Air New Zealand : Investor Update (Op Stats) November 2021

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Contents	22 December 2021

• November 2021 traffic highlights
• Operating statistics table
• Recent market announcements and media releases

November 2021 highlights

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Group traffic summary		NOVEMBER	% *
	2021	2020
Passengers carried (000)	345	690	(50.0%)
Revenue Passenger Kilometres(m)	198	425	(53.4%)
Available Seat Kilometres (m)	408	725	(43.7%)
Passenger Load Factor (%)	48.6%	58.7%	(10.1 pts)
Year-to-date RASK1	% change in reported RASK
	(incl. FX)
Group			4.3%
Short Haul			(4.3%)
Long Haul			(12.2%)

FINANCIAL YTD

2022 2021 % *+

2,530	3,122	(18.4%)
1,735	2,105	(17.0%)
2,880	4,078	(28.9%)
60.3%	51.6%	8.7 pts

• change in underlying RASK (excl. FX)
  4.6%
  (4.2%)
  (9.1%)

For

Please note that the available seat kilometre (capacity) numbers included in the tables within this disclosure do not include any cargo-only flights. This is because these capacity numbers are used to calculate passenger load factors and passenger RASK

* % change is based on numbers prior to rounding.

• The year to date percentage movements have been adjusted on a daily weighted average basis. The adjustment takes into account the difference in days for the accounting month of July 2020 (33 days) compared with July 2021 (32 days). This is because Air New Zealand operates on a 4,4,5 accounting calendar but closes the annual accounts on 30 June.

1 Reported RASK (unit passenger revenue per available seat kilometre) is inclusive of foreign currency impact, and underlying RASK excludes foreign currency impact.

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Operating statistics table

Group		NOVEMBER		FINANCIAL YTD
	2021	2020	% *	2022	2021	% *+
Passengers carried (000)	345	690	(50.0%)	2,530	3,122	(18.4%)
Revenue Passenger Kilometres(m)	198	425	(53.4%)	1,735	2,105	(17.0%)
Available Seat Kilometres (m)	408	725	(43.7%)	2,880	4,078	(28.9%)
Passenger Load Factor (%)	48.6%	58.7%	(10.1 pts)	60.3%	51.6%	8.7 pts

Short Haul Total		NOVEMBER		FINANCIAL YTD
	2021	2020	% *	2022	2021	% *+
Passengers carried (000)	341	684	(50.1%)	2,511	3,083	(18.0%)
Revenue Passenger Kilometres(m)	158	368	(57.1%)	1,536	1,720	(10.1%)
Available Seat Kilometres (m)	262	544	(51.8%)	2,201	2,677	(17.2%)
Passenger Load Factor (%)	60.3%	67.7%	(7.4 pts)	69.8%	64.3%	5.5 pts

Domestic		NOVEMBER		FINANCIAL YTD
	2021	2020	% *	2022	2021	% *+
Passengers carried (000)	334	671	(50.3%)	2,384	3,022	(20.6%)
Revenue Passenger Kilometres(m)	140	342	(58.9%)	1,167	1,585	(25.9%)
Available Seat Kilometres (m)	212	422	(49.9%)	1,550	2,111	(26.1%)
Passenger Load Factor (%)	66.3%	81.0%	(14.7 pts)	75.3%	75.1%	0.2 pts

Tasman / Pacific		NOVEMBER		FINANCIAL YTD
	2021	2020	% *	2022	2021	% *+
Passengers carried (000)	7	13	(42.6%)	126	60	110.7%
Revenue Passenger Kilometres(m)	18	27	(32.9%)	369	135	175.6%
Available Seat Kilometres (m)	51	122	(58.3%)	651	566	15.7%
Passenger Load Factor (%)	35.1%	21.8%	13.3 pts	56.6%	23.8%	32.8 pts

Long Haul Total		NOVEMBER		FINANCIAL YTD
	2021	2020	% *	2022	2021	% *+
Passengers carried (000)	4	6	(31.4%)	20	39	(49.2%)
Revenue Passenger Kilometres(m)	40	57	(29.6%)	199	385	(47.9%)
Available Seat Kilometres (m)	146	181	(19.3%)	679	1,401	(51.2%)
Passenger Load Factor (%)	27.5%	31.6%	(4.1 pts)	29.4%	27.5%	1.9 pts

Asia		NOVEMBER		FINANCIAL YTD
	2021	2020	% *	2022	2021	% *+
Passengers carried (000)	1	3	(59.3%)	6	20	(71.2%)
Revenue Passenger Kilometres(m)	11	27	(59.4%)	53	186	(71.5%)
Available Seat Kilometres (m)	76	132	(42.2%)	403	714	(43.2%)
Passenger Load Factor (%)	14.1%	20.1%	(6.0 pts)	13.1%	26.1%	(13.0 pts)

Americas		NOVEMBER		FINANCIAL YTD
	2021	2020	% *	2022	2021	% *+
Passengers carried (000)	3	3	(3.9%)	14	19	(25.7%)
Revenue Passenger Kilometres(m)	29	31	(3.9%)	147	199	(25.8%)
Available Seat Kilometres (m)	70	49	42.3%	276	687	(59.6%)
Passenger Load Factor (%)	42.2%	62.5%	(20.3 pts)	53.2%	28.9%	24.3 pts

* % change is based on numbers prior to rounding

• The year to date percentage movements have been adjusted on a daily weighted average basis. The adjustment takes into account the difference in days for the accounting month of July 2020 (33 days) compared with July 2021 (32 days). This is because Air New Zealand operates on a 4,4,5 accounting calendar but closes the annual accounts on 30 June.

Air New Zealand operates primarily in one segment, its primary business being the transportation of passengers and cargo on an integrated network of scheduled airline services to, from and within New Zealand. The following operational data and statistics is additional supplementary information only.

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Market Announcements

(during the period 2 December 2021 to 21 December 2021)

Air NZ announces revised Crown support package

14 December 2021

Air New Zealand announces the entry into a revised Crown support package comprising a further $500 million of additional liquidity to better position the airline during the period up to its recapitalisation, including an ordinary equity raising. The revised package, with overall liquidity support available increased to $2 billion, comprises:

• a new agreement, which gives Air New Zealand the ability to issue up to $1 billion of non-voting redeemable shares to the Crown; and
• a reduction in the existing secured facility from $1.5 billion to $1 billion, with an extended term to January 2026.

Ongoing uncertainty

On 13 August 2021, Air New Zealand, following consultation with the Crown, announced a further deferral of its planned equity raise until the first quarter of 2022. Since that announcement, the airline has been impacted by the recent domestic lockdowns and the ongoing Covid-related travel restrictions across its international network.

The Government has recently outlined a plan of phased reopening of borders from early 2022, which, in the airline's view, provides an indicative pathway to reopening New Zealand for international travel. However, the future impacts of Covid remain uncertain and circumstances continue to change all over the world.

In that context, the airline has been considering its financial support requirements during the period up to a planned equity raising - which the airline is still targeting for the first quarter of 2022 - together with what further support and flexibility may be needed if material and unexpected events were to occur in 2022 such that it becomes prudent to consider a further delay to the planned capital raise.

Revised support package

While the airline, with the support of the Crown, remains focused on an ordinary equity raise, it is important that the airline has sufficient flexibility to withstand presently unforeseen delays without relying entirely on increasing debt levels. In that context, the airline and the Crown have agreed to modify the Crown financial support for Air New Zealand and the overall liquidity support for Air New Zealand has increased to $2 billion, as follows:

1. Air New Zealand is able to issue up to $1 billion of redeemable shares to the Crown (Redeemable Shares); and
2. the existing facility limit under the secured Crown loan facility has been reduced from $1.5 billion to $1 billion and the maturity has been extended from September 2023 to January 2026 (Amended Crown Loan).

The terms of the Amended Crown Loan and of the Redeemable Shares have been negotiated between Air New Zealand and the Crown on an arm's length basis with each party having been independently advised.

It is Air New Zealand's intention that all amounts outstanding under the Amended Crown Loan and any issued Redeemable Shares will be repaid from the proceeds of the company's proposed equity raise, together with an aligned debt capital markets transaction. The Crown has confirmed to the airline that it shares this expectation.

NZX Waivers from NZX Listing Rules

NZ RegCo has granted Air New Zealand waivers from the relevant requirements under the NZX Listing Rules to obtain shareholder approval for entry into and performance of the Amended Crown Loan and the Redeemable Shares with the Crown, subject to the conditions specified in those waivers which are available at https://www.nzx.com/companies/AIR/announcements.

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One of those NZX conditions requires Air New Zealand to convene a shareholders' meeting for shareholders to consider and vote on an ordinary resolution to ratify the entry into the Amended Crown Loan by 31 December 2022 (unless the Redeemable Shares and Amended Crown Loan no longer remain in place at that time). If that occurs, the relevant notice of meeting convening that shareholders' meeting would provide further information to shareholders about both the Redeemable Shares and Amended Crown Loan. As part of the restructure of its liquidity support for the airline, the Crown (acting by and through the Minister of Finance) has committed to Air New Zealand that it would, in its capacity as the holder of its ordinary shares in Air New Zealand, vote in favour of such a ratification resolution.

The airline's current intention remains that such a meeting will be unnecessary given Air New Zealand's plans to raise equity in early 2022.

Liquidity update

As at 14 December 2021, the airline has drawn $505 million of the existing Crown Loan. It is currently estimated that drawings could be approximately $900 million by late February or March 2022. This reflects the estimated cash flow impact of ongoing travel restrictions including as set out in the airline's announcement on 17 September 2021 and the previously communicated repayment of $300 million of PAYE which is required in early 2022.

Air New Zealand releases 2021 Sustainability Report

7 December 2021

Air New Zealand is pleased to release its 2021 Sustainability Report. The report is attached or can be accessed via this link

For additional information on Air New Zealand's commitment to sustainability, please see Air New Zealand website

Media Releases

(during the period 2 December to 21 December 2021)

International border re-opening delay results in flight cancellations - Air NZ 21 December 2021

Following the New Zealand government's announcement delaying the start of non-MIQ travel, Air New Zealand will cancel around 120 services through to the end of February.

Air New Zealand Chief Executive Officer Greg Foran says this will be incredibly tough news for many.

"Our heart goes out to those who were counting down the days until they could reconnect with their family and friends.

"While this news is disappointing for the airline, we know these changes are put in place to keep Aotearoa safe. We'll now need to navigate our way through what these changes mean for our customers, as we have done over the past 23 months."

The airline estimates around 120 flights will need to be canceled, with around 27,000 customers expected to be impacted. Most of the cancelled services are across the Tasman with only a small reduction in frequency on some long-haul flights.

"We are here for our customers, and as we have throughout the pandemic, we will continue to fly to get them home to Aotearoa as MIQ allocations allow."

"Even though it may not be as soon as we had hoped, when the day comes our team will be standing tall, with a big smile, ready to welcome customers on board once again."

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All existing quarantine-free flights from Australia to New Zealand between 17 January and 28 February 2022 will be cancelled and there will be a limited schedule of quarantine flights will be available to book. Customers are asked to continue to check the airline's Travel Alerts page for further updates.

Customers who still wish to travel to New Zealand will need to secure a MIQ allocation before booking on a quarantine flight.

The airline will continue to operate a reduced schedule from New Zealand to Australia but will be consolidating its schedule and only operating services out of Auckland.

Customers with bookings who no longer wish to travel are asked to use the airline's online self-service tool to hold their fare in credit.

Please check the airline's Travel Alerts page for the quarantine flight schedule.

The airline's international flexibility policy is in place for flights scheduled to depart before 30 June 2022 meaning customers can change their flights with change fees waived.

If customers have booked through a travel agent or third-party online agent, they will need to contact them directly to rebook or place their ticket into credit.

Air New Zealand seeking innovators for next generation aircraft

21 December 2021

Air New Zealand wants to get a zero emissions aircraft in the air in the next five years and is calling on traditional aviation manufacturers as well as entrepreneurs and innovators from around the world to help achieve its goal of net zero carbon emissions by 2050.

The airline has released a Product Requirements Document (PRD)- a guide for business and innovators to help build, launch, or market the provision of zero emissions/novel propulsion aircraft in New Zealand. It provides an overview of Air New Zealand requirements based on its network and fleet and is intended to kickstart discussion for ongoing collaboration.

Air New Zealand is looking for aircraft technology ideas on how to accelerate and deploy propulsion innovations such as hybrid, hydrogen, or electric technologies for its new aircraft.

Air New Zealand's Head of Fleet Strategy Baden Smith says the airline is taking bold steps to ramp up genuine climate action and is looking for innovative organisations that can help us on our zero emissions aircraft journey.

"As we work towards our net zero 2050 goal, reducing aircraft emissions is critical. While our industry faces a steep challenge to decarbonise, New Zealand is uniquely placed to lead the world in zero emissions aircraft and low carbon alternatives on our domestic air transport network.

"We believe New Zealand could be a world leader in zero or low emissions aircraft, whether that's battery electric or green hydrogen powered. We're seeking the best ideas and technology from innovators around the globe who might be prepared to work with us.

"New Zealand is ideally suited to adopt zero emissions aircraft, as we have a number of short-range routes that are perfect candidates for utilizing these new technologies, and our renewable energy sources make it possible to eliminate carbon emissions effectively."

"This Product Requirements Document allows us to share our vision for zero emissions aircraft deployment and allows current and future aircraft developers to recognise both the opportunity here in New Zealand and Air New Zealand's ambition to make this a reality as soon as possible."

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