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MONTHLY: AIR: Air New Zealand Investor Update (Op Stats) - August 2016

14 Sep 2016 08:57NZX
Contents
o August market conditions
o Company news
o Operating statistics table

August market conditions

Air New Zealand carried 1,175,000 passengers during the month of August, an
increase of 4.4% compared to the same period last year. Revenue passenger
kilometres (RPKs) were 6.9% higher on a capacity (ASKs) increase of 8.4%.
Group load factors were down 1.2 percentage point overall to 82.1%.

Short Haul passenger numbers increased 3.8%.  In the Domestic market demand
(RPKs) increased by 7.8%, with capacity (ASKs) increasing by 8.7%, due to
increased services on Auckland-Queenstown.  Domestic load factor decreased
0.7 percentage points to 77.5%.

Tasman/Pacific demand (RPKs) increased 1.2% while capacity (ASKs) increased
by 4.0%. Load factor on Tasman/Pacific decreased 2.2 percentage points to
81.0%.

Long Haul passenger numbers increased 8.5% when compared to August last year,
with demand (RPKs) up 9.8% and capacity (ASKs) up 10.9%. Load factor on Long
Haul routes was 84.0%, down 0.9 percentage points.

On Americas/UK routes, demand (RPKs) increased 13.2% with capacity (ASKs)
increasing 12.9% due to the Auckland-Houston and Auckland-Buenos Aires
routes, which was partially offset by reduced frequency on the Auckland-Los
Angeles route. Load factor increased 0.2 percentage points to 85.4%.

On Asia/Japan/Singapore routes, demand (RPKs) increased 4.3%, with capacity
(ASKs) increasing by 7.7%, due to the commencement of the seasonal
Auckland-Ho Chi Minh City route. Load factor decreased 2.7 percentage points
to 81.7%.

For the financial year to date, Short Haul passenger revenue per ASK (RASK)*
decreased 6.0% while Long Haul RASK* decreased 12.1%.  Removing the impact of
foreign exchange, Group-wide RASK* decreased 10.1%, and Group-wide yields for
the financial year to date decreased 8.9% on the same period last year.

*  Air New Zealand''s operating statistics will provide Passenger revenue per
ASK, or RASK, going forward as a key metric of revenue performance. RASK is
defined as passenger revenue for the period divided by the total ASKs for the
period; compared to yield which represents the passenger revenue per
passenger kilometre flown.

Company news

The Airpoints(TM) and Fly Buys programmes take a new direction

Air New Zealand has been focused on making it simpler for AirpointsTM members
to earn Airpoints Dollars(TM) at a growing number of direct retail and travel
partners.

As a result, Airpoints(TM) and Fly Buys have elected to focus on their own
respective loyalty programmes and will no longer offer Airpoints Dollar
earning through the Fly Buys network from 17 October 2016.

For more information on Air New Zealand''s AirpointsTM programme, go to
www.airnewzealand.co.nz/airpoints

Three more businesses join the Air New Zealand Airpoints(TM) programme

Mitre 10, Tower Insurance and Storage King are the latest businesses to join
Airpoints(TM), giving members even more ways to earn their way to their next
flight.

They follow a number of other new partners announced recently, including
Mercury, Z, New World, Liquorland, Henry''s, Gilmours and Trents.

Airpoints members can currently earn Airpoints Dollars(TM) at Mitre 10 and
Mitre 10 MEGA stores under Airpoints'' current partnership with Fly Buys.
Mitre 10''s decision to partner directly with Airpoints will make it easier
for members to understand how to earn Airpoints Dollars in the future and
create further opportunities for customers.

Storage King, Australasia''s largest self-storage business has joined the
Airpoints for Business programme and is now offering Airpoints Dollars to
businesses signing a new storage contract and on a range of packaging
materials.

Tower Insurance will be offering Airpoints Dollars on its car, house and
contents insurance in the near future.

Airpoints members now have a choice of 55 businesses where they can earn
Airpoints Dollars.

Air New Zealand announces record profit, dividend and staff bonus for 2016
financial year

On 26 August, Air New Zealand announced earnings before other significant
items and taxation* for the 2016 financial year of $806 million, compared to
$474 million in the prior year. Earnings before taxation were $663 million
with net profit after taxation of $463 million, an increase of 40 percent and
42 percent, respectively.

A 2016 final fully imputed ordinary dividend has been declared of 10.0 cents
per share, bringing the full year ordinary declared dividends to 20.0 cents
per share, an increase of 25 percent on the prior year. The Board also
declared a fully imputed special dividend of 25.0 cents per share.  Both
dividends will be paid to shareholders on 19 September 2016.

In recognition of the record result, the Board has awarded a Company
Performance Bonus of up to $2,500 to 8,200 Air New Zealanders who do not have
other incentive programmes as part of their employment agreement.

Chief Executive Officer Christopher Luxon says the airline ended the year
with customer satisfaction at record highs, brand health in excellent shape,
the number one corporate reputation in New Zealand, and the staff culture at
the airline continuing to further improve.

Looking ahead, he acknowledges there is increased competition as other
international airlines also add capacity in recognition of strong tourism
demand for New Zealand.

"There''s no doubt customers have more choice but we are confident that we
have the right pricing, products and services to stay a step ahead of the
competition as we grow our business at home and overseas," says Mr Luxon.

Given the uncertain impact of competition and based on the current market
conditions, the airline expects earnings before taxation for the full year
2017 to be in the range of $400 million to $600 million.**

* Earnings before other significant items and taxation represent Earnings
stated in compliance with NZ IFRS (Statutory Earnings) after excluding items
which due to their size and nature warrant separate disclosure to assist with
understanding the financial performance of the Group. Earnings before other
significant items and taxation is reported within the Group''s audited annual
financial statements. Other significant items of $143 million includes $86
million related to the partial divestment of Virgin Australia and $57 million
related to settlement of a long-standing class action cargo legal claim.
Further details are contained within Note 3 of the Group financial
statements.
** Based on a fuel price of US$55 per barrel for the remainder of the year.

Ends.
End CA:00288973 For:AIR    Type:MONTHLY    Time:2016-09-14 08:57:03
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