View
0
Download
0
Category
Preview:
Citation preview
1
Investor Day 2013
2
Going beyond
Christopher Luxon
Chief Executive Officer
3
New Executive structure
Chief Strategy & Networks
Officer
ChiefSales Officer
Chief Operations
Officer
Chief Financial Officer
Chief Marketing & Customer
Officer
Chief Executive
Officer
Chief People Officer
Chief Flight Ops & Safety
Officer
StephenJones
MikeTod
NormThompson
RobMcDonald
BruceParton
DavidMorgan
LorraineMurphy
ChristopherLuxon
4
Focusing on the controllables
Fuel priceNatural disasters
Weather
Global recessions
Exchange rates
Culture
Fleet Product
Brand
Network
Safety
5
We want to be successful and significant
Our success is linked to New Zealand’s success
Go Beyond is our guide to what really matters
6
7
8
What success looks like to us
An aspiration to sustainably double our 10 year earnings
average*
*This is not a forecast
9
Our Aspiration
Aspiration to sustainably double
10 year earnings average*
10 year average
PBT
10 year average
Sustainablydouble
10 year average
Sustainablydouble
Normalised earnings before taxation
10
Who we are
A customer-centric and commercially savvy airline focused on the Pacific Rim
11
Our Air New Zealand
We are…
We are not…
12
A seamless transition
New management team in place January 1, 2013
New functional structure
A team of globally experienced leaders
with deep institutional
knowledge
Management information and
performance systems aligned
to new structure
13
New Sales leadership…
Chief Sales
Officer
GGMNew Zealand
& Pacific Islands
GM Asia
GM Americas &
Europe
GMAustralia
GM Cargo
14
..with a focus on channels & customers
Business
Families
Yuma Yuma girls
Skiers
Honeymooners
School kids
Channels Leisure Online Group Corporate
Our Japanese customers
ILLUSTRATIVE ONLY
…and market development
Product
5) Establish distribution channels
3) Identify product & product benefits for
target segments
4) Develop Pricing Plan
6) Build brand visibility
7) Integrated consumer & trade
promotions
8) Leverage partners
9) Establish Sales & Market Development
resource
10) Review Route Performance
1) Market Development Objectives
Customers2) Define market
segments & identifytarget segments
Brand
People Price
Place
Promotion
Partnerships
16
An overview of our markets…
17
Domestic New Zealand
Competitive environment
Pricing to stimulate market
Acceleration of A320s bringing down cost base
Unparalleled network
18
Tasman & Pacific Islands
Strong market performance
Virgin Australia alliance working well
Seats to Suit meeting the market
Improved network offering
19
China
Focus on Shanghai improving efficiency
Likely launch market for 787
Refocused sales function
Better in-market execution
20
Japan
A slowly recovering market
Some recent headwinds, primarily weak Yen
We are adjusting our marketing accordingly
ANA alliance
21
North America
Capacity growth to meet demand
New competition with Hawaiian growth
New LAX terminal, better transit experience
22
Europe
Exit Hong Kong-London route
Focus now on Los Angeles-London market
Making excellent progress
23
A virtuous circle
growprofit
sustainablereturns
to shareholders
investin our business
growrevenue
controlcosts
24
Becoming fit to win
energised management team
renewed focus on market sales execution
relentless cost control and resource optimisation
proactive pursuit of growth opportunities
We are firing on all cylinders
25
Executing the plan
Stephen Jones
Chief Strategy & Networks Officer
26
Our Domestic core
Strong and growing…
Deep network and schedule
Simpleend-to-end
journey
Modernfleet
Detailedyield
management
27
The Tasman
Structurally better and growing…
Seatsto
Suit
Growingmarket
Virginalliance
Virgininvestment
28
Air New Zealand & Virgin Australia
A powerful partnership…
Returning the Tasman to growth
Trans-Tasman alliance is a compelling customer proposition
Results are now clearLower faresMore passengersMore connecting journeysNew city pairsGrowth
Re-authorisation process now underway (5 year term sought)
Decision likely September 2013
29
We are now 1.2 airlines
The Virgin investment by the numbers…
In addition to our improved core business, the investment provides:
An economic exposure to the faster growing Australian market
A position in any Australasian regional consolidation
A liquid and readily valued investment
516mshares held
$300mNZD value @ 48 cps
27 cpsto Air NZinvestors
18%of Air NZ
market cap
30
International
Steadily improving…
Network portfolio
upgraded
Costs reducing
Ancillary revenue
Fleet efficiency
31
Reshaping International
Creating structural advantage through partnerships
Focus on Pacific Rim marketsDirect flightsStrong economic growth
Exiting markets where no competitive advantage existse.g. Hong Kong–London
Growing the network around deep partnershipsLeveraging home market strength for better customer proposition
32
Alliances
A quickly changing landscape…
Immunised revenue share arrangements emerging as preferred consolidator
Global alliances remain very important – but don’t meet all needs
Deeper cooperation on specific markets required
Partner choice within global alliance may be limited
Bilateral relationships outside of global alliance required
Air New Zealand at forefront of this evolutionVirgin AustraliaCathay Pacific
33
Cathay Pacific
A strong Hong Kong partner
Deep local distribution and brand strength
Product and brand aligned with Air New Zealand proposition
Alliance authorisation for Auckland-Hong Kong sector only
Early results encouraging
Exit Hong Kong-London without compromising Auckland-Hong Kong
34
Ideal new market characteristics
Ideal new
market
1. Market size to
support 2-3 weekly
services 2. Higher yielding
traffic mix > Bus/VFR
3. Strong historical
and projected
growth
4. Strong point-to-
point market
5. Focused markets(1-2 main
cities)
6. Structural
advantage, mostly
outbound
7. Conduct advantage -
network, cost or
productcompetitive advantage
market volume, quality and
growth
demand flow characteristics
35
New market focus on Pacific Rim
Strong existing traffic flowsHigh growthDirect flightsPartnerships
36
Conclusion
Playing in the right markets
Working with the right partners
Australasian business portfolio
Pacific Rim network focus
37
Customers at the core
Mike Tod
Chief Marketing & Customer Officer
38
39
40
41
42
43v
44
45
46
47
48
49
50
51
52v
53
54
55
56
57
58
59
60
61
62
63
64
65
A winning team
Lorraine Murphy
Chief People Officer
66
What we are known for
New Zealand Employer of Choice
Excellent reputation
Strong and proud culture
Talented, hard working people
Depth of experience
Constructive partner relationships
67
Core HR priorities
Engagement & culture
Diversity
Leadership
Performance
Sales capability
Succession planning
Employee relations
Talent
Our efficiency and effectiveness
Workforce planning
68
Leadership
Brand… “That’s an Air New Zealander”
What is ours
Management foundation and leadership is additive
A Leadership Development framework
Join Companies Leave Leaders
69
Leadership
Leadership
Culture
Engagement
Performance
70
Talent strategies
Leaders are talent managers
Talent identification and development framework
Attraction of talent
Emerging leaders
71
Performance
Differentiated
Consequential
Supported by core processes
Driving a culture… of high performers
72
Fighting fit
Bruce Parton
Chief Operations Officer
73
New Operations structure
Chief Operations
Officer
Technical Operations
Airline Operations Airports Regional
AirlinesSupply Chain
Cabin Crew
74
Without operational integrity, we don’t have an airline…
75
Simplifying our fleet
today tomorrowB737A320 A320
B747B767B777
B777B787
=Fuel efficiency
Operational savings
Better customer experience
76
Investing in continuous improvement
No stone unturned…
Project ChoiceIBM call centresOngoing initiatives
77
A new approach to airports
New structure under experienced GGM Airports John Whittaker
Next wave of technology improving customer ground experience
New ground handling contracts
Investment in mobile technology
78
Tech Ops
2600 staff
3 subsidiary companies
1.8 million productive man hours
40% for third party contracts
79
Changing maintenance requirements
Modern aircraft with longer maintenance intervals
Legacy fleet maintenance simplified
Significantly less man hours required going forward
80
Focusing on what the customer values
B787 entry into service
B777-200 upgrade
Lounge upgrades (CHC, AKL, LAX)
New ATR72-600s on regional + upgraded existing -500s
Improved check-in experience
Seamless journeys through our integrated network
81
Delivering a superior customer experience
82
Consistency is important
simplecheck-in
efficient boarding
great flight
smootharrival
Choose my seat
Drop my bag
Quick and easy
How late can I leave it?
Space for my carry-on?
Leave on time
Friendly service
Get what I expect
Arrive on time
Bags out quickly
83
Regional airlines
An integral part of our wider network
Superior servicing of small towns and regional centres
Regional economy remains challenging
Fleet flexibility (ATR72 Q300 B1900D)
Agile business equipped to respond quickly to market
84
Fighting fit
Our tempo as a business has increased
New, more efficient organisation structure
Simplifying, less maintenance intensive fleet
Focusing on what the customer values
Relentless focus on effective cost management
85
Financial management
Rob McDonald
Chief Financial Officer
86
Agenda
Capital Management
Hedging
Fleet
Loyalty
IT at Air New Zealand
87
Capital management
Fleet activity in next 3 years will shift leverage from lower end of targeted leverage range of 45% -55%
Fleet funding will be supported by:
Cash generating at operating level
Strong liquidity
Excellent access to funding market
Credit rating Baa3
Benign maturity profile
Share buyback in progress -
50
100
150
200
250
300
350
Jun 13 Jun-14 Jun-15 Jun-16
$NZmDebt Maturity Profile
as at 30 June 2012
88
Hedging
Air NZ undertakes hedging programmes to give the business time to adjust to material changes in:
Jet fuelForeign exchange rates
Moving to all Brent hedging
Fuel hedge Position 78% hedged to 30 June 2013
The first half of FY14 is 54% hedged
FX hedging programme progressing unadjusted
Significant depreciation of Yen necessitated review of Japan capacity
89
Fleet
Fleet inductions in 2013
3 x A320
2 x ATR72
Fleet inductions in the next 3 years
Calendar Year 2014 2015 2016
B777-300ER 2
B787-9 3 3 2
A320 3 4
ATR72 1 1 1
90
Fleet
Fleet exits
B747 – 2014
B737 – 2015
B767 – 2015 (under review)
By 2016
Longhaul fleet – 777/787
Short haul jet fleet – A320
Average Jet age (seat weighted) will fall to 6.5 years by Dec 2016
91
Loyalty
Significant upgrading of leadership capability
Appointed General Manager with external loyalty programme experience
New leadership team to drive:
Engagement
Commercial potential
Focus in coming year:
Increased engagement with partners to grow airpoints earning
Gold/Gold Elite review for value and relevance
Onesmart – fee simplification
92
Loyalty
Membership grown to 1.36m, up 18% YOY
Over $1b NZD in Airpoints rewards have been redeemed by Airpoints members since 2004
Airpoints direct earn credit card accounts up 6% (industry average growth 0.7%)
Total card spend up 10% YTD YOY (industry average 3.5%)
March 2013 v 2012 Airpoints spend up 11% (industry average -0.3%)
OneSmart activations up 45% YOY
Awarded the 2013 PayBefore Best General Purpose Reloadable Card Program International category
20% more customers now earning with our retail partners
Retail Airpoints issuance up 37% YTD YOY
Non air earn now exceeds air earn
93
IT at Air New Zealand
Major enabler of changeA leading IT department in New Zealand – 255 people, flex with
contractorsResilient, highly available infrastructure footprint across two Tier
III sitesReservation System
In-house
Low cost
Flexible – speed to market
Focus in coming yearData analytics
Mobility
Operational system refresh
94
Questions?
Recommended