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Investor Day 2013

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Going beyond

Christopher Luxon

Chief Executive Officer

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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

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Focusing on the controllables

Fuel priceNatural disasters

Weather

Global recessions

Exchange rates

Culture

Fleet Product

Brand

Network

Safety

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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

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What success looks like to us

An aspiration to sustainably double our 10 year earnings

average*

*This is not a forecast

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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

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Who we are

A customer-centric and commercially savvy airline focused on the Pacific Rim

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Our Air New Zealand

We are…

We are not…

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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

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New Sales leadership…

Chief Sales

Officer

GGMNew Zealand

& Pacific Islands

GM Asia

GM Americas &

Europe

GMAustralia

GM Cargo

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..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

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An overview of our markets…

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Domestic New Zealand

Competitive environment

Pricing to stimulate market

Acceleration of A320s bringing down cost base

Unparalleled network

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Tasman & Pacific Islands

Strong market performance

Virgin Australia alliance working well

Seats to Suit meeting the market

Improved network offering

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China

Focus on Shanghai improving efficiency

Likely launch market for 787

Refocused sales function

Better in-market execution

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Japan

A slowly recovering market

Some recent headwinds, primarily weak Yen

We are adjusting our marketing accordingly

ANA alliance

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North America

Capacity growth to meet demand

New competition with Hawaiian growth

New LAX terminal, better transit experience

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Europe

Exit Hong Kong-London route

Focus now on Los Angeles-London market

Making excellent progress

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A virtuous circle

growprofit

sustainablereturns

to shareholders

investin our business

growrevenue

controlcosts

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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

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Executing the plan

Stephen Jones

Chief Strategy & Networks Officer

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Our Domestic core

Strong and growing…

Deep network and schedule

Simpleend-to-end

journey

Modernfleet

Detailedyield

management

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The Tasman

Structurally better and growing…

Seatsto

Suit

Growingmarket

Virginalliance

Virgininvestment

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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

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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

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International

Steadily improving…

Network portfolio

upgraded

Costs reducing

Ancillary revenue

Fleet efficiency

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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

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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

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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

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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

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New market focus on Pacific Rim

Strong existing traffic flowsHigh growthDirect flightsPartnerships

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Conclusion

Playing in the right markets

Working with the right partners

Australasian business portfolio

Pacific Rim network focus

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Customers at the core

Mike Tod

Chief Marketing & Customer Officer

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A winning team

Lorraine Murphy

Chief People Officer

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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

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Core HR priorities

Engagement & culture

Diversity

Leadership

Performance

Sales capability

Succession planning

Employee relations

Talent

Our efficiency and effectiveness

Workforce planning

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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

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Leadership

Leadership

Culture

Engagement

Performance

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Talent strategies

Leaders are talent managers

Talent identification and development framework

Attraction of talent

Emerging leaders

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Performance

Differentiated

Consequential

Supported by core processes

Driving a culture… of high performers

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Fighting fit

Bruce Parton

Chief Operations Officer

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New Operations structure

Chief Operations

Officer

Technical Operations

Airline Operations Airports Regional

AirlinesSupply Chain

Cabin Crew

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Without operational integrity, we don’t have an airline…

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Simplifying our fleet

today tomorrowB737A320 A320

B747B767B777

B777B787

=Fuel efficiency

Operational savings

Better customer experience

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Investing in continuous improvement

No stone unturned…

Project ChoiceIBM call centresOngoing initiatives

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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

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Tech Ops

2600 staff

3 subsidiary companies

1.8 million productive man hours

40% for third party contracts

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Changing maintenance requirements

Modern aircraft with longer maintenance intervals

Legacy fleet maintenance simplified

Significantly less man hours required going forward

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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

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Delivering a superior customer experience

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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

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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

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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

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Financial management

Rob McDonald

Chief Financial Officer

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Agenda

Capital Management

Hedging

Fleet

Loyalty

IT at Air New Zealand

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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 -

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100

150

200

250

300

350

Jun 13 Jun-14 Jun-15 Jun-16

$NZmDebt Maturity Profile

as at 30 June 2012

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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

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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

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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

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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

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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

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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

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Questions?