0
200
400
600
800
1,000
1,200
1,400
1,600
1H2HFY
NZD millions
2023 Fuel cost outlook
20222023
1
Assumes an average jet fuel price of US$105 per barrel for the second half of the 2023 financial year and a NZD/USD rate of 0.6350. Valuation date of 15 February 2023.
2
Assumes an average jet fuel price of US$115 per barrel for the full 2023 financial year.
12
2H 2023 Fuel cost
1
sensitivity (inclusive of hedging)
550
600
650
700
750
800
850
900
$75$85$95$105$115$125$135
NZD cost of fuel (millions)
Singapore Jet (USD/barrel)
•Proportion of forecast fuel
volumes hedged
•Hedge portfolio structured
to allow participation to
downward price
movements, primarily
through use of call options
2H 2023~70%
Q4 2023~65%
1H 2024~30%
AIR NEW ZEALAND 2023 INTERIMRESULT
Actual and forecast aircraft capital expenditure
1
HistoricalForecast
•Forecast investment of $3.0 billion in aircraft and
associated assets through to 2028, including 8 new
Boeing 787 aircraft
−Reflects expected deferral of one A321 neo from
FY2023 to FY2024
−Delivery flexibility remains in place for a substantial
portion of the Boeing 787 delivery stream
•No committed aircraft capital expenditure currently beyond
2028
Fleet investment update
1
Includes progress payments on aircraft and aircraft improvements (e.g. refurbishment); excludes assumed interiors retrofit capital expenditure for the existing 14 Boeing 787 fleet and engine maintenance.
13
Aircraftdelivery schedule (as at 31 December 2022)
Number in
existing fleet
Number
on
order
DeliveryDates (financial year)
2H 202320242025202620272028
Owned fleet on
order
Boeing 787
148--2222
Airbus A320neo / A321neos
15512--2-
0
200
400
600
800
1,000
202020212022202320242025202620272028
$ millions
AIR NEW ZEALAND 2023 INTERIM RESULT
Boeing 787
retrofit
Unlike aircraft capital expenditure, non-aircraft capital expenditure is generally contractually
uncommitted and subject to changes in phasing and level of spend
Engine
maintenance
Digital
transformation
•Interior retrofit of 14 existing
Boeing 787 aircraft
•Anticipated to commence
no earlier than mid-calendar
2024
•Estimated cost of ~ $450
million, staggered over
several years
•Spend relates to overhaul
of owned engines across
all fleet types
•Has an enduring benefit
of 5+ years
•Annual expenditure varies
based on utilisation of
aircraft
•Investments in digital
assets linked to Kia Mau
strategy, focused on
ensuring resiliency and
optimising customer and
employee experiences
•Annual expenditure in the
range of ~$50 million to $75
million
Property and
infrastructure
•Investments in buildings and
operational facilities
•Includes expenditure on the
new Auckland engineering
hangar, cargo facilities and
head office relocation
•Elevated annual expenditure
of ~$75 million over the next
4 years
Other investments are a critical component of our strategy
and operational resiliency
Other capital expenditure is generally contractually uncommitted and subject to changes in phasing and spend
14
AIR NEW ZEALAND 2023 INTERIM RESULT
Financial
resilience
•Maintain investment
grade credit rating
•Gearing target range
of 45% to 55%
•Minimum liquidity of
$700 million
•Debt to earnings
metric
1
of 2.0x to 3.3x
Investments
in strategy
•Disciplined capital
investments to
support our strategy
−Aircraft ownership
decisions
−Non-aircraft
investment
•Targeting a
sustainable pre-tax
ROIC of >10%
AirNewZealandhasexperienceda strongerandfaster
recoverythaninitiallyexpected,withbordersreopening
earlyandstrongandsustainedlevelsofdemand.On
thisbasis,theBoardwillconsiderdistributionsto
shareholdersinAugustwhentheairlineannouncesits
2023annualfinancialresults
1
Refers to Debt to EBITDASA metric.
2
See Air New Zealand’s distribution policyfor further details. Dividends are currently suspended.
Financial
Performance
•Substantial and
sustained recovery
in earnings
•Consideration of
broader
macroeconomic
environment
Our returnto profitability and ongoing financial resilience
are important milestones
Distributions
2
15
AIR NEW ZEALAND 2023 INTERIM RESULT
All information is private and confidential
Greg Foran
Chief Executive Officer
Outlook
AIR NEW ZEALAND 2023 INTERIM RESULT
Network and schedule focused on reliability and resilience
Expect passenger capacity at 80% to 85% of pre-Covid levels for 2H 2023
Sector
1H 2023
2
Actual
2H 2023
2
Estimate
FY2023
Estimate
Domestic
94%95% to 100%95% to100%
Tasman and
Pacific
Islands
82%85% to 90%80% to 85%
International
long-haul
3
50%75% to 80%65% to 70%
Group
64%
~80% to
85%
~75%
to80%
•Overall mix of capacity is skewed to domestic and short-haul
•Domestic
−Ongoing strong domestic and regional demand
−Return of international tourists
−Third domestic A321 coming into service 2H 2023
•Tasman and Pacific Islands
−Building capacity up near to pre-Covid levels by end of FY2023
across the Tasman
−VFR
4
and leisure demand for Pacific Islands remains high
•International long-haul
−All international markets open for 2H 2023
−Remaining 777-300 aircraft returning to service in May
−Solid demand from Asia and North America
17
1
Does not include cargo-only flying. For 1H 2023, Group capacity including cargo-only flying was ~70%.
2
Compared to pre-Covid levels in 1H 2019.
Passenger capacity
1
3
International long-haul for FY2023 includes Bali and Honolulu, which was reported under Tasman and Pacific Islands for FY2019.
4
Visiting friends and relatives.
AIR NEW ZEALAND 2023 INTERIM RESULT
• Looking to the remainder of the financial year, we remain optimistic about demand
• We acknowledge significant uncertainty regarding the overall economic outlook
• We also note that the second half of the financial year is typically weaker than the
first half
• Against this backdrop and based on the assumption of an average jet fuel price of
US$105 per barrel for the second half of the financial year, 2023 earnings before
other significant items and taxation are expected to be in the range of $450 million
to $530 million
• This guidance includes a preliminary estimate of the impact of the Auckland floods
and Cyclone Gabrielle.
Outlook
18
Supplementary
information
AIR NEW ZEALAND 2023 INTERIM RESULT
Liquidity and gearing position
$ millions31 Dec 202230 Jun 2022
Gross debt(3,412)(3,568)
Cash, restricted deposits and net open
derivatives
2,5092,176
Net debt(903)(1,392)
Gross debt/EBITDA4.8N/A
Net debt/EBITDA1.3N/A
Gearing32.7%45.4%
Total liquidity2,5602,193
Liquidity (% of 2019 revenue)44.3%37.9%
Moody's ratingBaa2 (investment grade)Baa2 (investment grade)
21
AIR NEW ZEALAND 2023 INTERIM RESULT
Dec 2022
$M
Dec 2021
$M
Earnings/(Loss) before taxation (per NZ IFRS)299(376)
Add back other significant items:
FX losses on uncovered foreign currency debt126
Aircraft impairment (reversal)/expense(12)3
Earnings/(Loss) before other significant items and taxation299(367)
1
Earnings/(Loss) before other significant items and taxation represents Earnings stated in compliance with NZ IFRS (Statutory Earnings)after excluding items which due to their size or nature warrant separate disclosure to assist with
understanding the underlying financial performance of the Group. Other significant items and taxation is reported within the unaudited condensed Group interim financial statements. Further details are contained within Note 4 of the 2023
condensed Group interim financial statements.
Earnings before other significant items and taxation
1
22
AIR NEW ZEALAND 2023 INTERIM RESULT
Dec 2022Dec 2021MovementDec 2018
(1H FY19
pre-Covid)
Variance to
pre-Covid
1
Operating revenue
3,0781,125174%
2,927
5.2%
Earnings/(Loss) before other significant
items and taxation
299(367)181%
217
37.8%
Earnings/(Loss) before taxation
299(376)180%
211
41.7%
Net profit/(loss) after taxation
213(272)178%
150
42.0%
Operating cash flow
97262
2
1468%
482
2
101.7%
Cash position*
2,1601,79320%
1,217
77.5%
Gearing*
32.7%45.4%(12.7)
56.4%
(23.7)
Financial overview
23
1
Calculation based on numbers before rounding.
2
Restated due to reclassification of carbon credit purchases from operating cashflows to investing cashflows
*
Comparatives at 30 June rather than 31 December
AIR NEW ZEALAND 2023 INTERIM RESULT
Dec 2022Dec 2021Movement
1
Dec 2018
(1H FY19
pre-Covid)
Variance to
pre-Covid
1
Passengers carried (‘000s)
7,9523,203148.3%
8,895
(10.6%)
Available seat kilometres (ASKs, millions)
– passenger flights
15,1263,704308.4%
23,084
(34.5%)
Available seat kilometres (ASKs,
millions) – passenger and cargo-only
flights
16,5768,77289.0%
23,084
(28.2%)
Revenue passenger kilometres (RPKs,
millions)
13,2412,166511.2%
19,244
(31.2%)
Load factor
87.5%58.5%29.0 pts
83.4%
4.1 pts
Passengerrevenue per ASKs as
reported (RASK, cents)
16.814.118.8%
10.8
54.9%
Passengerrevenue per ASKs, excluding
FX (RASK, cents)
16.614.117.7%
10.8
53.5%
Group performance metrics
1
Calculation based on numbers before rounding.
24
AIR NEW ZEALAND 2023 INTERIM RESULT
Domestic
Dec 2022Dec 2021Movement
1
Dec 2018
(1H FY19
pre-Covid)
Variance to
pre-Covid
1
Passengers carried (‘000s)
5,6793,03387.2%
5,755
(1.3%)
Available seat kilometres (ASKs,
millions) – passenger flights
3,3812,05164.8%
3,591
(5.9%)
Revenue passenger kilometres
(RPKs, millions)
2,9521,48898.3%
2,970
(0.6%)
Load factor
87.3%72.6%14.7 pts
82.7%
4.6 pts
Passengerrevenue per ASKs as
reported (RASK, cents)
28.920.640.2%
22.5
28.1%
Passengerrevenue per ASKs,
excluding FX (RASK, cents)
28.720.639.7%
22.5
27.6%
1
Calculation based on numbers before rounding.
25
AIR NEW ZEALAND 2023 INTERIM RESULT
Tasman & Pacific Islands
1
Dec 2022Dec 2021Movement
2
Dec 2018
(1H FY19
pre-Covid)
Variance to
pre-Covid
2
Passengers carried (‘000s)
1,6771431,075%
1,967
(14.7%)
Available seat kilometres (ASKs,
millions) – passenger flights
5,018759561%
6,133
(18.2%)
Revenue passenger kilometres
(RPKs, millions)
4,374410967%
5,081
(13.9%)
Load factor
87.2%54.0%33.2 pts
82.8%
4.4 pts
Passengerrevenue per ASKs as
reported (RASK, cents)
15.17.4105.9%
10.3
46.8%
Passengerrevenue per ASKs,
excluding FX (RASK, cents)
15.07.4104.0%
10.3
45.4%
1
Historically Honolulu and Denpasar were categorised within Pacific Islands. From 1 July 2022, Honolulu has been reclassified to sit within North America and Denpasar has been reclassifiedto Asia, both of which are reported under
international long-haul. All historic data has been adjusted to reflect this change.
2
Calculation based on numbers before rounding.
26
AIR NEW ZEALAND 2023 INTERIM RESULT
Dec 2022Dec 2021Movement
1
Dec 2018
(1H FY19
pre-Covid)
Variance to
pre-Covid
1
Passengers carried (‘000s)
596272,145%
1,173
(49.2%)
Available seat kilometres (ASKs,
millions) – passenger flights
6,727894653%
13,359
(49.6%)
Revenue passenger kilometres
(RPKs, millions)
5,9152682,110%
11,193
(47.2%)
Load factor
87.9%30.0%57.9 pts
83.8%
4.1 pts
Passengerrevenue per ASKs as
reported (RASK, cents)
11.95.0137.8%
7.9
50.4%
Passengerrevenue per ASKs,
excluding FX (RASK, cents)
11.75.0134.3%
7.9
48.1%
International long-haul
1
Calculation based on numbers before rounding.
27
AIR NEW ZEALAND 2023 INTERIM RESULT
Fuel cost movement
$278 million
effective increase
in fuel price
160%
Increase in
jet fuel price
US$82to
US$127
per barrel
Dec 2022
hedge gain
of $9m
vs
Dec 2021
hedge gain
of $44m
754
174
206
243
35
96
0
100
200
300
400
500
600
700
800
900
DEC 2021
FUEL COST
VOLUMEUNDERLYING
PRICE
NET HEDGING
IMPACT
FX
MOVEMENTS
DEC 2022
FUEL COST
$ millions
28
AIR NEW ZEALAND 2023 INTERIMRESULT
1
For 2021 and 2022, excludes the Boeing 777-200ER fleet.
* Excludes short-term leases which provided cover for the global Rolls-Royce engine issues.
20222023202420252026
Boeing 777-300ER77776
Boeing 7871414141618
Airbus A3201817171717
Airbus A320/A321neo1316181818
ATR72-6002929292929
Bombardier Q3002323232323
Total Fleet104106108110111
Fleet delivery and age update
29
7.5
7.1
7.1
6.7
7.3
7.9
8.7
9.4
10.1
2018*2019*2020202120222023202420252026
Aircraft fleet age in years
(seat weighted)
1
HistoricalForecast
AIR NEW ZEALAND 2023 INTERIMRESULT
1
Finance leases are lease liabilities with purchase options. Operating leases are lease liabilities without purchase options
2
Weighted average life of secured aircraft debt, finance leases and unsecured debt. Excludes operating leases
Debt maturity profile as at31 Dec 2022
($ millions)
•Gross Debt of $3.4billion
−comprising: ~$2.0 billion secured aircraft debt and finance
leases
1
, $760 million operating leases
1
, $101million unsecured
NZD bond, $565 million unsecured AUD notes
•Cash of $2.2billion, restricted deposits of $430 million and net
open derivatives of ($81) million
•Net Debt of $0.9 billion
•Undrawn Crown Standby Facility of $400 million expiring 30
January 2026
•Weighted average debt and finance lease maturity of ~4.25 years
2
Capital structure as at31 Dec 2022
Air New Zealand’s debt structure provides flexibility
•No financial covenants on debt
•Reduced refinancing risk
•Competitive financing costs
•Prepayment optionality
Debt structure and maturity profile
220
364
314
265
248
122
87
67
146
126
16
11
307
101
258
202920302H 2023202420252026202720282031203220332034
NZ Retail BondSecured Aircraft Debt and Finance Leases
2
Australian Medium Term Notes
30
AIR NEW ZEALAND 2023 INTERIM RESULT
Available Seat Kilometres (ASKs)Number of seats operated multiplied by the distance flown (capacity)
Cost/ASK (CASK)Operatingexpenses divided by the total ASK for the period
GearingNet Debt / (NetDebt + Equity)
Earnings before interest, tax, depreciation,
amortisation, significant items and
associates (EBITDASA)
Operating earnings (before depreciation and amortisation, net finance costs, associate earnings, other significant items
and taxation) plus finance income and cash dividends received from associates less foreign exchange gains/losses
Gross DebtInterest-bearing liabilities, lease liabilities and redeemable shares
Net Debt
Interest-bearing liabilities, lease liabilities and redeemable shares less bank and short-term deposits, net open
derivatives held in relation to interest-bearing liabilities and lease liabilities, and interest-bearing assets
Cash, restricted deposits and net open
derivatives
Bank and short-term deposits, interest-bearing assets and net open derivatives held in relation to interest-bearing
liabilities and lease liabilities
Liquidity
Cash and cash equivalents (which excludes restricted deposits) plus the outstanding amount of any Crown standby loan
facility available to be drawn
Passenger Load FactorRPKs as a percentage of ASKs
PassengerRevenue/ASK (RASK)Passenger revenuefor the period divided by the total ASK on passenger flights for the period
Revenue Passenger Kilometres (RPKs)Number of revenue passengers carried multiplied by the distance flown (demand)
Glossary of key terms
The following non-GAAP measures are not audited: CASK, Gearing, Net Debt, Gross Debt, EBITDASA and RASK. Amounts used within the calculations are derived from the condensed Group interim financial statements where possible. The
interim financial statements are subject to review by the Group’s external auditors. 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.
31
AIR NEW ZEALAND 2023 INTERIM RESULT
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
Corporate governance:
www.airnewzealand.co.nz/corporate-governance
Sustainability: https://www.airnewzealand.co.nz/sustainability
Find more information about Air New Zealand
32
33
---
Amount (000s)
3,124,000
3,124,000
213,000
213,000
N/A
N/A
N/A
NZ$ AmountReporting Period
0.46
Contact person for this announcement
Unaudited interim financial statements accompany this announcement.
Authority for this announcement
Name of person authorised to make this
announcement
Jennifer Page, General Counsel and Company
Secretary
Contact phone number
Contact email addressinvestor@airnz.co.nz
Date of release through MAP23 February 2023
Leila Peters, General Manager Corporate Finance
Imputed amount per sec Quoted Equity
Security
Record Date
+64 9 336 2607
Net tangible assets per Quoted Equity
Security
0.48
Dividend Payment Date
Prior Comparative Period
A brief explanation of any of the figures
above necessary to enable the figures to be
understood
Refer to media release.
Previous Reporting Period6 months to 31 December 2021
Percentage change
Revenue from continuing operations177.0%
Total Revenue177.0%
Currency
No interim dividend will be paid
New Zealand Dollars
Amount per Quoted Equity Security
Net profit from continuing operations178.3%
Total net profit178.3%
Interim Dividend (NZ$)
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Results for announcement to the market
Name of issuerAir New Zealand
Reporting Period6 months to 31 December 2022
PRELIMINARY HALF YEAR REPORT ANNOUNCEMENT
AIR NEW ZEALAND LIMITED
Half Year Ended 31 December 2022 (referred to in this report as the "current half year")
1 Information prescribed by NZX
(a) A Statement of Financial Performance
Refer to the Interim Financial Statements.
(b) A Statement of Financial Position
Refer to the Interim Financial Statements.
(c) A Statement of Cash Flows
Refer to the Interim Financial Statements.
(e) A Statement of Movements in Equity
Refer to the Interim Financial Statements.
Ordinary Shares4648
(g) Commentary on the results
MeasurementCurrent period
Prior
comparable
period
(i)Basic and diluted earnings per shareNZ cents per share6.3 (24.2)
(ii)Returns to shareholders (see also section (d) above)$NZ'm- -
(iii)Significant features of operating performance:
(iv)Discussion of trends in performance:
(v)The Issuer's dividend policy
(vi)
(h) Audit of financial statements
Basis of preparation
Current period
Prior comparable
period
Refer to the media release.
Refer to Results for announcement to the market.
2 The following information, which may be presented in whatever way the Issuer considers is the most clear and helpful to users, e.g.,
combined with the body of the announcement, combined with notes to the financial statements, or set out separately.
(d) Details of individual and total dividends or distributions and dividend or distribution payments, which:
(i) have been declared, and
(ii) relate to the period (in the case of ordinary dividends or ordinary dividends and special dividends declared at the same time) or were
declared within the period (in the case of special dividends).
No interim dividend is recognised in respect of the 2023 financial year or final dividend in relation to the 2022 financial year.
Refer to the media release.
(f) Net tangible assets per security with the comparative figure for the previous corresponding period
(NZ Cents Per Share)
Refer to Air New Zealand website - https://www.airnewzealand.co.nz/dividend-history
Refer to the media release.
The annoucement is based on unaudited interim financial statements. The interim financial statements have been the subject of review by the external
auditor, pursuant to NZ SRE 2410 (Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity, issued by the External
Reporting Board.
This report is compiled in accordance with New Zealand Generally Accepted Accounting Practice (“NZ GAAP”). NZ GAAP consists of New Zealand
equivalents to International Financial Reporting Standards (“NZ IFRS”) and other applicable financial reporting standards as appropriate to profit-oriented
entities.
Any other factors which have or are likely to affect the results, including those where the effect could not be quantified:
Page 2
Air New Zealand Limited
NZX Preliminary Interim Report
PRELIMINARY HALF YEAR REPORT ANNOUNCEMENT
AIR NEW ZEALAND LIMITED
Half Year Ended 31 December 2022 (referred to in this report as the "current half year")
Accounting policies
Refer to Note 1 of the Interim Financial Statements.
Changes in accounting policies
Audit Review Report
A copy of the review report is attached at the back of the Interim Financial Statements.
Additional information
Not applicable.
This half year report was approved by the Board of Directors on 23 February 2023.
Dame Therese Walsh
Chair
Refer to Note 1 of the Interim Financial Statements.
Page 3
Air New Zealand Limited
NZX Preliminary Interim Report
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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