Air New Zealand AGIFORS 2003 New York May 27th-30th 2003.
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Transcript of Air New Zealand AGIFORS 2003 New York May 27th-30th 2003.
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Air New Zealand
AGIFORS 2003New York
May 27th-30th 2003
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Agenda• Introduction
• Update since Cancun - major airline activities•Events up to August 01
•September 01
•Post September 01
• NZ Express a winner
• Substantial improvement in NZ financial position
• Optimisation tools assist in new crew contracts
• NZ/QF commercial alliance
• War in IRAQ and now the SARS virus
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Introduction
• Started with Air New Zealand 5 and 1/2 years ago based in Auckland
• Commenced as Finance Manager within Sales and Distribution responsible for finance and performance management analysis and reporting
• Moved with my family to Melbourne, Australia in June 01 working for Ansett Australia in a similar Sales and Distribution performance management position
• In June 02 joined the Air New Zealand Network Logistics team as Network Performance Manager responsible for the OR team, systems and standards and performance analysis and measurement
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Events at NZ since we last attended AGIFORS 2000
• June 2000 - NZ purchased final 50% of Ansett Australia to take 100% control
• Oct/Nov 2000 - Combined AN/NZ announces a new business unit integrated structure
• Jan 2001 - Garry Toomey appointed as the new President and CEO of AN/NZ
• April 2001 - new “functional” structure announced to replace previously announced BU structure
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September 2001
• Undoubtedly one of the most significant months in history in NZ
• Terrible events of 9/11 very much felt down under
• AN collapses the following day (put into voluntary administration)
• Major operational issues to be dealt with but well handled by a nucleus of key operational managers (about 10) and achieved thanks largely to the quality SABRE tools we had in place namely AIRCEWS and AIROPS
• NZ had to write-off a large the significant investment in AN. NZ was on brink of financial with approximately 90% debt to equity ratio
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Later part of 2002 and 2003 - a significantly brighter period for NZ
• Launch of NZ Express on 1st November 2001
• Announcement of substantially improved 31 Dec02 half year profit and year-end forecast
• Re-negotiated tech crew (Dec02) and cabin crew (Mar03) contracts, both for 2 years
• NZ/QF commercial alliance announcement
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An integrated product offering
Full Service Value Based Plus Value Based
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Principles of NZ Express
GIVING THE CUSTOMER WHAT THEY WANT
• Lower fares, more choice
• More seats per flight
• Simplified booking and purchasing processes
• Improved loyalty benefits for high yield frequent flyers
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Express Class a Success
20% savings in fares for customers
Internet bookings averaging 35% (pre-launch 4%)
PAX numbers up 30% on trunk routes
7% of customers using Kiosks - target is 50%
Auckland Koru lounge upgrade completed
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Return to profitability
Six months to Dec 02 Dec 01* Change $m $m $m
Profit before unusuals & tax 138 (90) 228
Unusual Items (4) (330) (326)
Profit before tax 134 (420) 554
Taxation (41) 44 (85)
Net profit after tax 94 (375) 469
*continuing businesses only
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Traffic up 7.3 percent
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
Jul Aug Sept Oct Nov Dec
RPK (millions)
2001
2002
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Load Factors up 6.9 percent
60
6264
66
6870
7274
76
7880
82
Jul Aug Sept Oct Nov Dec
Per
cent
2001
2002
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Optimisation tools assist in crew contract negotiation process• Both NZ tech crew and cabin crew contacts expired in the later part of
2002
• Pairings and roster optimisers were both used to model different contract rule scenarios highlighting cost impacts of changes to high degree of accuracy
• Introduced a new rostering system for pilots known as SBS (Seniority Biased System)
• Moved to paying pilots using roster average whilst balancing pilot hours within a narrow window and allowing a minimal number of outliers +/-
• Both pilot and cabin crew union negotiators directly engaged in reviewing OR models and data thereby gaining significant buy-in to the process
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NZ/QF Alliance - Approval Progress
Kiwi Shareholder Approval
ACCC and NZ Commerce Commission
Shareholder Approval
In Progress
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Latest events and Outlook
• War in IRAQ did not have a major impact on NZ
• The SARS is having a major impact•8% of international capacity has been removed through to September03
•Monitoring impact very closely
•No drastic cost reduction measures implemented yet!!!!!
• Forward bookings softening - but loads remain relatively high
• Full year profit forecast to 30 June 2003 still expected approximately PBUT $200 million, a $1.5billion turnaround from 2002
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AGIFORS 2004
As proud hosts of AGIFORS 2004, Air New Zealand extends an invitation to you all
see you in NEW ZEALAND!!!!!!!
AGIFORS
March 2004