Ann: ADDRESS: AIR: Air NZ 2013 Annual Meeting Sha

• Release Date: 27/09/13 15:53
• Summary: ADDRESS: AIR: Air NZ 2013 Annual Meeting Shareholder Address
• Price Sensitive: No
• Download Document  19.3KB

					AIR
27/09/2013 13:53
ADDRESS

REL: 1353 HRS Air New Zealand Limited (NS)

ADDRESS: AIR: Air NZ 2013 Annual Meeting Shareholder Address

AIR NEW ZEALAND ANNUAL SHAREHOLDER MEETING
FRIDAY 27 SEPTEMBER 2013

JOHN PALMER'S OPENING REMARKS

Welcome everyone to the Aviation Display Hall here at MOTAT - a highly
relevant location for Air New Zealand's 2013 Annual Shareholder Meeting.

We are delighted to have this opportunity to share with you the great history
of Air New Zealand and its predecessor TEAL, exemplified by the wonderful
work of the Friends of the Solent Flying Boat in restoring the "Aranui" - the
only remaining example of this pioneering aircraft.

Fittingly, stimulation of tourism to New Zealand was the reason behind the
New Zealand Government's investment in flying boats 1939.

The dedication of Air New Zealanders is demonstrated by the presence here
today of a number of crew, engineers and Captains who flew these wonderful,
historic aircraft to some of the most romantic destinations in the world -
they will be happy to answer your questions, and no doubt share a few
stories, at the conclusion of the meeting.

This meeting is open to the public and is being webcast live for the benefit
of those unable to be here, and we have members of the media in attendance
also. Welcome all.

Before we start the annual meeting, I would like to introduce to you the Air
New Zealand Board of Directors.

From my far left:
- Rob Jager
- Jan Dawson
- Paul Bingham
- Tony Carter

And from my far right:
- Dr Jim Fox
- Roger France
- and our Chief Executive Officer Christopher Luxon

Seated in the front row and assisting us today are:
- Rob McDonald, the company's Chief Financial Officer
- John Blair, General Counsel and Company Secretary
- James Gibson from Bell Gully, the company's lawyers
- and Andrew Dick from Deloitte, the company's auditors

We also have several other members of the Executive team present today.

Moving to the formalities of the meeting, I note that there is a quorum
present and I declare the meeting open.

Notice of the meeting was duly given and the meeting has been properly
convened. We will turn to resolutions later in the meeting. Please note that
only shareholders, proxy holders or shareholder company representatives may
vote.

The order of events for this afternoon's meeting will be as follows:

- Following short addresses from Christopher Luxon and myself, I will take
questions regarding the Company's performance
- I will then move to the formal resolutions of the meeting
- Following this, I will open the floor to general discussion

JOHN PALMER'S ADDRESS

The 2013 financial year was one of significant progress for the company.
Earnings before taxation were $256 million, 172 percent ahead of last year's
result. Statutory net profit after taxation was $182 million.

This was the company's best result in five years, and I note that we
comfortably exceeded our initial guidance of more than doubling the previous
year's profit figure. Operating cash flow was a record $750 million,
reflecting the strength and quality of the result.
Some key factors contributed to this, including the benefits of a modern,
more fuel efficient fleet and an optimised global network with fewer
underperforming routes. All parts of the network contributed positively,
which couldn't always be said in the past.

We are now making good progress towards our goal of delivering sustainably
improved returns to shareholders. Costs are being managed, and the company
has a strong financial position with $1.15 billion of cash on hand and a
gearing at a historic low of 39.1 percent.

Importantly for shareholders, total dividend for the 2013 financial year was
8 cents per share, resulting in a dividend payout ratio of 49 percent. This
is a 45 percent increase on the previous year, and is testament to the sound
financial position of the company.

The Board has announced today an extension of the share buyback programme,
which has been in effect since last year's Annual Shareholder Meeting. The
programme will now run for a further year, acquiring a maximum of 3 percent
of the company's shares, or a value of $45 million, whichever is higher.

As many of you will be aware, this is my last Annual Shareholder Meeting as
Chair. For the past 12 years I have had the honour of leading this iconic
company, and some key events and changes have taken place over that time.

The collapse of Ansett Australia and the events of 9/11 provided a
challenging environment in which to start rebuilding Air New Zealand in late
2001. Since that time, the airline has benefited from outstanding leadership,
embracing a culture of innovation and calculated risk taking.

The airline today bears little resemblance to that of a decade ago. Fuel
prices are at levels that would have been unimaginable in 2001, and yet Air
New Zealand has remained consistently profitable through a range of adverse
economic conditions and global events.

Having the Crown as a majority shareholder has given the airline the stable
ownership dynamic required to successfully execute this turnaround story. The
New Zealand government has received in excess of $500 million in dividends
during this time, and the fact that the airline is being held up as a model
for the mixed ownership programme is testament to how far we've come from the
dark days of 2001.

It gives me great satisfaction to be stepping down now that Christopher Luxon
is established in the Chief Executive role. In the few short months since he
took over, Christopher has shown himself to be an inspirational leader who
can take Air New Zealand to the next level of performance.

Subject to his re-election, Tony Carter will assume the Chairmanship at the
conclusion of this meeting, and shareholders and customers alike can be
confident that the progress will continue. Tony is an experienced and
successful business leader with a great understanding of competitive markets
and the importance of customer focus.  The Board has today appointed Jan
Dawson to the position of Deputy Chair, replacing Tony Carter.

Despite all the industry pressures, Air New Zealand is again generating
acceptable shareholder returns. The challenge for the new Board and
management is to further improve on that momentum, and I'm confident that
they can.

Thank you, I will now hand over to Christopher Luxon.

CHRISTOPHER LUXON'S ADDRESS

Good afternoon everyone, and thank you for taking the time to be here today.

As many of you will be aware, this is my first Annual Shareholder Meeting as
Chief Executive, and now that I've been in the role for 9 months I have to
say both what a privilege and responsibility it is to lead this iconic
company and that I'm enjoying every minute of it.

Air New Zealand has been around in one form or another for 73 years. I'm very
conscious that I'm only stewarding the airline for the time that I'm here and
my goal is that I will leave it stronger than when I inherited it for future
generations to take forward.

Many Air New Zealanders have contributed to building the business we have
today for which I am very grateful.

In particular, I would like acknowledge our retiring Chairman John Palmer. He
has been a real statesman and the backbone of our organisation. John's
leadership of the airline following the government recapitalisation has been
the absolute key to getting us where we are today. We have a very strong
platform - customers at the core, unparalleled corporate reputation and a
positive, open innovative culture. John leaves a real legacy and platform for
us all to now protect, enhance and build upon.

I was proud to announce last month what was a much improved set of financial
results and the culmination of a tremendous amount of hard work that has gone
on across the whole company and from all 11,000 Air New Zealanders.

This is Air New Zealand's best result for five years.  It is also the third
best in our history and I believe places us as one of the top performing
airlines globally.  This is something we can all be incredibly proud of.

The high quality of the result is not just in what we've achieved, but more
importantly how we've achieved it by growing our revenue 3%, controlling unit
costs, which are down 3% in spite of high fuel and airport company charges,
and expanding pre-tax earnings by 172%, record operating cash flow, and a 45
percent increase in dividend.

And this result is most importantly enabling us to re-invest back in the
business to:

- Enhance the customer experience
- Develop new markets
- Improve the efficiency of our operations
- Invest in the development of our people

As we look into the next five years there is no silver bullet and we expect:

- Tough global economic conditions to remain with a slow recovery.
- Competition to continue to intensify.
- Customers to demand more from the products and services they purchase and
the companies that stand behind them.

So, within the business we've launched what we call our Go Beyond plan. It
recognises that we're a company that has a wonderful foundation, but it is
now time for us to build upon that foundation.

We want to happen to our future, rather than have it happen to us. It's time
to Go Beyond. To Go Beyond in terms of our customers' experience, our
marketplace execution, our operational intensity, and our people.

We believe it's important that we recognise we have a role to play that is
bigger than just our airline. Our success is inextricably linked with New
Zealand's success - New Zealand becomes a small and isolated place without a
strong Air New Zealand, and likewise a successful Air New Zealand needs a
strong and growing New Zealand.

That's why one of our Go Beyond goals is to help "supercharge New Zealand's
success - economically, socially & sustainably.

I think this video helps to bring to life both the impact and the
responsibility we have to be a part of the fabric and future of New Zealand
and help "supercharge New Zealand's success".

[Video]

I don't need to point out to you that our industry faces lots of external
shocks or uncontrollable factors - natural disasters, economic meltdowns,
rising fuel and input costs, and increasing competition. These are known
unknowns that will continue to occur in our industry.

Yet these happen to all of our competitors at the same time and what matters
most is our relative competitiveness in these situations. I believe we can
respond quickly to changing circumstances due to our strong culture, superior
speed, and effective risk mitigation.

However, the difference to our margins occurs by focusing on the
controllables of the business - the growth and cost levers.

Our business has done an excellent job on the supply side - ensuring we have
the right fleet, network, and product, but the real opportunity now is to
focus on sales growth, revenue generation and market development.

This is why we have completely retooled our sales organisation to be anchored
around sales distribution channels and customer segments.

The lesson Air New Zealand has learned is that operationally, we can fly our
aircraft anywhere in the world, but the challenge to build a sustainable
profitable growing business.

We have to put growth at the heart of the company. How do we stimulate and
build market demand? What segments we will target? What channels we will use
to distribute our product? How we will leverage partnerships?

Historically, we've seen our geographic location as a disadvantage. Nothing
could now be further from the truth. We are witnessing a once in a generation
shift of economic power from the Atlantic to the Pacific.  New Zealand and
Air New Zealand together are well positioned to seize this opportunity in the
large markets of the Americas, Asia and Australasia.

Market development presents a big opportunity for our business and in fact
for our tourism industry as a whole. Many of our markets have huge
populations yet we have only 0.1% to 0.6% of outbound travel and there are
large customer segments which are simply not affected by the wide range of
uncontrollable factors.

If we look at North America - a population of 315 million, 110 million
passports issued, 28 million active considerers of a trip to New Zealand, yet
only 191,000 came in the last year.

The big opportunity is to find out who and where these customers are, what
sales channels they buy tickets from, what are the messages they need to
hear, the triggers and barriers we need to overcome. It's all about execution
and market development.

While there is undoubtedly huge potential in these markets - the reality is
none of us can do it on our own. We need to work together as an industry and
as I say 'hunt in a pack' to convert these immense opportunities.

At Air New Zealand, hunting in a pack means working with other airlines
through alliances. We have a clear ambition to grow our business yet with a
small outbound market, growth often relies on significant inbound traffic.

Thus, we need to find the right partners who can work with us in our key
inbound markets. By bringing together two partners with complementary
strengths at either end of a route, the alliance is able to offer customers
better connections and frequencies, and deeper distribution power.

We recognise that we've got to work with other non-airline partners too.
That's why we're working on an industry led National Tourism Plan so we can
all be aligned around some really clear goals, ensure we realise the
collective economic benefits, and deliver a world class visitor experience.

The other big focus for our business has been cost control. We need to be
fighting fit and we are doing that by aggressively simplifying our business
to drive out cost and complexity.

We have spent a lot of time looking at case studies of airlines around the
world - successful, and not so successful. It's clear while an airline needs
to be good at many things to succeed, it's the inability to maintain a low
cost base and ultimately to remain profitable that has proven to be the
downfall of many carriers in the past.

Although great customer service is paramount in our industry, in the end it
cannot trump high costs. The bottom line is - a low cost base preserves
profits. The more profitable an airline the more formidable it is as a
competitor and the more it can invest in driving future growth.

The key to the success of this is to intelligently address the root cause of
our high costs, remove complexity and waste, and simplify our business in the
process.  As I have said before this is an 'AND' thing.  We will not lose our
customer centric focus during this journey.

We are now constantly benchmarking our costs versus our competitors. Frankly,
if there is a difference between our costs and the competitors then the
customer must value it or we will remove it.  We have to keep thinking, 'is
the customer in seat 17C ultimately prepared to pay for this cost in their
ticket price?'

It's about value added costs. It's led to some tough decisions around labour,
overheads and supply chain costs.

Getting ourselves onto a virtuous circle of sustainable profitable growth as
we have done is important.

Stronger commercial results are the critical enabler that allows us to
reinvest back in our business on an ongoing basis which in turn is what
secures our future by ensuring we remain relevant and competitive.

To be clear this result is a good first step on this next phase of the Air
New Zealand journey. We want to be truly world class from New Zealand and
string together a series of results we can be proud of.

There is a lot more improvement possible and a lot more we want to achieve in
the coming years. We feel optimistic about our future.

Our confidence in our future and that of New Zealand is best represented by a
$1.8 billion commitment to 21 new aircraft in the next 3 years. These are
next generation aircraft that will both transform our business economics and
improve the experience for our customers.

I can't think of a New Zealand company making that kind of investment in its
and New Zealand's future.

As you can see, we have some exciting times ahead of us.

Thank you for your time, your support and your investment in Air New Zealand.

I will now hand back to John Palmer.

JOHN PALMER

Thank you Christopher.

I'd like to say a few words now in recognition of a very significant Air New
Zealander who is here with us today.

Norm Thompson will be known to many of you as our Deputy Chief Executive and
Chief Sales Officer. Norm joined Air New Zealand on the 15th of January 1968,
and this year marks 45 years of service he has given the company.

I could talk for a long time about Norm's tenure at Air New Zealand, but in
the confines of this meeting, let me just say that his contribution has been
enormous. Among his many accolades, Norm was earlier this year made an
Officer of the New Zealand Order of Merit in recognition of his services to
industry.

Norm has stated that he intends to retire at the end of this year.

Norm, on behalf of shareholders, customers and the Air New Zealand family, I
want to thank you. You are the consummate Air New Zealander, and your passion
and dedication has inspired many.

We wish you a well deserved break, in the knowledge that you will no doubt
remain very active in tourism and business circles for years to come.

I will now open the floor up for questions regarding the company's
performance.

[QUESTIONS]

JOHN PALMER CONTINUES MEETING

TONY CARTER CLOSING REMARKS

I would like to take this opportunity on behalf of the Board and all Air New
Zealanders to thank John Palmer for his outstanding leadership of Air New
Zealand as Chairman since late 2001.

I believe that John took on one of the toughest Governance roles our country
has seen in the past two decades when he stepped into this Chairmanship. It
was a dark period for our airline.

Air New Zealand had just been recapitalised by the Government at close to a
billion dollars, it had lost the trust of its customers and its reputation
was in tatters both at home and globally.

Yet here we are today just over a decade on and Air New Zealand is regarded
as one of the best airlines globally, both in terms of the experience it
delivers customers and its financial performance. The airline has declared
dividends during this period of close to $700 million. John has been
instrumental in this success.

He oversaw the appointment of the entire Board following the
recapitalisation, has ensured its ongoing renewal and has appointed and
worked with three world class Chief Executive Officers.

John has created the environment for those leaders to bring Air New Zealand
to where it is today - an airline lauded globally for its customer
centricity, innovation, operational excellence and unique culture.

As is the way with Boards, shareholders and the public do not see what
happens within the Boardroom. John is a highly inclusive and effective
Chairman.  He creates an environment that ensures all Directors contribute in
a meaningful way, he strongly encourages debate, he challenges everyone - and
that includes management - and then draws all that together for consensus
decisions.

John Palmer is the consummate Chairman and Air New Zealand has been
incredibly lucky to have him at the helm since 2002.

John, it is a privilege to be given the opportunity to lead the Board to
build on the outstanding foundation you have laid for the future.

JOHN PALMER RESUMES

Thank you everyone for your attendance and participation this afternoon. I
formally declare this meeting closed.

We invite you to join us for light refreshments and afternoon tea.

Thank you.
End CA:00241709 For:AIR    Type:ADDRESS    Time:2013-09-27 13:53:35