Monthly Investor Update
Tuesday 25 Nov 2008

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MONTHLY INVESTOR UPDATE: 25 November 2008

CONTENTS
October market conditions Aircraft deliveries Company news Operating statistics table

OCTOBER MARKET CONDITIONS
In October, Air New Zealand carried 971,000 passengers, down 1.8% on the same month last year. During the month the airline’s capacity was reduced by 1.5% on last October and the Group’s passenger load factor dropped by 1.9 percentage points to 76.7%. The Domestic passenger load factor improved by 1.0 percentage point, despite the 1.9% capacity increase on October last year. The Tasman / Pacific market continues to be challenging with passenger numbers and load factors significantly down. Passengers carried fell by 9.6% and passenger load factor was down by 7.3 percentage points on October last year. In the Long Haul market the passenger load factor remained stable as capacity was effectively managed by a 3% reduction in seats. North America / UK routes showed signs of weakness with passenger numbers falling 6.5%. Passenger numbers for Asia / UK and Japanese routes remained flat on October last year. Air New Zealand’s scheduled international capacity is forecast to be down 13% in the fourth quarter of the 2009 financial year compared with the same period last year.

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In October, Short Haul load factors decreased by 4.5 percentage points to 75.2% - Domestic passenger load factor was up 1.0 percentage point to 73.3% - Tasman / PI passenger load factor decreased by 7.3 percentage points to 76.2% Long Haul load factors increased 0.1 of a percentage point to 77.9% - Asia / Japan / UK passenger load factor was up 0.7 of a percentage point to 77.4% - North America / UK passenger load factor decreased by 0.5 of a percentage point to 78.2%

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Group-wide yields for the year-to-date were up 6.9% on the comparable period last financial year. Short Haul and Long Haul yields were up by 5.5% and 10.7% respectively. Removing the impact of foreign exchange, group-wide yields were up 5.0%. The 2009 financial year-to-date capacity and passenger numbers are not directly comparable with the previous period. This is due to two less days being captured in the July 2008 operating statistics compared to July 2007. We have made adjustments to the variance calculations to make the figures comparable year on year.

NEW AIRCRAFT DELIVERIES
The only further deliveries expected of new aircraft during the 2009 financial year are the final two Q300 turbo prop aircraft, which are due to arrive in April and May 2009. An A320 has been on sub-lease to an European operator and is due to return into the Air New Zealand operating fleet next month. Operating Aircraft Boeing 747-400 Boeing 777-200ER Boeing 767-300ER Airbus A320-200 Boeing 737-300 ATR72-500 Q300 Beech 1900D TOTAL June 08 8 8 5 12 16 11 21 17 98 Additions 1 1 Disposals 25 November 08 8 8 5 12 16 11 21 18 99

COMPANY NEWS
Air New Zealand Announces Redundancies Air New Zealand announced on 19 November that it will disestablish up to 200 full-time jobs. Areas affected are long haul cabin crew, recruitment, airline operations and technical operations planning and management. The airline has been reducing capacity to match customer demand over the past few months and as a result has been reviewing staffing levels. Air New Zealand will commence consultation to disestablish up to 100 long haul cabin crew positions along with six jobs in recruitment and seven jobs in the airline operations area. Separate reorganisations are underway in subsidiary businesses, including Safe Air in Blenheim, with a small number of redundancies expected. Also being implemented is a further phase of the technical operations restructure, which started in 2006. This will see up to 68 roles in the technical, planning and management areas disestablished to meet the new shape of the business and its current demand profile. Annualised savings from the redundancies and a current review of all spending should be in excess of $20 million. It is expected that the majority of the redundancies will be achieved on a voluntary basis.

Sustainable biofuel test flight scheduled The world's first commercial aviation test flight powered by a sustainable second-generation biofuel will take place on 3 December 2008. The jatropha based fuel for the Air New Zealand Boeing 747-400 test flight out of Auckland, New Zealand, has been certified as suitable for use by Rolls-Royce. The two-hour test flight is scheduled to take off on 3 December with the jatropha blend fuel to power an Air New Zealand Boeing 747-400's Rolls-Royce RB211 engine. Various procedures will be carried out during the test flight to confirm and measure the performance of the engine being operated with this fuel. The test flight is a joint initiative between Air New Zealand, Boeing, Rolls-Royce and UOP, a Honeywell company, as part of commercial aviation's drive for more sustainable air travel for future generations.

Air New Zealand makes it quicker and easier to get through domestic airports Air New Zealand has successfully launched its revolutionary domestic travel experience with a range of technical and design innovations that help customers save time and get through the airport faster. On 3 November at Auckland Domestic Airport, Air New Zealand unveiled its new state-of-the-art check in and boarding experience, introducing a new layout and design, new kiosks that enable customers to print their own bag tags, a direct to conveyor belt bag drop zone to eliminate queues, new gate scanners for straight to gate check in and boarding for customers without bags and several new technological enablers for frequent flyers. Auckland was the first domestic airport to have the extreme makeover followed by Christchurch on 17 November and Wellington will be launched early December. New kiosks are being progressively introduced to the larger domestic airports and gate scanners allowing customers to scan their boarding passes will be in place at all 26 domestic terminals used by Air New Zealand. In total, 112 new kiosks ...