V. A . AIR NEW ZEALANDT Investor Day 2016 . 3May 2016 A a; I 'f ?1 IN VESTOR DAY 5'01 l1 Forward looking statements ?lh This presentation contains forward-looking statements. Forward-looking statements often include words such as ?anticipate expect?, ?intend?, ?plan?, ?believe continue? or similar words in connection with discussions of future operating or financial performance. The forward-looking statements are based on management's and directors? current expectations and assumptions regarding Air New Zealand's businesses and performance, the economy and other future conditions, circumstances and results. As with any projection or forecast, forward- looking statements are inherently susceptible to uncertainty and changes in circumstances. Air New Zealand's actual results may vary materially from those expressed or implied in its forward-looking statements. Agenda 9am 10:45am Welcome Leila Peters, Head of Investor Relations Driving returns through disciplined growth Christopher Luxon, Chief Executive Officer Network growth opportunities Stephen Jones, Chief Strategy, Networks & Alliances Officer Morning tea break Financial priorities Rob McDonald, Chief Financial Officer Q&A 12:30pm Discussion with the Chairman Tony Carter, Chairman of the Board Meeting concludes 3 Christopher Luxon Chi u?ve Officer Key messages We are well-positioned to compete and win in a dynamic marketplace We have built the best platform to capture and leverage profitable growth Significant opportunity ahead to continue generating sustainable shareholder returns 5 Our strategy has been successful Customer Experience Commercial Results Engaged Culture Our business is built upon a strong foundation of what really matters 6 Performance driven by good planning, sharper execution and a supportive environment Strategydriven Investment in our network Customer focus Historical & committed aircraft capex Overall Customer Satisfaction on MyVoice Strong tourism demand Overseas visitors to New Zealand* ($ millions) $1,000 $800 Dec 2012 Dec 2015 $600 +6% $400 $200 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Financial year 2012 Driving efficiencies Pacific Rim alliances Operational improvements in CASK* (cents per ASK) 10.25 2013 2014 2015 * Source: Statistics New Zealand Jet fuel price decline 5 year pricing for Singapore Jet Fuel ($USD) $150 10.00 9.75 $100 7% 9.50 improvement 9.25 $50 9.00 DEC 2012 DEC 2013 DEC 2014 DEC 2015 * Prior year CASK adjusted to the average fuel and foreign exchange rates for the six month period ending in December 2015 and excluding divested operations. $0 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 7 We see further opportunity for growth, but recognise the environment will be different Key factors support sustainable profitability through the cycle…  …with some near-term challenges ahead 2017 Impact Continued inbound tourism strength Increased competition  Fuel price outlook continues to be favourable  Leveraging alliance partnerships Benefit of FX hedges in 2016 not expected in 2017  Scale efficiencies from fleet programme  Corporate brand and employee engagement has never been stronger Unknown ~$120M Expect 2017 earnings will be solid, while not at the level of 2016 8 Flexibility to address the current competitive environment while executing the long-term strategy Short-term dynamics (< 18 months) Revenue management + Capacity management • Increased capacity driving significant growth of seats across the network • Expect headwind to overall yield as market adjusts to new capacity Medium-term • Revenue mix impact related to stimulation of leisure travel Strong underlying demand expected to drive supply and demand equalisation, with a return to stable yields – But revenue maximisation and profitable growth will continue to drive our strategy • Short-haul schedule depth allows for continuous capacity management based on demand levels • Reallocation of North America capacity – Houston outpacing expectations – Shifting some capacity from LAX to Houston – United relationship provides SFO optionality • Alliance partnerships in Asia provide optionality to adjust capacity • Flexibility on timing of fleet exits 9 A look ahead…driving returns through disciplined growth 1 Demand growth Disciplined network growth from new and existing markets supported by alliance partnerships 2 Scale economies Invest in a simplified and fuel efficient fleet that can competitively leverage network growth 3 Value growth Leverage our data and our brand to provide products and services that our customers value The right platform to leverage growth opportunities profitably 10 INVESTOR DAY 2016 The Pacific Rim will continue to support tourism growth to New Zealand ?llb 11 We have built up our network and are well positioned to capture tourism growth • Diversified profitability across the network • Growth underpinned by strong alliance partnerships in key markets • Leveraging our geography to maximise traffic through and into New Zealand – Tourism growth driving inbound international growth – Grow and leverage network efficiencies in Asia – Australian traffic in key cities feeding North & South American growth 12 Inbound tourism will continue to fuel domestic growth • Domestic dispersal of inbound international tourism through Auckland • Strong domestic market share to leverage growth from inbound tourists • Network strength, product and lounges to drive further stimulation • Full network offering to 22 main centres and regions across New Zealand • Stable outlook for New Zealand economic growth driving increased domestic travel 13 We play an instrumental role in converting the potential tourism pool into actual visitors Thought process for holiday travel Estimated size of New Zealand “active considerer” target market* (in millions) 26.4 Dreaming 15.4 China United States 5.0 4.1 3.7 United Kingdom Japan Australia * Tourism New Zealand. Planning Holiday Visitors to New Zealand** (in millions) 1.8 1.6 Booking 1.4 1.2 1.0 2012 2013 2014 Year ended March ** Statistics New Zealand. 2015 2016 14 Market development example: Shanghai 2012 Today Positioning • Primarily low value group travel • Wealthier independent travellers • “Romance” and “family” marketing platforms • Visit multiple cities throughout NZ Partners • No partnership for local sales efforts • The right travel agents and trade partners • Air China alliance Product Boeing 767 Competition • No direct route competition Boeing 787  Revenue mix  Alliance partner   Optimise costs Quality product • China Eastern competes directly on Auckland to Shanghai route since September 2015 2015 vs 2014 market growth  Chinese visitors +34% and total spend +63%* * Comparison based on December 2015 versus December 2014; Statistics New Zealand. 15 It starts with having the best fleet for the New Zealand market Flying west to Asia Flying east to North America Market preference towards lower proportion premium product Market preference towards higher proportion premium product Aircraft: Aircraft: B787-9 (302 seats) B777-300 (332 seats) 16 Consistency throughout the customer experience journey is vital to our success • Significant data analysis on all aspects related to customer experience • Tool for determining return on investment and payback on customer experience investments • Evolution of future customer experience analytics focused on providing real-time insights Sample customer experience dashboard 17 And our customer experience scores and corporate reputation have never been better +8% Most reputable No. 6 in Australia Company in New Zealand 2016 Corporate reputation 2016 Long-haul: Short-haul: Corporate reputation +6% #1 2015: 2012: #5 Overall Customer Satisfaction on MyVoice Dec 2012 Service Perceptions in Brand Health Dec 2015 Source: MyVoice Air New Zealand feedback survey. #3 2015: 2012: #5 Top 4 Of the 13 airlines we compete with in 2015 Star Alliance rating IATA survey 18 Our end goal is to utilise data to increase personalisation and commercialisation of the customer journey 19 Airpoints™ is our platform for customer relationship data Loyalty data 70% of Air New Zealand sales occurring domestically are with an Airpoints™ member Sales channel Airline program Profit from the Loyalty effect Increasing loyalty Focused on capturing loyalty Own the customer Leverage our customer data Own the customer data 20 Our people deliver our value proposition to every customer, every day Our philosophy Our results • Top quartile of companies in Asia Pacific for employee engagement* • Inducted into the Randstad Hall of Fame as “New Zealand’s Most Attractive Employer” (2014-2016) * As demonstrated by our 2015 employee engagement survey through Aon Hewitt. 21 Continued execution of strategy with more opportunity ahead INVESTOR DAY 2016 Grow revenue Grow pro?t Sustainable returns to shareholders Control costs Invest in our business ?llb 22 Continued execution of strategy with more opportunity ahead Grow revenue & control costs Grow profit Profit Before Tax Passenger revenue/ASK Costs/ASK (in cents) (in cents) 11.6 11.1 +4.5% 11.6 2012 2012 2015 +9.2% Invest in our business $474 (in millions) 10.5 2015 $94 +72% 3 year CAGR 2012 2015 Sustainable returns to shareholders 5 year total shareholder return (as at March 2011 to March 2016) Pre-tax ROIC +9.1% 243% 16.2 % 7.1% 2012 2015 NYSE Arca global airline index NZX50 Qantas ASX200 23 A AIR NEW ZEALAND Stephen Jones Chief Strategy, Networks 15 Alliances Officer Network growth I opportuniti The Pacific Rim continues to be a core source of global traffic growth Air New Zealand 2016 estimated capacity growth ~11% 64% 36% FY2016 Growth from new routes Growth from existing routes 25 We are highly methodical in evaluating new route opportunities Sample application of framework: Competitive advantage Conduct advantagenetwork, cost, product, distribution Market volume, quality and growth Higher yielding traffic mix > Business/ VFR Ideal New Market Structural advantage: predominantly outbound Demand flow characteristics Market size to support a minimum of 2-3 services per week Focused markets (1-2 main cities) Strong historical and projected growth Strong point-topoint market Buenos Aires Sizeable local market of ~43 million in Argentina / 14 million in Buenos Aires area Balanced inbound/outbound mix of traffic Focused mainly on Buenos Aires and surrounding areas with sufficient demand Air New Zealand is the sole direct operator between New Zealand and Argentina Buenos Aires not a competitor hub; not overflying major cities 26 Our international growth has been de-risked by strong alliance partnerships * Why it works for Air New Zealand  Partners have “skin in the game” to sell the route  Strength of sales & distribution in local markets  Access to frequent flyer databases * Indicates a revenue share alliance. * Not part of a revenue share alliance. 27 The fundamentals of a revenue share alliance 1 Revenues from all routes that are under alliance are pooled together 3 2 A simple revenue share model might calculate Air New Zealand’s share of revenue as shown below: 4 Total alliance revenue AIR’s flown ASKs Total alliance ASKs 5 Additional adjustments as negotiated for each revenue share alliance Revenue share is compared to actual revenue earned by each carrier A transfer payment is made to equalise AIR’s share of revenue Enduring success of an alliance partnership requires balance 28 The newest revenue share alliance partner: United What’s the benefit for us? What’s the benefit for United? • Leveraging United’s extensive sales and distribution channels • Leveraging Air New Zealand’s sales capabilities in New Zealand • Access to United’s substantial frequent flyers • More convenient flight choices for customers flying between U.S. and New Zealand • Secures connectivity into domestic USA and beyond • Revenue from connecting traffic Revenue share routes 29 Focusing our medium-term capacity growth on increasing depth New markets Depth of existing markets Rationale: • Increased frequency can strengthen competitive position • Fixed launch costs associated with new markets not applicable • Potential for increased utilisation depending on the market • Known markets 30 Americas: Leveraging Auckland’s geographic advantage • North American growth will continue to feed transTasman flows – Strong collaboration with Tourism Australia • Australia traffic helping to feed North & South American growth via Auckland North America • Outbound flows driven by increased sales presence in Australia – Ease of international transfers from Australian cities other than Sydney South America Australia 31 Asia: Most efficient long-haul growth opportunity Today Future • Ability to grow Asia efficiently with daynight schedule rotations that increase frequency • Scale growth expected to result in improved utilisation of fleet and unit costs • Longer term aspiration to grow passenger flows from Asia to South America via Auckland Asia Daily service to Asia requires two aircraft Double-daily service to Asia would require three aircraft South America 32 A network strategy firmly aligned with long term value creation • Fundamental re-shaping of Air New Zealand’s network strategy largely complete • Network firmly in sustainable growth phase • Alliance partnerships underpin the growth opportunity 33 mu. Rob McDonald Chief Financial Officer Financial 1 It" ?51? 54-? A STAR ALLIANCE MEMBER Focused financial priorities over the medium-term Virgin Australia investment Fleet simplification Financial framework 35 Virgin Australia investment • Announced review of Virgin Australia investment including possible sale of all or part of our shareholding • Equity accounting for Virgin Australia investment ceased on 30 March 2016 – Differential between market value of the investment and the carrying value and associated reserves recorded in the profit and loss • Virgin Australia investment From 30 March 2016, our investment in Virgin Australia will be recognised as an investment in quoted equity instruments – Fair value movements will be recorded in the profit and loss 36 The ideal fleet to deliver profitable network growth Fleet simplification Fleet complexity Fleet age (on a seat-weighted basis) Ownership profile (on a seat-weighted basis) 2012 2018 Many fleet types Few fleet types Wide-body B747 B767 B777 Narrow-body B737 A320 Turboprops ATR72s Q300 Beech 1900D 8.6 years 62% owned 38% leased Wide-body B787 B777 family Narrow-body A320 family Turboprops ATR72s Q300 6.7 years 72% owned 28% leased 37 Halfway through significant capex programme Historical & committed aircraft capex ($ millions) $1,000 • • Committed investment of ~$2.2 billion in aircraft from 2017 to 2020 Declining fleet age driven by deliveries of 787s, A320 family and ATRs $800 $600 $400 $200 $0 • Low average fleet age of 6.7 in 2018 relative to global average of 9.9 years** 2012 2013 2014 2015 2016 2017 2018 2019 2020 Financial year Aircraft fleet age in years (seat weighted) 8.6 2012 9.2 2013 9.1 2014 Forecasted fleet age Historical fleet age 7.8 7.4 7.7 2015 2016 2017 6.7 6.2 2018 2019 6.9 2020 Financial year ** Source: IATA. * Committed aircraft expenditure based on US dollar exchange rate of 0.68. 38 Modern aircraft driving improved variable cost efficiencies Wide-body Narrow-body Turbo-prop B787-9 A321 neo vs B767-300ER ATR72-600 vs A320 ceo vs Bombardier Q300 ↑ 31% ↑ 23% ↑ 36%* Additional seats Additional seats Additional seats ↓ ~20% ↓ ~16% ↓ ~13%* (per seat) (per seat) Variable Operating cost Variable Operating cost Scale economies Substantially lower operating costs and increased seat density resulting in reduced unit costs Variable Operating cost (per seat) * When compared to the Beech 1900D, the ATR72-600 aircraft has 49 more seats and approximately 40% improvement in variable operating costs per seat. 39 Benefits from fleet programme are being realised  Scale economies Improving operating economics  Simplicity to ramp up growth  Operational efficiencies  Competitive product offering 40 Sound financial framework focused on delivering shareholder value Financial framework Profitable Growth Capital Discipline + Capacity growth in-line with New Zealand tourism growth over medium term Maintain investment grade credit rating Continuous CASK improvement (ex: fuel & FX) Gearing between 45% to 55% Risk Management Hedging Liquidity = Shareholder Returns Targeting pre-tax ROIC > 15% Targeting a consistent and sustainable ordinary dividend Funding flexibility 41 Capacity growth to track New Zealand tourism growth over the medium term New Zealand overseas visitor growth vs Air New Zealand international ASK growth 20% Growth rate 15% 10% 5% 0% -5% 2012 2013 2014 2015 Calendar year Overseas visitor growth AIR International capacity growth 42 Further improvements to CASK driven by fleet programme and operational efficiencies • Underlying unit cost improvements expected as fleet replacement continues – Excluding benefit from fuel price and foreign exchange Operational improvements in CASK* (cents per ASK) 10.25 10.00 9.75 • Efficiencies from simplified and fuel efficient fleet – Lower fuel burn – Simplified pilot and crew groups – Maintenance 7% 9.50 improvement 9.25 9.00 DEC 2012 DEC 2013 DEC 2014 * Prior year CASK adjusted to the average fuel and foreign exchange rates for the six month period ending in December 2015 and excluding divested operations. DEC 2015 43 Maintaining a strong and flexible balance sheet Historical gearing • 65% 52.4% 55% 46.1% 45% 39.3% 42.9% Target range of 45% to 55% Rise of gearing reflects fleet investment and impact of US dollar appreciation 35% 25% 2012 2013 2014 2015 Financial year 44 Stable investment grade rating provides financial flexibility Gross debt / EBITDRA* 3.8x Credit rating 2.9x Moody’s Baa1 Baa2 2012 2015 Financial year • Investment grade credit rating of Baa2 with stable outlook • Benign debt profile Investment grade Baa3 Ba1 Ba2 Ba3 – $150 million unsecured bond payment due in November 2016 Source: Bloomberg as at 22 April 2016. * Gross debt defined as interest-bearing liabilities plus bank overdraft plus operating lease expense multiplied by five (in accordance with Moody’s calculation); EBITDRA excludes associate earnings. 45 Effectively managing financial risks to support our strategic plan Liquidity Hedging Fuel Funding flexibility • Target liquidity ratio of 20% to 30% • Maximum tenor of 12 months • Historically have managed towards high end of target • Primarily utilise collar structure • Currently hedged near policy maximums • Diversified pool of funding available – Commercial debt Liquidity ratio Foreign Exchange 40% • Management of US dollar-denominated balance sheet items 30% • Hedging cover on operating exposures denominated in non-NZD currencies • Well positioned to access financial markets 27.2% – Cash 29.9% 29.2% 29.7% – Operating leases 20% – Finance leases 10% – Unsecured retail bond 0% 2012 2013 2014 2015 – Capital markets Financial year 2016 Net exposures – top 5 currencies USD Fuel USD Other AUD GBP JPY CAD 46 Attractive return on invested capital • Disciplined approach to growth opportunities • Focus on driving cost efficiencies • Contribution of lower fuel Pre-tax ROIC 16.2% 7.1% 2012 2015 47 History of distributing dividends through the cycle  Investing for growth  Changing the mix of owned vs. leased aircraft  Rewarding our people • Ability to attach imputation credits for up to ~$750 million of cash dividends Investing for growth 25.0 2014 - 2019 18.0 20.0 50% 20.0 40% 16.0 15.0 30% 8.5 10.0 5.0 5.0 5.0 2005 2006 6.5 7.0 8.0 5.5 20% 5.5 10% 0.0 DIVIDEND AS % OF OPERATING CASH FLOW Consistently returned capital to shareholders, while at the same time: DIVIDEND DECLARED PER SHARE (CENTS) • 0% Ordinary dps 2007 2008 2009 Special dps 2010 2011 2012 2013 2014 2015 Total dividend as % of operating cash flow 48 Disciplined capital allocation leading to sustainable long-term returns for our shareholders Sources & uses of cash 2011-2015 ($ billions) $5.6 $3.8 $2.1 Debt draw-down $1.0 $3.5 Cumulative operating cash flow $0.2 Operating cash flow & debt draw-down Gross capex / Other investments Debt payments Retained cash $0.6 Cash returned to shareholders 49 Key messa, DAY 2016 We have built Signi?cant well-positioned the best platform opportunity ahead to compete and to ?pure and to continue generating win in a dynamic leverage pm?table - sustainable marketplace grow shareholder retums 474A A STAR ALLIANCE MEMBER Glossary of terms Available seat kilometres (ASKs) Number of seats operated multiplied by the distance flown (capacity) EBIT Earnings before interest and taxation EBITDRA Earnings before interest, taxation, depreciation, rentals and amortisation Cost/ASK (CASK) Operating expenses divided by the total ASK for the period Gearing Net Debt / (Net Debt + Equity); Debt includes capitalised operating leases Gross Debt Interest-bearing liabilities and bank overdrafts, less bank and short-term deposits, net open derivatives held in relation to interest-bearing liabilities, interest-bearing secured deposits and non-interest bearing deposits Liquidity Total Cash (comprising Bank and short-term deposits, interest-bearing secured deposits, non-interest bearing deposits and bank overdraft) as at the end of the financial year divided by Total Operating Revenue for that financial year Net Debt Gross Debt, plus net aircraft operating lease commitments for the next twelve months multiplied by a factor of seven Passenger Load Factor RPKs as a percentage of ASKs Passenger Revenue/ASK (RASK) Passenger revenue for the period divided by the total ASK for the period Pre-Tax Return on Invested Capital (ROIC) Earnings Before Interest and Taxation (EBIT) excluding associate earnings, and aircraft lease expense divided by three, all divided by the average Capital Employed (being Net Debt plus Equity) over the period Revenue passenger kilometres (RPKs) Number of revenue passengers carried multiplied by the distance flown (demand) Total Shareholder Return (TSR) The movement in share price, and assuming that all dividends are reinvested in shares on the ex-dividend date throughout the period 52 4 AIR NEW ZEALAND A STAR ALLIANCE MEMBER