Air NZ 2024 Annual Meeting Materials

Stock exchange listings: New Zealand (NZX: AIR) / Australia (ASX: AIZ) / ADR (OTC: ANZLY)


MARKET ANNOUNCEMENT

Air New Zealand postal address: Private Bag 92007, Auckland, 1142, New Zealand
Investor Relations email: investor@airnz.co.nz
Investor website: www.airnewzealand.co.nz/investor


26 September 2024

Air New Zealand 2024 Annual Shareholders’ Meeting Materials


Please find attached to this announcement the Chairman and CEO address, in addition
to the presentation for Air New Zealand’s 2024 Annual Shareholders’ Meeting which
will be held today at 2pm.

There is no new material information contained within the speeches or the
presentation.

Information on meeting participation is included in the Notice of Meeting. Shareholders
attending online will be able to access the meeting link and Portal Guide from the
Company’s website, https://www.airnewzealand.co.nz/annual-meeting.


Ends.



Jennifer Page
General Counsel & Company Secretary
jennifer.page@airnz.co.nz
+64 27 909 0691

For investor relations questions, please contact:
Kim Cootes
Head of Investor Relations
kim.cootes@airnz.co.nz
+64 27 297 0244

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ANNUAL SHAREHOLDERS’ MEETING
TUESDAY 26 SEPTEMBER 2024

CHAIRMAN’S ADDRESS

Across the 2024 financial year, our amazing team of Air New Zealanders continued to demonstrate
their ability to adapt and innovate, delivering new tools and digital enhancements, greater self-
service capability and refreshed onboard offerings for our customers. All against the backdrop of
what could only be described as an incredibly dynamic and challenging operating environment.

The Board and I are proud of all that has been achieved, and of the agility, resilience and ongoing
commitment to safety and excellence that the entire Air New Zealand whānau has shown over this
time. We know this will hold us in good stead as the short-term headwinds we are facing start to
abate.

The financial result we announced a little under a month ago, with earnings before tax of $222
million and net profit after tax of $146 million. It was, as expected, considerably lower than the 2023
result, when pent up demand and constrained capacity led to one of the strongest financial results
in our history.

But there is so much more to the 2024 financial year than just the financial result, and reflecting on
the year, there is much to be proud of. We carried 16.5 million passengers on our network, and
rolled out a series of customer innovations, new products and digital solutions, all with a view to
improving our customer proposition and the way our people deliver it. Greg will touch on this in
more detail shortly.

We were again awarded New Zealand’s most attractive employer, highlighting our ongoing
commitment to creating a diverse and inclusive workplace for our people.

We also delivered improved on-time performance, up almost 3 percentage points even though we
operated 17 percent more capacity this year, and we reinstated ordinary dividend payments to
shareholders.

These are all impressive achievements when you consider the raft of obstacles the airline has faced
over the course of the year.

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Greg will speak to these a little later, but I wanted to highlight perhaps the most impactful of those
obstacles here, as it has had a significant impact on the airline’s financial performance.

Additional maintenance requirements globally for the engines that power our A321neo and
Dreamliner fleets have resulted in up to six of our A321neo aircraft and up to three of our Dreamliner
aircraft out of service at any one time. That’s close to a billion dollars’ worth of our most efficient
aircraft, sitting on the ground, unable to be flown. We estimate earnings for the year would have
been around $100 million higher, net of compensation, had we been able to operate our aircraft
and schedule as intended.

Despite this, we remain focused on the big picture. In times like this, it would be easy to pull back,
to stop investing, and focus purely on short-term profitability. But we know this approach will not set
the airline up for success in the mid to long term.

Our balance sheet is robust and has the capacity to weather this storm without compromising on
our core strategy. We remain committed to investing sensibly in the areas that matter to our
customers and our people and focusing on opportunities to improve returns for our shareholders.

One important thing I did want to mention before we go any further. As many of you will be aware,
in July this year Air New Zealand removed its 2030 Science Based carbon reduction target and
withdrew from the Science Based Targets Initiative.

This was a very difficult decision, and one we did not make lightly. It does however reflect the
reality that many of the levers needed to meet this target are not progressing at the pace required
and are outside our control. We are currently developing a potential replacement that more
appropriately reflects the challenges we face and will provide an update in due course. I want to
assure you that our decarbonisation work remains a critical priority.

Turning to our capital management framework, we have taken a number of steps this year to align
our current metrics with the targets set out in our revised capital management framework.

In addition to reinstating an ordinary dividend in line with our target payout ratio range, we have
purchased aircraft with cash, helping to grow our unencumbered fleet to approximately $1.6 billion.
We also chose to make early repayments of about $70 million in secured aircraft debt. We remain
committed to maintaining an investment grade credit rating as it provides financial resilience and
flexibility in terms of access to various funding markets and attractive pricing.

I will close this section out by briefly discussing the outlook statement.

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Along with some of the operational issues I’ve just outlined, there were also a number of trading
conditions that significantly impacted our result for the second half of the 2024 financial year. In
particular the tougher economic backdrop in New Zealand driving softness in demand, the
cumulative impact of inflationary cost pressures, the impacts of aircraft availability issues and
significant competition on our US network.

We expect these trading conditions to remain similar through the first half of the 2025 financial year.
Given the ongoing uncertainty, the airline is not providing guidance at this time.

What I do want to reiterate though, is that these challenges will pass. Our strong leadership,
innovative mindset and customer first mentality will see us come through the current environment
stronger than ever.

I am enormously proud of how Air New Zealand has navigated the past year. On behalf of the
Board, I would like to thank the entire Air New Zealand whānau. I also thank my fellow directors,
and you, our shareholders for your ongoing support.

I would now like to invite Greg to address the meeting.

CHIEF EXECUTIVE OFFICER’S ADDRESS

Kia ora and good afternoon everyone.

2024 was a year that was as satisfying and rewarding as it was challenging and frustrating. Often
all in the same week.

What makes me most proud, is how our team’s energy and drive to deliver for our customers shone
through.

We rolled out new features on our digital app, including baggage tracking capability, and multiple
other booking management enhancements which place more self-service capability in our
customers hands and help us manage disrupts more effectively.

Our recently launched Ops Collab platform, which provides instant multi-way communication
between cabin crew and operational ground staff, has been a gamechanger for improving our
boarding and aircraft turn times.

We redesigned check-in areas at Auckland Domestic and International airports, minimising queues
and providing a better customer experience. We also rolled out a reinvigorated Seats to Suit product

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on our international short-haul network to give customers greater flexibility and to ensure we
continue to provide good value across all ticket price points.

In other words, we haven’t been sitting idle, waiting for the current operating and macro environment
to improve. We have been focussed and deliberate with our decisions, and our investments, with a
view to making sure we are fighting fit once aircraft availability issues subside.

Although there are considerable distractions in the current environment, we are facing our
challenges head on.

I won’t go into each point in detail but there is a huge amount of work that we have undertaken to
mitigate some of the headwinds.

As noted earlier, the additional maintenance requirements for the engines that power our A321neos
and Dreamliners has been the single most impactful operational challenge this year. We took
immediate action to minimise disruption, leasing three Boeing 777-300s and securing additional
engine spares, no easy task in a market where many other airlines globally are also searching.

You also saw us make some really difficult decisions, such as the temporary suspension of our
direct route to Chicago, to make sure we could deliver a schedule that was more reliable.

Moving on to the economic slowdown in New Zealand, which has impacted demand on our
domestic network, particularly in the corporate and government sectors. We responded quickly,
making targeted schedule reductions, reviewing our revenue management settings and focusing
on improved ancillary revenue offerings.

Overall market capacity for the North American network is up almost 50 percent on last year, but
our strategy for international markets remains clear. Our premium cabins are important to us, and
you will see this reflected in our retrofit programme later this year, with the introduction of innovative
new products such as Business Premier Luxe. As our new 787’s start arriving from Boeing in the
2026 financial year, you will also see our long awaited SkyNest product being released to the
market.

We will also continue to build marketing programmes that inspire travel to and from New Zealand
on Air New Zealand.

The impact of inflation being felt across the business is significant and has meant that non-fuel
operating costs have increased 20 to 25 percent across the past five years, which in a tight revenue
environment is very difficult to navigate.

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A key priority for us continues to be delivering excellent customer service and a range of competitive
fares. This requires ongoing discipline around our cost base, and you have seen us make targeted
adjustments, including a two percent reduction in headcount, as well as pursuing improvements in
the controllable cost base.

As Therese noted earlier, we remain focussed on the big picture. For me that means controlling
what we can, relentlessly focusing on our customers and our people, and investing for the future.

You will see on this slide that there are three key areas where we are directing our investment
spend over the coming years. This includes our fleet, key infrastructure such as engineering
hangars and hybrid electric ground service equipment, as well as digital initiatives and
enhancements. These investments are the right thing to position our airline for success over the
medium and long-term.

Despite the external dynamics at play this year, our Kia Mau strategy continues to provide a
roadmap for our business. It allows us to look beyond these temporary headwinds and ensure we
are continuously improving our customer proposition and delivering sustainably stronger financial
performance over the medium to long term. We have made demonstrable progress against this
roadmap and are excited about the momentum building in a number of areas – I’ll touch on just a
few highlights from the past year.

Looking at our three key profit drivers, our efforts to Grow Domestic are currently somewhat
challenged with the NEO issues, but we have enhanced and added more self-service offerings via
our app, invested in new and efficient hybrid electric ground service equipment to support our
operational reliability and we are about to trial a Starlink-powered Wi-Fi solution on domestic
aircraft. All of these investments will put us at the top of our game when we see our NEO fleet scale
back up and return properly to the domestic network.

Progress against our ‘Elevate International’ pillar has spanned across all areas of the customer
experience, many of which I have already highlighted here today. Responding to significant
demand, we now offer Bali services year-round and also had our revenue alliance partnership with
Singapore Airlines reauthorised for another five years.

As aircraft availability issues start to resolve, we are turning our minds to the network opportunities
and potential new routes we may look to serve in the future.

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As we look to lift the value of loyalty to our members and our airline, it has been a big year. After
many months of hard work across the business, we successfully launched our Airpoints™
programme in the iFly Loyalty platform a few weeks ago.

iFly lays the foundation for an improved member experience - making it easier to access and view
Airpoints™ activity and benefits, as well as streamlining the process to expand and onboard new
ground earn partners.

This is a key step on our journey to create a more rewarding experience for our loyal customers
today, and in the future. We expect to have more developments to share as the 2025 financial year
progresses.

I won’t go into details across each of our key enablers, but this year has been significant in terms
of the level of new and enhanced data and digital tooling that we have put in the hands of our
people.

Better data, at their fingertips, providing real-time information and feedback, help our people get
continuously better at delivering a world-class operational service for our customers.

We believe in the strength of our Kia Mau strategy and our fantastic team. I’m excited about the
opportunities ahead as we move out of this current cycle.

Tēnā koutou, tēnā koutou, tēnā koutou katoa.

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AIR NEW ZEALAND 2024 ANNUAL RESULTS
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AIR NEW ZEALAND 2024 ANNUAL RESULTS
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Annual
Shareholder
Meeting
26 September 2024
2024
NZX: AIR | ASX: AIZ | US OTC: ANZFY

AIR NEW ZEALAND 2024 ANNUAL RESULTS
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AIR NEW ZEALAND 2024 ANNUAL RESULTS
Dame Therese Walsh (Chair)
Larry De Shon
Claudia Batten
Alison Gerry
Dean Bracewell
Paul Goulter (Retires 26.09.24)
Laurissa Cooney
BOARD OF DIRECTORS
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AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING

AIR NEW ZEALAND 2024 ANNUAL RESULTS
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AIR NEW ZEALAND 2024 ANNUAL RESULTS
ONLINE ASSISTANCE
ONLINE ASSISTANCE
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AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING

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ORDER OF MEETING
Questions on 2024 performance
CEO’s address
Chair’s address
Resolutions and voting
General questions

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CHAIR’S ADDRESS
Dame Therese Walsh

$222m
earnings before tax
includes $90m of unused credit breakage
16.5m
Passengers flown
Up 4% on last year
$459m
Cargo revenue
above pre-Covid levels despite increased competition
Awarded New Zealand’s
Most Attractive Employer
by Randstad for 2024
On-time performance
improved to 79.4%
up from 76.8% with further improvements targeted
3.5cps
unimputed ordinary dividends
for the 2024 financial year
Customer satisfaction
up at pre-Covid levels
Now over 4.6 million members worldwide
14% annual growth in
Airpoints
TM
membership
2024 YEAR IN REVIEW
Driven by improved onboard offerings and airport
touchpoints
~$100m adverse impact
to FY24 earnings
From aircraft availability challenges, net of
compensation
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AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING

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CAPITAL MANAGEMENT ACTIONS
AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING
Invest in core operations
Maintain financial resilience and flexibility
DistributionsGrowth capex
Underpinned by our commitment to maintain investment grade credit rating metrics
• Target liquidity range of $1.2 billion to $1.5 billion
• Net Debt to EBITDA ratio of 1.5x to 2.5x
• Fleet and infrastructure investments above WACC through the cycle
• Investment to support the airline’s decarbonisation ambitions
• Ordinary dividend pay-out ratio of
40% to 70% of underlying net
profit after tax (NPAT)
• Return excess capital via special
dividends or share buybacks
• Disciplined investment in value
accretive capex
• Target ROIC above pre-tax
WACC
•Major progress on Auckland jet base and 787 interior
programmes
•Investment in battery electric and hybrid ground service
equipment
•~$200 million 2023 special dividend paid
•~$70 million unimputed ordinary interim dividend paid
•~$50 million unimputed ordinary final dividend declared
•Cash purchase of two A321neo aircraft
•Establishment of new $250 million revolving credit
facility, replacing Crown Standby Facility cancelled in
Mar 2024
•Early repayment of select aircraft debt
PROGRESS MADE IN FY24

2025 OUTLOOK
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AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING
We have outlined a number of trading conditions that have
significantly impacted our result for the second half of the 2024
financial year, in particular the tougher economic backdrop in New
Zealand driving softness in demand, the cumulative impact of
inflationary cost pressures, the impacts of aircraft availability issues
and significant competition on our US network.
We expect these trading conditions to remain similar through the first
half of the 2025 financial year. Given the ongoing uncertainty, the
airline is not providing guidance at this time
.

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CEO’S ADDRESS
Greg Foran

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AIR NEW ZEALAND 2024 ANNUAL RESULTS
Improved customer satisfaction
Redesigned check-in
Engaged workforce
Reinvigorated Seats to Suit
Digital innovationImproved inflight experience
KEY HIGHLIGHTS
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AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING
Record growth in Airpoints
TM
members
Improved collaboration

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AIR NEW ZEALAND 2024 ANNUAL RESULTS
Economic slowdown
in New Zealand
•Swiftly negotiated leased aircraft and
engines
•Increased inventory of parts and
spares
•Network and schedule adjustments,
including temporary suspension of
Chicago
Challenges with
aircraft availability
Cost inflationInflux of competition
on North America
•Targeted capacity reductions
•Improved uptake of ancillary
revenue products
•Monitoring revenue management
settings to respond in real time to
demand changes
•Productivity initiatives
•Targeted headcount reductions
•Review and negotiation of key
supplier arrangements
We expect a continuation of these factors into FY25
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WE ARE FACING OUR CHALLENGES HEAD ON
•Targeted marketing activity to
maintain strength in premium
cabins
•Increasing cargo volumes to offset
passenger demand softness
•Collaboration with Tourism New
Zealand and alliance partners to
improve customer reach
AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING

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AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING
Fleet
InfrastructureDigital
INVESTING IN THE LONG- TERM

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AIR NEW ZEALAND 2024 ANNUAL SHAREHOLDER MEETING
•New and enhanced self-service
offerings for customers
•Investment in new and efficient
ground service equipment
•Two new domestic A321neos
delivered
Elevate
international
Lift
loyalty
Grow
domestic
•Reinvigorated Seats to Suit offering
•Redesigned premium check-in at
Auckland Airport
•Renewed Singapore Airlines alliance
•Refresh of 777 interiors
•Retail partnership ecosystem
grew by four partners
•Airpoints dollar
TM
issuance by
partners up 3 percent
•Prepared for launch of iFly
platform
ENABLED BY STRONG CULTURE AND FOCUSED INVESTMENT
•Launched series of digital
tools to support operational
and customer service
excellence
•Investment in infrastructure
Brilliant basicsDigitalSustainabilityPeople and safety
•13 union agreements ratified
•New Mangōpare pilot cadetship
launched
•Safeguard New Zealand
Workplace Health & Safety Award
•Purchase of first battery
powered, all electric aircraft
due to be delivered in 2026
•Procurement of SAF, targeting
uplift of 10% of total volumes
by 2030
•Multiyear upgrade of digital
platforms and tooling
•Artificial intelligence proof of
concept trials
CONTINUED FOCUS ON DELIVERY OF OUR KIA MAU STRATEGY

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QUESTIONS
ON 2024
PERFORMANCE

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RESOLUTIONS
FOR VOTING
Resolution 1
To r e-elect Claudia Batten
Resolution 2
To r e-elect Alison Gerry

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PROXIES AND POSTAL VOTES RECEIVED
AS AT 25 SEPTEMBER 2024
Proxy votesPostal votes
ForAgainstAbstainDiscretionForAgainstAbstain
Resolution 1:
Re-election of
443,951,831 12,985,879 3,444,030 8,679,799 1,729,244,978 1,272,173 693,724Claudia Batten
Resolution 2:
Re-election of
444,498,344 12,577,054 3,444,631 8,541,510 1,729,192,6771,346,842670,111Alison Gerry

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To re-elect Claudia Batten
RESOLUTION 1

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To re-elect Alison Gerry
RESOLUTION 2

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GENERAL
QUESTIONS

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