Air New Zealand Limited (AIR) Earnings Call Transcript & Summary

Write it in the sky, write it in the land, write it in the hearts of the people for the greatest thing is love. Behold, let there be life. Kia ora, ladies and gentlemen, my name is Regan Close, and on behalf of Air New Zealand, I'd like to pass on [Foreign Language] of this region. I'd also like to greet you all that have joined us here today. [Foreign Language] I now invite our Chairman, Dame Therese, to address you. Thank you. Kia ora.

Kia ora, Regan. [Foreign Language] Air New Zealand. [Foreign Language] Air New Zealand. Kia ora [Foreign Language] Kia ora, good afternoon, everyone, and welcome to Air New Zealand's 2020 Annual Shareholders' Meeting. My name is Therese Walsh, and I'm the Chairman of Air New Zealand's Board. I'm joining you virtually today from our headquarters in Auckland. And here in the room with me, I have our Chief Executive, Greg Foran as well as the other members of your Board. Today's meeting is being webcast live for all users. In light of the uncertainties surrounding the COVID-19 alert level that would be in place for today's meeting and Air New Zealand at this time, we made the decision a few weeks ago to hold a virtual-only annual shareholders' meeting. This is a new and unusual experience for us all so I'd like to take a moment to thank you for your participation and for your understanding. You will be able to vote and ask questions during the meeting. Please refer to the virtual annual meeting online portal guide, which is available on the NZX and on our Investor Center website for specific instructions. If during the course of the meeting you need any further assistance, please call the Link Market Services helpline on the number displayed on this slide. Before our formal proceedings begin today, I would like to introduce you to my fellow Air New Zealand Board members and in particular, welcome our 3 newest directors to their first Air New Zealand annual shareholders' meeting. In the room with me today, from my far right and your left, we have Dean Bracewell, one of our new directors; and next to him, our Deputy Chairman, Jan Dawson. From my far left, your right, we have Laurissa Cooney, who is also new to our Board; as well as Jonathan Mason; Linda Jenkinson; and of course, our Chief Executive, Greg Foran. Joining us virtually, we have Larry De Shon, based in the United States, who is also a newly appointed Director; and Rob Jager, who is joining us from Perth. Laurissa Cooney joined the Board in October 2019. She has a very strong understanding of the regional tourism industry as well as a deconnection to iwi and regional stakeholders across New Zealand. Her commercial skills and her genuine passion for governance and leadership make her an excellent addition to the Board. Larry De Shon and Dean Bracewell were both appointed to the Board in April 2020. Larry, who as I mentioned earlier, is dialing in from the United States, brings with him a wealth of international business, transportation and aviation experience, having previously spent 28 years with United Airlines. He also has significant experience in leading companies through a regrowth phase, which will be an incredibly useful skill as we plan for the revive and thrive phases of our plan. Dean Bracewell is one of New Zealand's most highly regarded business leaders and has an intimate understanding of the transportation and logistics industries. He also understands what it takes for a company to succeed, both in New Zealand and in a tough and competitive environment. He brings excellent commercial and leadership skills that will further strengthen the Board's existing skill set. You will, of course, hear from all 3 of these directors later on in the meeting when we move to the resolutions. I would also like to take this opportunity to formally welcome our Chief Executive Officer, Greg Foran, to his first annual shareholders' meeting for Air New Zealand. Greg joined us in February from Walmart in the United States. He has an impeccable track record in delivering strong commercial performance, outstanding customer focus and in building a strong culture. He has also led the company strongly through an extraordinarily difficult 8 months. Finally, I would like to thank our Deputy Chairman, Jan Dawson. After 9 years of service to our Board, Jan indicated late last year that she intended to retire at today's annual shareholders' meeting. However, given the challenging situation the airline faces as we never get through the COVID-19 crisis, Jan has kindly agreed to continue in her position in the short term to provide continuity on the Board. Once the date for Jan's retirement has been agreed, the Board will revert back to 7 directors. Also here with us today in the room, we have Jeff McDowall, the company's Chief Financial Officer; our General Counsel and Company Secretary, Jennifer Page; James Gibson from Bell Gully, the company's lawyers; and Peter Gulliver from Deloitte, the company's auditors on behalf of the auditor general. We also have several other members of the executive team and our share registrar, Link Market Services, present today. Before we move on to the more formal proceedings, I would like to take this opportunity to acknowledge the incredibly difficult environment that our team has been operating in over the past 8 months and continues to operate in today. In late March, Air New Zealand, as across the business, began the monumental task of significantly scaling down our operations as international travel essentially ground to a halt and New Zealand moved into lockdown. Additional health and safety requirements, not only here in New Zealand, but also in the few international ports we were able to serve, meant that every single step of the travel journey had to be critically assessed and adjusted as necessary. On behalf of myself and the Board, I want to say a sincere thank you to all Air New Zealanders. We know that at times, this has felt like a thankless task, but I want you to know that we value what you do, and we are grateful for your efforts on behalf of the airline. Now for the formalities of the meeting. I note that based on the information that has been conveyed to me that there is a quorum of shareholders present online, and therefore, the meeting is duly convened. Notice of this meeting was circulated to all shareholders, and I will, therefore, take it as read. We will turn to the resolutions later in the meeting. Please note that only shareholders, proxyholders or shareholder company representatives may vote. The order of events for today's meeting will be as follows: I will discuss the company's performance for the 2020 financial year and the outlook going forward. Following my address, we will hear from Greg Foran, our Chief Executive Officer, who will discuss the near-term challenges and opportunities the airline faces as well as the company's refreshed strategy. We will then open the floor to any questions that you may have regarding the 2020 financial performance or the outlook. I will then move on to the 4 formal resolutions contained in the notice of meeting, and we will address questions after each resolution is proposed. [Operator Instructions] And voting on the resolutions will be conducted by way of poll. This year, given the virtual-only platform, you will be able to cast your vote using the electronic voting card that you received when you validated your registration using your shareholder number. Voting is open from the commencement of this meeting so you can vote at any stage. Specific time has also been allocated for voting later on in the meeting. And please, if you have any issues, refer to the virtual annual meeting online portal guide that can be found under the download section of the virtual meeting platform. Following the voting, I will open the floor to any general questions any of our shareholders may have. We've also received some questions from shareholders prior to the meeting, and we will address these during the session. Well, it's fair to say that 2020 has been a year of unprecedented challenge and disruption. The COVID-19 pandemic has had a rapid and devastating impact across all areas of society, and in particular, has dealt a huge blow to the aviation and tourism sectors, both here in New Zealand and around the world. As you will have seen from the 2020 financial results we reported in August, the impact on our business has been significant. However, I am extremely proud that in the midst of dealing with this crisis, Air New Zealand played a pivotal role in getting the New Zealand economy back up and running, providing repatriation flights to bring Kiwis home and ramping up our cargo offering to enable critical suppliers to flow in and out of New Zealand. This was crucial to keep New Zealand and New Zealanders connected to global markets. I want to say thank you to our people for everything they have done for our airline and our country to make this happen. Turning now to the financial summary for the 2020 financial year. You can see that we reported operating revenue of $4.8 billion, a decrease of 16% from the prior year, and that our overall result was a loss before other significant items and taxation of $87 million. If you include other significant items of $541 million, the majority of which related to the impairment of our Boeing 777-200 fleet and the cost of reorganizing our labor base, we made a loss before taxation of $628 million. We also reported short-term cash of $438 million as at 30 June 2020. The $900 million government loan facility had not been drawn at this time, and I'll give -- be giving an update on our cash and liquidity position later on in today's meeting. The financial results on this slide are certainly not the results that you would typically see Air New Zealand present. It was extremely disappointing for everyone here to announce our first loss in 18 years, particularly given we know that our team has been working harder than ever to deliver for our customers and for our airline. Sadly, it has also meant that for the first time since 2005, we have not paid a dividend to our shareholders. These results are not a reflection of the action or efforts of the incredible team of Air New Zealanders nor are they a reflection of the path we were on when we announced our interim result in February. Rather, they show that even the most financially strong and resilient of airlines is not immune to the impacts of COVID-19. I think this graph paints a really sobering picture of just how challenging COVID-19 has been to the aviation industry and how it really is like nothing we have experienced before. You can see here that some really significant events in global history, such as the SARS outbreak, the global financial crisis, swine flu, they all had a sizable impact on demand for air travel. However, the impact of these all look reasonably insignificant when you compare them to COVID-19. In late February, when we reported our 2020 interim results, we had only recently suspended services into Shanghai and Seoul and made some minor tweaks to our schedule in markets where we anticipated some flow-on impacts to demand. In March, it became clear very quickly that this crisis was larger and would likely have a bigger impact on both the New Zealand economy and in Air New Zealand than anyone had originally anticipated. As the spread of COVID-19 gained momentum globally, the New Zealand government developed an elimination strategy, which saw New Zealand enter into a 7-week period of quite intense lockdown. This graph, with the blue line representing passenger bookings in 2020 and a purple line representing bookings in the prior year, shows very clearly the impact of that lockdown on our business. Across the period from late March through to the end of April, with all nonessential travel prohibited, demand reduced to almost 0. This resulted in Air New Zealand operating less than 5% of our total network, and never in our 80-year history have we had to reduce network capacity to this extent. After a strong start to the financial year and an interim profit before other significant items and taxation of $198 million, Air New Zealand had been tracking well to deliver profit in line with the earnings guidance provided to the market in February, which was a profit of between $300 million and $350 million. We were focused on growing our presence in new markets and stimulating domestic leisure demand. We were also preparing to launch the first ever nonstop link between New Zealand and New York. However, following the declaration of a global pandemic and ultimately the closure of New Zealand's borders to all foreign nationals, within a very short space of time, we went from transporting more than 330,000 passengers a week to transporting just 8,000 customers a week in April. To put it very simply, we, like all our global peers, were an airline that couldn't really fly. This meant that we quickly swung from a profit position to a loss before other significant items and taxation of $87 million. In response to this unprecedented event, Air New Zealand's management team and Board acted quickly, pulling every available lever to safeguard our balance sheet and reduce our cash outflows. This included reducing executive and Board pay, renegotiating terms with our lessors and other suppliers, suspension of all dividends and prohibiting discretionary spend. Please be assured that we have left no stone unturned in our efforts to safeguard the future of our airline, and we will continue to review this even now. Regretfully, we also had to make the difficult decision to reduce our workforce by more than 4,000 people as we prepare to be a smaller airline for a time. Without the ability to mandatorily furlough staff, like airlines in other jurisdictions, we did not have the flexibility to keep our team employed while we wait for demand to return. This has been a gut-wrenching decision for management and the Board, and it's no secret that our people are a key competitive advantage and are second to none when it comes to taking care of our customers. Sadly, these decisions were vital to the airline's survival. As the true extent of this crisis came to light and credit markets began to tighten up, even for investment-grade airlines such as Air New Zealand, we made the decision to engage with the New Zealand government and negotiate a short-term liquidity solution in the form of a $900 million loan standby facility. We felt that it was necessary to obtain this funding and obtain it quickly to maintain continuation of our operations for what was shaping up to be an extended period of reduced demand. This loan was negotiated on an arm's length basis for a term of 2 years. We've recently drawn down on a portion of the loan and will continue to draw incremental amounts on an as-needed basis to ensure we are not paying more interest than necessary. Since we announced the actual financial results in August, we've incrementally drawn down $110 million of the $900 million Crown standby loan facility. Therefore, our total liquidity available to us as at 25 September is approximately $1 billion, comprising $215 million of cash on hand and $790 million remaining on the Crown standby facility. We continue to expect average monthly cash burn to be between $65 million and $85 million on a go-forward basis. Cash burn for August and September was higher than this as we expected due to the timing of refunds, remaining redundancy payments and fuel hedge closeout costs. The additional 2-week period of lockdown that we entered in August 2020 and the subsequent weeks of social distancing requirements on planes also increased cash burn over this period. The Crown standby facility provides Air New Zealand with the necessary liquidity support as we work through a plan for the future shape and size of our business post COVID-19. This facility was always intended to provide the necessary time for the airline to reposition its operations and to facilitate the implementation of a long-term capital structure. We continue to evaluate a range of scenarios on how the pandemic may develop and the subsequent impacts on our operations, fleet, operating cost structure and capital requirements. Assuming there are no further material adverse developments, we expect to complete the capital structure review by early 2021 and be in a position to proceed with capital raising before June 2021. We are pleased that the New Zealand government has recently reaffirmed its commitment to managing its majority -- maintaining rather its majority shareholding in Air New Zealand, and the Board is engaging constructively with the Crown and its capital structure and funding discussions. With the outlook for future passenger demand clearly uncertain and highly dependent on the removal of travel restrictions both here in New Zealand and globally, we know that Air New Zealand will continue to be a smaller business for a time to come. Although a month has now passed since we announced our annual results, a high degree of uncertainty still remains. Given the uncertainty surrounding travel restrictions and the level of demand as these restrictions lift, Air New Zealand is currently not able to provide specific 2021 earnings guidance. However, each of the scenarios we are currently modeling suggest we will make a loss in 2021. Before I hand over to Greg, I would like to say thank you to you, our shareholders, for your continued support of Air New Zealand and your patience as we navigate through this extraordinarily difficult time. We appreciate your commitment to the success of our airline. With that, I will now hand over to Greg. Thank you.

Thank you, Dame Therese. Kia ora and good afternoon, everyone, and thank you for taking the time to join us virtually for our annual shareholders' meeting today. And I wanted to start by reiterating Dame Therese's earlier comments. 2020 has dealt us some of the worst trading conditions in history, and COVID-19 has fast evolved into the most financially threatening event that has ever faced our industry and indeed, our economy. In my career to date, I've dealt with a number of different disasters and crises, but I've never been part of an organization where effectively your entire revenue base disappears in a matter of weeks and for a substantial period of time. But there is a common characteristic that I've observed come out at times of crisis and that is that difficult times tend to bring out the very best in people. Whether we register it consciously or not, I believe that we're aware that something greater than ourselves is at stake. And as the COVID-19 crisis continues to unfold, we see this play out every day in our business. Now it maybe something small, like our crew reassuring a nervous passenger about the stringency of enhanced cleaning protocols or it may be larger, like our critical action around the cargo team remodeling the entire cargo business in the space of just 48 hours to enable the airline to tap into a vital source of additional revenue at a time when passenger demand was virtually nil. Our people and their commitment to our airline truly do make all the difference. Air New Zealanders from across the entire business have made significant personal sacrifices with more than 3,500 people sadly losing their roles, over 600 staff taking voluntary exit and almost 400 taking significant reductions to their work hours. This is all to ensure that Air New Zealand emerges strongly from this crisis. As we navigate through the 3 stages I've spoken about previously: survive; then revive; and finally, thrive, I remain excited about the opportunities that have emerged from our strategy refresh, and I'm confident that Air New Zealand is well positioned to take advantage of those opportunities. I'll talk some more about the strategy refresh a little later on. One thing, though, I'd like to be really clear on is that there is still a huge degree of uncertainty, both in terms of how long this crisis will continue and what the landscape will look like when we do emerge from COVID-19. The actions we're taking are based on a range of scenarios that may or may not play out in the way we envision, but they are necessary in order to ensure we can pivot our business and our planes quickly to those routes that make sense in the new world order. When I think about our business, there are 5 key stakeholder groups that are fundamental to the success of our airline. These are customers, our people, shareholders, suppliers, and of course, the communities in which we operate. And during the last 8 months, every stakeholder has been impacted significantly by COVID-19. From our customers dealing with constantly changing travel plans and trying to access their flight credits; to our people who've worked through some of the most onerous and complex operating conditions in history; to you, our shareholders, with no dividend payment this year; from our suppliers who have been asked to work with us as we reduce our cost base; and finally, to communities, being less connected throughout New Zealand. This has been a total company fight. Everyone is contributing and everyone has been impacted. While these are undoubtedly difficult times, I could not be prouder of our airline, now in its 80th year, and the amazing team we have, both within the company and supporting us externally. The way that everyone has stepped up to deal with this crisis is nothing short of inspiring, and I want to thank all of our stakeholders for your support. I'd now like to spend a few minutes detailing the work we have underway with each of the stakeholder groups I mentioned earlier. Our customers. To our customers, firstly, let me say thank you. From over 30,000 seats sold on our domestic network each day in 2019 to just a handful during level 4. From nearly 600 international flights per week to effectively nil for several months. Never has Air New Zealand experienced this degree of change in such a short period of time. And this tested every aspect of our customer service proposition, and although the situation was entirely unseen and even our most pessimistic black swan event planning could not have predicted this, at times, we did not just stumble. We unfortunately fell. And for that, I sincerely apologize. Having to cancel 4 million seats in the space of a few short weeks saw us implement a credit solution quickly but not fast enough. That had calls reaching 56,000 in just 1 day in our call centers. Now in late July, we were able to launch a partial online solution, enabling around 70% of customers to access their credits and redeem them online, and that was an important milestone to rectifying the situation for our customers. However, we do recognize that there is still some work to be done to enable us to provide a fully self-serviced digital solution for customers with more complex bookings or for those who booked via a travel agent. Please be assured that we continue to work on this and have implemented additional tools, such as allowing customers to pool credits with family members or use them on an entirely different ticket type or destination. And I hope this shows that we are committed to providing our customers flexibility and demonstrating as much care as possible. I've often commented to our people that our domestic business is the heart of our airline. New Zealand is our home, and we protect and nurture our domestic business accordingly. Although New Zealand's second lockdown provided further challenges, we were once again encouraged by the domestic demand we saw immediately following the removal of social distancing on the 14th of September. We sold more than 0.25 million tickets in a 72-hour period, the strongest volume of domestic sales we've ever seen over a 3-day period. And business traffic is also rebounding, particularly with respect to our SME travelers, who appear eager to get back out there in person and to do business again. We remain confident that demand in this critical part of our business is strong and resilient. And this is only possible because of the loyalty our customers have shown us, and we're very grateful for that support. Our people. Our people are the core of our business and a key competitive advantage for Air New Zealand, and they've shown a level of resilience in this environment that is incredibly admirable. And I want to take this opportunity to thank each and every one of our Air New Zealand [Foreign Language] for their commitment and dedication to our airline and our customers. That includes those that have sadly lost their roles as a direct result of COVID-19. With less flying and the likelihood that this crisis will extend for a protracted period of time, it's clear that we require fewer people until demand recovers. Now we're consciously aware of the impact of these decisions on all Air New Zealanders and have been doing everything we can to assist, including offering CV services, financial assistance programs, helping to find redeployment opportunities. And we've also provided well-being check-ins and support mechanisms for those staff that remain. To assist our people on the frontline, we've ramped up our private COVID-19 testing facilities and have worked hard with the Ministry of Health to ensure that our crew are kept safe while also not facing overly onerous isolation requirements. Our shareholders. The interests of our shareholders are clearly aligned to those of Air New Zealand, that is to maximize the long-term value of our airline and to deliver a strong return on invested capital as soon as possible. We have a strong, well-run airline, and I'm confident that the actions we're taking now will help us to deliver returns to our shareholders in the future. You will see us continue to reduce costs where it makes sense, but you should also expect to see us invest in the customer proposition so we're ready to compete strongly as we emerge from this crisis. We're committed to doing what is best for all our stakeholders, and thank you for your support. Our suppliers. Like many businesses during this crisis, we've left no stone unturned in our efforts to reduce our costs in an environment where revenue is constrained. As part of this, we've reviewed all of our purchasing agreements, including within our property portfolio, supplier terms, including leasing of planes and CapEx spend. Through an immense effort from our team and the cooperation of our suppliers who understand the critical position we find ourselves in, we've been able to make some significant savings in this area. And I'd like to say a huge thank you to our suppliers for stepping up in these unprecedented times. We continue to engage actively and constructively with all our suppliers so that when demand eventually recovers, we can move forward strongly together. Finally, our communities. They are vital to Air New Zealand, and we recognize the critical role we play in connecting New Zealanders to their loved ones. And this is a role we take very seriously. Unlike other carriers who will come in and out of routes, we're committed to New Zealand and to offering consistency of service wherever possible. Even in the depths of our national lockdown, we provided services to main centers to keep our essential workers moving. Since moving out of the first lockdown, we've also returned to all domestic locations to ensure New Zealand communities remain connected. We donated thousands of in-flight blankets to charitable organizations such as New Zealand Red Cross and the Middlemore Foundation to provide a bit of extra warmth and comfort to the more vulnerable in our community over winter and over the lockdown. We've also donated nearly 15,000 food items to Mangere Budgeting Services Trust and Food Bank for food parcels after hearing that some of our crew were volunteering their time for this worthy cause. I believe this shows our deep commitment to New Zealand and to all New Zealanders. As I mentioned at the annual results a few weeks back, while the outlook for future passenger demand is clearly uncertain, we have seen some highly encouraging signs in our domestic bookings. At that time, with the country in alert levels 2 and 3, we waited with interest to see what would happen when social distancing requirements were removed. To say we were thrilled by the response would be an understatement. On the 14th of September, when the government removed social distancing requirements on flights within New Zealand, we put an additional 180,000 of our cheapest fares on the Domestic network. We also waived domestic change fees so our customers could book with confidence, knowing that if their circumstances changed, we would look after them. As I mentioned earlier, we sold 0.25 million seats in the first 72 hours. This is fantastic news and shows that more Kiwis than ever are eager to get out and explore our country or visit friends. In parallel to dealing with the COVID-19 crisis, the management team and I have been working on a strategy refresh. Our project was called Kia Mau, meaning get ready. Our strategy review showed us that pre-COVID-19, we were a fundamentally strong and resilient and efficient airline. Therefore, our refreshed strategy is not turning the dial 180 degrees. Rather it is an evolution of the principles that have guided us for many years. Our strategy centers around 5 key pillars. These are: prioritizing people, taking care of our biggest asset, our people and building a culture of care from the inside out; experience excellence, shaping our network and products around our most loyal customers and the experiences they desire most; lifting loyalty, strengthening loyalty to create a second growth engine; do it digital, putting significantly more control of the travel experience in our customers' hands and by developing innovative digital tools and products; ambitious action, putting greater focus on leading and advocating for action on decarbonization, developing a road map specific to our network and operations, with the goal of achieving net zero emissions by 2050. This road map emphasizes the importance of sustainable aviation fuel as a key lever to reduce emissions in the medium and longer term. While our strategy review took place in a pre-COVID environment and it's difficult to know exactly what the world will look like on the other side of this, we know that we need to be really sure that everything we do, from the routes we fly, the fleet we buy and the onboard services we provide, they all make sense in this new world. We know that some of the details will only emerge in time and that we may need to make incremental tweaks to our strategy as that happens. Importantly, our strategy review enabled us to gain some important insights into our customers and what they value the most. And 2 of the biggest insights, which we can develop irrespective of the level of flying we are currently operating, relate to our digital and loyalty propositions. Digital technology and tools will be at the center of future customer innovations and operational performance and enhancements. We have a team dedicated to putting as much control of the travel experience, not just with our airline, but also with our partners, into the hands of customers. Alongside this, they're keenly focused on putting the right digital tools into our operations functions so that we enhance everything from flight planning through to safety management, engineering, rostering and on-time performance. From a loyalty perspective, we'll bring even more opportunities to earn and use Airpoints Dollars while creating innovative new products and services. We're excited about the potential of the program. And while there is not a lot I can share with you today, we are excited to be undertaking testing with thousands of our customers across the country to make sure that our refreshed loyalty proposition exceeds their expectations and delivers the products and services they truly desire. The Air New Zealand that will emerge from this crisis will be keenly focused on the network and products that will deliver the highest value to our customers and to you, our shareholders. We can see an Air New Zealand in the future that is smaller for a time but even more efficient, operating fewer wide-bodied aircraft. The difficult decisions we've made in the past several months, whilst painful, are with a view to making Air New Zealand even more profitable in the future. This will allow us to reinvest in our customer experience and share the rewards with our Air New Zealand [Foreign Language] and shareholders. [Foreign Language] With that, I will hand the meeting back over to Dame Therese. Thank you.

[Foreign Language] Greg. I now open the meeting to any questions you may have that specifically pertain to the company's 2020 performance and our 2021 outlook. If you have any general questions, these will be addressed towards the end of the meeting. And as all questions will be submitted online this year, our Investor Relations team will read this out, and myself, Greg or other members of the Board will address these. Can I ask if there are any questions specifically on the 2020 financial results or the 2021 outlook that shareholders would like to raise? No questions have been received. So I will now move us to the formal resolution section of the meeting. The resolutions for consideration today may only be voted on by shareholders, proxy holders and shareholder company representatives. We have 4 resolutions to be voted on today, all relating to the reelection of 4 of our existing directors, being Linda Jenkinson, Laurissa Cooney, Dean Bracewell and Larry De Shon. Air New Zealand's constitution requires that directors are appointed by the Board and brought to the annual shareholders' meeting to retire and be reelected at the next meeting. As already mentioned, voting on all the resolutions will be concluded -- will be conducted rather today by a poll. Shareholders will be able to cast their vote using the electronic voting card received when online registration was validated. To vote, you will need to click Get Voting Card within the online meeting platform. You'll be asked to enter your shareholder or proxy number to validate. Please then mark your voting card in the way you wish to vote by clicking either for, against or abstain on the voting card. Once you have made your selection, please click Submit Vote on the bottom of the card to lodge your vote. The company secretary holds a record of the valid proxies and postal votes received. Before I put the resolutions to the meeting, you can see the results of the voting directions given to proxies and the postal votes at the bottom of the slide for transparency. We will discuss and vote on each resolution in turn, and Link Market Services will tally the votes at the end of the meeting. Resolution #1. I will now turn to the reelection of Linda Jenkinson as a director. Miss Jenkinson is a global entrepreneur with extensive experience leading multinational companies. She was previously a partner at management consulting firm A.T. Kearney. Ms. Jenkinson has been an independent Nonexecutive Director of Air New Zealand since June 2014. She sits on the Health, Safety and Security Committee of the Board. You can find further credentials of Linda Jenkinson detailed in the notice of meeting. I now invite Linda to give you her comments in relation to her reelection. Linda?

Kia ora and good afternoon. Thank you, Therese, for your kind introduction. I'd like to add my welcome to you, our shareholders, to our annual general meeting, and thank you for the opportunity to speak to you today to seek your support as a director of Air New Zealand. I returned to New Zealand after a 30-year career based in the United States in 2018. Since leaving my role as Chair of a global customer and employee loyalty company, I have been a full-time Nonexecutive director, serving on Boards in listed and unlisted companies in New Zealand, Australia and the United States, focusing on transportation, financial services and high-growth technology companies. I've been on the Air New Zealand Board now for 6 years, and in that time, I have been a member of the Health, Security and Safety Committee. We are in unprecedented times, and I believe my background as a CEO of international transportation company, as a partner at A.T. Kearney, working with corporations and major change initiatives and as a high-growth technology entrepreneur where my last start-up focused on customer and employee loyalty, uniquely qualifies me to support Air New Zealand. I believe my background contributes to the skills of my fellow directors to support Air New Zealand in these very challenging COVID times. Thank you for your support in my reelection as a director. I am honored to be in the service of our national airline and our shareholders. Thank you.

[Foreign Language] Linda. I move that Linda Jenkinson is reelected as a Director of the company. Have we received any questions from shareholders on the resolution? No questions have been received. If you could please now submit your vote on your electronic voting form under resolution 1 to reelect Linda Jenkinson. Please select either for, against or abstain. [Voting]

Thank you. I will now turn to the reelection of Laurissa Cooney as a director. Laurissa is a fellow of the New Zealand Institute of Chartered Accountants and a chartered member of the Institute of Directors in New Zealand. Ms. Cooney has been an independent Nonexecutive Director of Air New Zealand since October 2019. She sits on the Audit and Risk Committee of the Board. Further credentials of Laurissa Cooney are detailed in the notice of meeting, and I now invite Laurissa to give you her comments in relation to her reelection. Laurissa?

Thank you, Therese. [Foreign Language] Laurissa Cooney [Foreign Language] Kia ora, I'm Laurissa and my iwi connections [Foreign Language] and I currently reside in sunny Bay of Plenty region. It is a pleasure to be able to address our shareholders today, and I thank you for your time. It is an honor to be considered for reelection to the Air New Zealand Board and to have a few moments to talk to you. By way of background, I joined the Board in October 2019. My career before becoming a professional independent director included Senior Audit roles with Deloitte in New Zealand and London, over 14 years, before I worked as a Chief Financial Officer for Te Whare Wananga o Awanuiarangi for 7 years. I'm an active member of the Institute of Directors with a chartered member status and became a follower of the Chartered Accountants Australia and New Zealand Society last year. My background in financial reporting, audit and risk management, coupled with my CFO commercial experience, has equipped me strongly to contribute to the existing skill set of the Air New Zealand Board. My current Board portfolio and work history has provided me with valuable insights into the regional tourism industry and sustainability practices. I am also incredibly grateful for the deep connection to iwi and regional stakeholders from these engagements. These relationships and insights have become especially important with Air New Zealand's current focus on the domestic tourism market. I believe that Air New Zealand is an amazing company, and I bet you, it is an iconic company that New Zealanders feel proud of and part of. And through my time with the organization, it is clear, our talented staff play a significant role in Air New Zealand's success. I am proud of Air New Zealand; proud of our CEO, Greg; and Chair, Dame Therese, for their outstanding leadership; proud of our passionate staff and my fellow Board directors for their commitment and contribution to Air New Zealand in such difficult and surreal times. I am deeply committed to working on your behalf to achieve the best possible outcomes for your airline with my fellow directors. With your support, I would like to continue in this role and continue to bring a regional tourism, sustainability and iwi perspective to this incredibly special New Zealand company. Thank you for your time. [Foreign Language]

Kia ora, Laurissa. I move that Laurissa Cooney is reelected as a director of the company. Have we received any questions from shareholders on this resolution? No questions have been received. If you could please now submit your vote on your electronic voting form, under resolution 2, to reelect Laurissa Cooney. Please select either for, against or abstain. [Voting]

Thank you. I will now turn to resolution 3, being the reelection of Dean Bracewell as a director. Mr. Bracewell has significant experience in the freight and logistics industry, with the majority of his career spent at Freightways, where he held a number of senior leadership and executive roles, including most recently as Managing Director. Mr. Bracewell has been an independent Nonexecutive Director of Air New Zealand since April 2020. He sits on the People, Remuneration and Diversity Committee, and further credentials of Dean Bracewell are detailed in the notice of meeting. I now invite Dean to give his comments in relation to his reelection. Dean?

Good afternoon, everyone. It is a pleasure to join you today for my first Air New Zealand annual shareholders' meeting and to stand for reelection to the Air New Zealand Board. I enjoyed a great 35-year career with Freightways, of which 18 was as the Managing Director. I was part of a team whose objective was to deliver superior performance to all stakeholder groups, naturally including shareholders, who enjoyed many successive years of positive returns. During my time at Freightways, our ownership changed from private New Zealand ownership to an Australian public company to private equity and lastly, to be fully listed on the NZX. As such, I've experienced a variety of governance styles and been a part of a number of different Boards, all of whom I have learned something from. Since moving on from Freightways, I've taken on a select number of governance roles and a range of companies, where I feel that my past experience will enable me to make a positive contribution to each respective company. With your support, I hope to bring to Air New Zealand the experience I have gained from my involvement in sustaining and improving the performance of a company and highly competitive service industries; the knowledge I've gained through working with and leading large teams of people throughout New Zealand and Australia; a base understanding of aviation, having overseen the operations of a domestic cargo airline and aviation engineering team. I've also been a customer of Air New Zealand's cargo division so I bring a natural empathy with some of New Zealand's business customers the understanding that we must target the satisfaction of all stakeholders' expectations to ensure the long-term positive performance of the company to benefit you, its owners. Ahead of my decision to join the Air New Zealand Board in April, the company was impacted by COVID-19 so the challenges facing the company were already evident. This only increased my interest in being a part of the Air New Zealand team. Tough decisions have had to be made for the long-term good of the company, and none are tougher than those a result in saying goodbye to a large number of loyal people. In this regard, I will also bring to Air New Zealand the desire to see some of these people eventually welcomed home when the airline is once again in a position to thrive. I feel very keenly the responsibility that this Board has to you, the company's shareholders. I will be honored to continue as a director with your support. Thank you.

Kia ora, Dean. I move that Dean Bracewell is reelected as a Director of the company. Have we received any questions on this resolution from shareholders? No questions have been received. If I could now ask you to please submit your vote on your electronic voting form, under resolution 3, to reelect Dean Bracewell. Please select either for, against or abstain. [Voting]

Thank you. Our final resolution is in relation to the reelection of Larry De Shon as a director. Mr. De Shon has more than 40 years experience in the aviation and transportation industries. Prior to joining Air New Zealand's Board in April 2020, he was Chief Executive Officer of Avis Budget Group, Inc., where he was responsible for more than 30,000 employees globally. He also spent 28 years with United Airlines, where he held a number of executive roles across key business areas such as airport operations, marketing and onboard services. Mr. De Shon has been an independent Nonexecutive Director of Air New Zealand since April 2020, and he sits on the Board's Health, Safety and Security Committee. Further credentials of Larry De Shon are detailed in the notice of meeting. I now invite Larry to give his comments in relation to his reelection. Welcome, Larry.

Thank you, Dame Therese. Kia ora, good afternoon. It's a privilege to be with you today even if it is over a video and to be considered for reelection to the Air New Zealand Board. I've worked with the travel and transportation industry for 42 years, spending almost 30 of those years with United Airlines, starting in airport operations, working on the frontline, loading and cleaning airplanes. I worked my way up through the organization and was heavily involved in the airlines' expansion into Asia and Europe, including launching operations in France, where I lived and worked as Managing Director for 4 years. As I grew within the organization, I served in global executive positions, heading up strategy, marketing, onboard service and global airport operations. In addition, after a 13-year career, I just retired from Avis Budget Group, a global Fortune 500 company, where I served as Executive Vice President of Operations; President of International, living in the U.K. for 4 years; and eventually, CEO of the global business, running 11 brands in car rental and truck rental and the largest car sharing company in the world, Zipcar. I have had the privilege of visiting your beautiful country a number of times throughout my career. I am also a director for The Hartford Financial Services Group, where I serve on the Audit Committee, the Governance Committee and the Finance, Investment and Risk Management Committee. While at United, working with Star Alliance Partners, I developed a great deal of respect for Air New Zealand's professionalism and the quality of service they are renowned for. I hope I can leverage my skills and experience to help Greg and the management team to this most difficult period in the airline industry and to help air New Zealand develop and grow into an even better, stronger and successful company. I seek your support, and it would be an honor to serve on the Board of Directors of Air New Zealand. Thank you.

Kia ora, Larry. Thank you so much. I move that Larry De Shon is reelected as a director of the company. Can I check, have we received any questions from shareholders on this resolution? Thank you. No questions have been received. If you could please now submit your vote on your electronic voting form, under resolution 4, to reelect Larry De Shon. Please select either for, against or abstain. [Voting]

Thank you for your participation. Shareholders should now submit their votes virtually. Voting will be open until the close of the meeting, and the results will be announced to the NZX and the ASX after the conclusion of the meeting. We will now take a moment to allow shareholders to cast their remaining votes. [Voting]

I call the meeting back to order. I would now like to open today's meeting up to any other questions that you may have. And can I please ask that we use this time to focus on questions relating to matters that are relevant to the company. If you have any customer-related matters that you would like to address, please direct your comments to our Investor Relations team. Now while we wait for some questions to come through from online participants, I will address some of the questions we received prior to the meeting. The first question is, where does Air New Zealand see opportunities to invest or capitalize on to turn the disadvantage of the current situation into an advantage? Thank you for the question. I think the first thing is that, as Greg outlined, we have a strategy refresh that will serve us well as we move out of COVID. It will include a focus on our people, and it will also include a focus on our customer propositions, both with investments in our loyalty platform and our digital initiatives. So those things are going to be really important as we move out of the COVID world. Secondly, I think what's really important for us at Air New Zealand is that we continue to have an incredibly strong domestic network. And it has been very strong throughout COVID and will continue to be. And this is actually a point of differentiation with a number of airlines around the world where we have been able to continue in that manner. And building on that strong domestic network as we move forward, is going to give us a platform to go forward into the international and other parts of our network as we open up post-COVID. So I think all those things are focus areas for us as we move forward. Thank you. The next question is, what are the core points that Air New Zealand will focus on in the next 12 months? Again, thank you for the question. I will hand this question over to our Chief Executive, Greg Foran, to ask what Air New Zealand will be focusing on in the next 12 months, Greg?

Thank you, Dame Therese. The key thing is, obviously, to keep our domestic network strong and resilient, and we've been really focused on making sure that, that comes to light. Secondly, I think it's important that we continue to build out areas that are not necessarily COVID impacted. So areas like digital and loyalty that I spoke about in my presentation previously. And the third point is it's incredibly important that we stay close to our Air New Zealanders during this period. We know that, that's a key competitive advantage. And so staying close to those Air New Zealanders who are going to be with us as we emerge from this over the next period is going to be critical.

Thank you, Greg. The next question is, I want to check if the company has plans to pay dividends in the future so as to recover any potential loss from the reductions in the share price? Obviously, as a company, we would like to be paying dividends in the future. I think in order for that to happen, and there are no firm plans at this stage. We need to have stepped through COVID-19 a little further. We need to have a stronger view of what scenario is playing out and where we are with our view on medium-term earnings expectations. As some of you will know, we have always sort of run a fairly prudent policy, which looks to keep our gearing at around 45% to 55% and to make sure we can pay dividends that are sustainable and consistent. And that's what we'll be aiming to do, and you'll be the first to know when any decisions are taken in that regard. Thank you for that question. If I move on to the next one, how will you keep the airline and especially international travel relevant in a COVID-19 world? And I feel we may have already answered that between Greg and myself earlier in terms of the strategy refresh, both in terms of our innovation and loyalty and in our digital platforms and also our onboard offerings. So those will be our focus areas going forward. The next question, could you outline a time line where you could see Air New Zealand into a trans-Tasman bubble with Australia? And I think the reality is that we don't know that will be something that will happen when it occurs and the political leaders and various countries agree. I think the key thing for us at Air New Zealand is to make sure that we are really well prepared for whether that happens tomorrow or in 9 months' time. We were hoping that it would be up and running about now a trans-Tasman bubble, now it's looking to be near Christmas or perhaps beyond. Again, it's in the hands of our political leaders and how COVID-19 is playing out, but we are prepared to make sure that we can make that a safe experience for our customers when that does occur. Thank you for that question. And for the next one, why is Air New Zealand's top echelon run by people who do not know much about aviation? You must have talented people to elect in place of just reelecting the empty chairs that collect the pay. Well, let me start by talking about the Board, and then I'll talk about the management and leadership at Air New Zealand. I think, firstly, in relation the Board, we're looking to have a diverse and highly experienced board in place at Air New Zealand, which I believe we do. We do look to have different skill sets, and we run a skills matrix. Airline experience is important. And I think there is a correct assessment there in an airline, some airline experience is obviously an advantage. Our recent appointments have obviously added to our skill sets in that regard. Larry, who was in front of the meeting earlier, has a long history in the aviation sector. And Dean Bracewell, who you've also heard from has a strong background in freight and logistics and air transport in that regard. I think it's also important to recognize that a number of our Board members have been on the Board for enough years to have gathered quite a lot of experience with the company, which is incredibly important when you're going through a difficult time like this. In relation to the executive and the management team, the broader airline leadership team, I think that between everybody and that group, there's close to 500 years of airline experience across all areas. So I'm not concerned about that particular issue, and I think we are well covered. Again, thank you for the question. The next question is, is there any scope to introduce a status match program now to capture those people that have moved here and are fresh supporters of Air New Zealand and want to cement their loyalty. Greg, would you like to answer that question?

Yes. So I think that's a terrific question. And we would never say no to anything. So let's consider that, and we'll put that into our refresh strategy and see where we end up. Thank you.

Yes. Thank you for the suggestion. Always welcome. Okay. That's the prepared questions that have come in in advance. Let's now move to any live online questions from the virtual audience. And I'll just check whether we have any questions that have come through today?

Yes, we have. The first question is, can you please expand a little on rapidly increasing Air New Zealand's capacity to export our valuable agricultural and horticultural goods with almost -- with an almost COVID-free environment in New Zealand as we move forward, this will give New Zealand an advantage over other competing countries.

Excellent. And I mean, I'll start by saying that our cargo offerings during COVID-19 have been incredibly strong as we get New Zealand's products around the world, and we will seek to build that as we go forward in terms of our cargo strategies. But Greg, would you -- do you want to offer anything more specific on that?

Yes. So we're certainly excited about what we've seen with cargo. And we're incredibly grateful for the support that actually we've had from the Ministry of Transport, which, under a scheme they've put in place, has allowed us to operate around about 50 cargo flights a week. We're going to America. We're up to Japan. We're into Seoul. We're moving product over to Australia. And that dialogue continues with the Ministry of Transport. And we've seen an extension of that through now to December. It's certainly of great interest to us to continue to fly cargo and we're learning a lot from it, and we're appreciative, as I said, of the support that we get.

Excellent. Thank you for that, Greg. And thank you for the question. Are there any further questions from our online audience?

Our second question is, were the Air New Zealanders that were made redundant, offered a right to return?

Again, I'll let Greg answer that question.

So in terms of how we've handled this, we've got a group of Air New Zealanders that have been made redundant. And should we have positions available, then certainly, we would be obviously open to them reapplying. We also have a group of Air New Zealanders, particularly cabin crew, that have taken, if you like, a leave without pay option, essentially something along the lines of furlough, and they would have the option to return ahead of those that have been made redundant.

Thank you, Greg, for that answer. And let's move to our next question because there appear to be -- there appears to be a little queue, which is great. So can I please have the next question?

What happens to the unused aircraft during COVID reduced operations? And to what extent will these costs impact future results?

Okay. So in terms of our current fleet, the major part of the fleet that is impacted by COVID-19 are our 777 widebodies. In particular, our 777-200s that have gone into deep storage. Also a number of our 777-300s have gone into deep storage, although I think we've kept a couple on the ground for contingency purposes. So that has been the main impact on our fleet during COVID-19. As many of you will be aware on the wide-body network, we have an ordering for new 787 aircraft from Boeing, and that will be coming in a few years' time. So we will be continuing to review our requirements on the wide-bodied network as we move forward and out of COVID. Thanks.

What form will the capital raise intake in 2021?

Right. So in terms of a capital raising, which is a popular topic at the moment, we are in the throes of completing our capital structure review, and we will be looking to finalize that early 2021. We'll then be looking to have a capital raising after that and pre or before June 2021. So we will probably be looking to go to the market in the early part of 2021.

As part of the 2021 outlook, how strengthened airline partnership arrangements be used to enhance lifting loyalty?

Great question. Thank you. And I will pass it on to Greg.

That is a good question. And obviously, that's going to be dependent on when borders start to open and people begin to fly again. So we've got some great agreements in place with a number of partner airlines. But clearly, that's dependent on us getting up and running. And as I mentioned, with the loyalty work, we're in the process of developing that out further and beginning to test some things. And as that comes to light, we'll be sure to share some more information on that in due course.

Excellent. Thank you very much, Greg, and thank you for the question. Do we have another question?

Other than forming a bubble with Australia, does Air New Zealand consider other COVID low-risk countries, such as Vietnam and Taiwan?

Greg, do we?

Yes. Sure. As you mentioned previously, this is something that's not in our control. And obviously, we don't get access to any information that's not in the public domain in terms of what's happening in relation to borders. So we're dependent on the policies and procedures that the government will put in place around border openings.

Thank you.

Coming from an FMCG background, does Mr. Foran intend to continue with Air New Zealand as a full-service airline? Or does he see that it could move to a more basic airline?

Thank you for the question. The reality is that Air New Zealand is a bit of a hybrid in terms of its positioning. So as we think about our domestic and mid-haul business, I would not say that as a full-service airline. We don't offer business class seats across the Tasman or up and down the country. So we're a notch ahead of, if you like, a low cost carrier. In terms of the wide-bodied fleet that are doing the long-haul flying, that is more of a full-service airline. So the positioning with Air New Zealand is a bit unique in the airline world and the fact that we sort of occupy 2 positions and our intention would be to maintain that hybrid approach.

Thank you. Next question.

Does Air New Zealand have any thoughts on diversifying into other transport methods such as rail and shipping for leisure and business customers?

No current plans.

Does Air New Zealand have any plans for scenic flights to Antarctica?

No current plans.

Who among the directors is responsible for public relations? Is that director happy with the image of Air New Zealand and the actions that have been initiated to strengthen that image?

So in terms of public relations, that is a responsibility of every director on the Board as it is the responsibility of the Chief Executive and the executive team. I think Greg was really upfront and has addressed that there were times when we not only stumbled, but we fell in terms of dealing with some of the issues around COVID-19. And we have rallied as quickly as possible to put in place solutions and to answer the questions that our customers, the public, have of us. And I think we've worked through those. It certainly wasn't perfect. I think Greg was very upfront about that, and we all take responsibility jointly for everything that has occurred. And for the great solutions have been put in place in response to that. So thank you.