Air New Zealand Investor Day 2017: Summary

Air New Zealand hosted (01-Jun-2017) its Investor Day 2017, with key speakers from the carrier, including CEO Christopher Luxon, who stated growth has been supported by robust demand drivers that are expected to remain strong for the foreseeable future, as well as New Zealand’s fast-growing economy.

Key highlights from the presentation include:

Earnings before tax likely to exceed USD372m: Air New Zealand CEO Christopher Luxon announced an update on the carrier’s 2017 outlook. Mr Luxon stated that based on the current market environment and jet fuel price, 2017 earnings before taxation are likely to exceed NZD525 million (USD372.8 million). This is the second best result ever achieved by the carrier, following a result of NZD663 million (USD469.4 million) in 2016.

Strategic growth priorities: Air New Zealand announced plans for future growth opportunities, including:

  • Expanding the core domestic business with a targeted three year average capacity growth of 3% to 5%;
  • Stimulating additional demand by growing core jet and regional routes;
  • Investing in coordinated regional tourism campaigns;
  • Leveraging the strengths of its long haul network with a targeted three year average capacity growth of 4% to 7%.

Leverage Australia demand to the Americas: Air New Zealand announced it will focus heavily on the Australia demand for long haul connecting services. Air New Zealand CEO Christopher Luxon stated: “leveraging Australia demand will maximise returns on our Americas routes and increase profitability during relatively low demand periods due to seasonal differences”. Connection opportunities for Australians travelling to the Americas includes Vancouver, San Francisco, Los Angeles, Houston and Buenos Aires.

Expansion of loyalty programme a core focus: Air New Zealand announced it will invest heavily in its loyalty programme, to deliver value to members and the carrier’s overall business. Air New Zealand CEO Christopher Luxon stated the plan for the programme includes offering new card products for members, expanding the programme and retail loyalty coalition for members to utilise.

Significant improvements in unit cost and target: Air New Zealand announced a 5% improvement in CASK trend since Jun-2014. The primary drivers of this improvement have been attributed to upgauging, fuel efficiency and scale economies. Air New Zealand aims to continue this CASK trend through to 2020 as capacity growth forecasts increase, targeting low-single digit nominal CASK improvement.

Further scale opportunities across the Pacific Rim: Air New Zealand announced plans to build scale in its existing long haul markets by:

  • Continuing to build Tokyo over Haneda Airport, maintain Narita presence;
  • Growing Auckland-Houston service to daily;
  • Increasing Auckland-Buenos Aires frequency;
  • Adding one to two new international destinations.

Making great strides made in fleet efficiency: Air New Zealand highlighted key deliverables which will assist with increasing the efficiency of the carrier’s fleet. These include:

  • New deliveries of Boeing 787-9 aircraft will have a different configuration that is skewed to a higher premium product. 54% increase in premium cabin seats vs. current 787-9s;
  • 787-9 vs. 767-300ER: 31% increase in seats and 20%-25% variable operating cost reduction;
  • Airbus A321neo vs A320ceo: 27% increase in seats and 15% variable operating cost reduction.