Ann: MONTHLY: AIR: Air New Zealand Investor Update (Op Stats) -...

• Release Date: 26/11/14 15:39
• Summary: MONTHLY: AIR: Air New Zealand Investor Update (Op Stats) - October 2014
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					AIR
26/11/2014 15:39
MONTHLY
PRICE SENSITIVE
REL: 1539 HRS Air New Zealand Limited (NS)

MONTHLY: AIR: Air New Zealand Investor Update (Op Stats) - October 2014

CONTENTS

-Trading update
-October market conditions
-Company news
-Operating statistics table (see attached document)

TRADING UPDATE

The Company has previously announced that it expected to improve on the 2014
result in the coming year. At the Annual Shareholders' Meeting in late
September it was stated that there had been an encouraging start to the year
with solid forward bookings into the high season.

That sales momentum continues as the Company heads into a period of sustained
growth. Further, should the current level of jet fuel price persist, there
will be significant additional improvement in earnings in the second half of
the financial year.

This outlook excludes equity earnings from the Virgin Australia shareholding.

OCTOBER MARKET CONDITIONS

Air New Zealand carried 1,093,000 passengers during the month of October,
2.9% more than the same period last year. Revenue passenger kilometres (RPKs)
were 0.8% higher on a capacity (ASKs) increase of 0.5%. Group load factor was
82.9%, up 0.2 of a percentage point.

Short Haul passenger numbers were up 3.5%, while in the Domestic market
demand (RPKs) and capacity (ASKs) increased by 3.9% and 4.4% respectively.
Domestic load factor was 81.4%, a decrease of 0.4 of a percentage point.

Tasman/Pacific demand (RPKs) increased 3.4% while capacity (ASKs) increased
by 1.8%. Load factor on Tasman/Pacific increased 1.3 percentage points to
85.0%.

Long Haul passenger numbers decreased 1.7% when compared to October last
year, with demand (RPKs) down 1.9% and capacity (ASKs) down 1.5%. Load factor
was 82.1%, down 0.3 of a percentage point.

On North American/UK routes, demand (RPKs) decreased 5.3% with capacity
(ASKs) decreasing 4.7%, due to the withdrawal from service of the Boeing
747-400. Load factor was down 0.5 of a percentage point to 82.2%.

Demand (RPKs) increased 5.7% on Asia/Japan routes, with capacity (ASKs)
increasing by 5.6%. Load factor increased 0.1 of a percentage point to 81.8%.

Group-wide yields for the financial year to date were up 2.0% on the same
period last year. Short Haul yields were up 2.1%, while Long Haul yields were
up 0.8%. Removing the impact of foreign exchange, Group-wide yields were up
4.3%.

COMPANY NEWS

CHANGES TO REGIONAL DOMESTIC SERVICES ANNOUNCED

Air New Zealand recently unveiled the outcome of a comprehensive review of
its regional aircraft operations aimed at delivering sustainable air services
and lower prices for customers.

Chief Executive Officer Christopher Luxon says that since the beginning of
2014 the airline has had a team looking at how to address the challenges of
the poor operating economics of its 19 seat fleet while at the same time
leveraging the significant economies of scale available from its 50 and 68
seat fleets.

Mr Luxon says that as 2014 has unfolded it has also become clear there are
some regional routes where demand for seats is strengthening. "Air New
Zealand has already begun putting more seat capacity into those markets and
is announcing an acceleration of that process with an additional $100 million
investment in four new 68 seat aircraft."

This brings total investment in new 68 seat aircraft to $300 million over
four years and will mean that Air New Zealand will move all regional flying
to either 50 or 68 seat aircraft and exit its 19 seat fleet by August 2016.

"Our average regional airfare has fallen by two percent over the past five
years and today's announcement will keep further downward pressure on
regional airfares. On the 13 routes which will move from 19 seat aircraft to
more cost effective 50 seat aircraft we expect to deliver a 15% average fare
reduction to our customers.

"This is good news for the following 12 towns: Kerikeri, Whangarei, Tauranga,
Hamilton, Rotorua, Gisborne, Taupo, Wanganui, Palmerston North, Blenheim,
Hokitika and Timaru. Each will progressively move to 50 seat aircraft and
benefit from fare reductions."

Unfortunately there are a small number of regional routes where customer
demand simply cannot sustain larger 50 seat aircraft and Air New Zealand will
therefore suspend the following services from April 2015: Kaitaia - Auckland;
Whakatane - Auckland; Whangarei - Wellington; Taupo - Wellington; Westport -
Wellington and Palmerston North - Nelson. Hamilton - Auckland will also be
suspended from February 2016.

As Kaitaia, Whakatane and Westport are single route ports, the suspension of
these services means Air New Zealand will no longer operate to these
destinations from the dates specified.

Mr Luxon says, "While this news will be disappointing for some communities,
Air New Zealand remains resolutely committed to regional New Zealand and the
changes announced today will set up our regional business model for future
sustainable success."
End CA:00258153 For:AIR    Type:MONTHLY    Time:2014-11-26 15:39:28