AIR NEW ZEALAND ANNUAL SHAREHOLDER MEETING FRIDAY 28 SEPTEMBER 2012

CHAIRMAN’S ADDRESS The 2012 financial year saw an improvement in the company’s performance relative to the previous year. Normalised earnings before taxation were $91 million, 21 percent ahead of last year’s result. Statutory net profit after taxation was $71 million, down 12 percent on 2011. Taken on its own this result is somewhat disappointing, but it needs to be viewed in a broader context.

I wrote in the annual report that ongoing challenges in the global economy have continued to suppress demand, escalate oil prices and destabilise financial markets. As the financial crisis has evolved, it has become clear that we cannot expect a return to what could be considered normal operating conditions anytime soon.

With this in mind, management have worked hard to adapt to this business environment. Significant investments have been made in upgrading to a more modern, fuel efficient and less maintenance intensive fleet. Costs are being aggressively managed, and the company has a strong financial position with over $1 billion cash on hand and a relatively low gearing of 46.1 percent as at 30 June.

As a Board we are committed to providing our shareholders with a consistent dividend stream where possible. After reviewing the company’s financial performance and financial commitments, we declared a final dividend of 3.5 cents per share, taking the total dividends for the 2012 financial year to 5.5 cents per share.

It is worth highlighting our dividend history, which compares very favourably against our industry peers in this part of the world. We are the only airline in Australasia to have consistently paid a dividend during the past seven years – this is a reflection of our high performing management team, who have been able to achieve consistent profitability through one of the toughest periods the airline industry has ever experienced.

At the annual result announcement last month we gave an outlook statement on the 2013 financial year as we see it. We said that, assuming our current forecast of market demand and fuel prices at current elevated levels, we expect to deliver a more than double Normalised Earnings before Taxation. Clearly we operate in a volatile industry with certain variables beyond our control. However three months into the 2013 financial year, we believe we are well placed to deliver that result.

As a consequence, we believe that the current share price does not fairly reflect the underlying value of the company’s shares. The Board has therefore decided to undertake a share buyback programme. We will do so through an on-market share buyback on the NZX and the ASX to acquire up to 3% of the company’s shares. The Crown, which holds 73 percent of the Company’s ordinary shares, has advised that it will not participate as a seller into the share buyback.

The programme may commence from 4 October 2012 and may continue until 27 September 2013. Air New Zealand will not purchase shares under the buyback at a price which is more than 5 percent above the five day volume weighted average market price for Air New Zealand shares. This pricing restriction is required under the ASX Listing Rules. It is currently intended that shares acquired under the share buyback will be held as treasury stock and may be used for the purposes of fulfilling Air New Zealand’s possible future obligations under employee share-based compensation plans.

This is the last Shareholder Meeting before our CEO, Rob Fyfe, departs at the end of the year. As I have noted previously, Rob started his tenure seven years ago with an immediate and very difficult challenge confronting the company – a restructure of the engineering business. That process set the tone of his leadership – well reasoned and researched initiatives, well communicated ideas and vision, determination to improve outcomes, and above all, trusting and encouraging people to go above and beyond in their daily activities. Rob’s legacy will be the strong business he leaves behind, and the special culture he has instilled throughout all levels of the organisation. He has been an outstanding leader both within the business and in the wider international aviation sector. This week, Vanessa Stoddart, one of the long serving members of Rob’s team has also announced her decision to leave the company at the end of the year. Vanessa has been an important part of the senior leadership of the company through this period and I want to publicly acknowledge her contribution.

Shareholders should appreciate the enormous contribution both Rob and Vanessa have made to the company.

We announced in June the appointment of as CEO designate. Christopher joined us 18 months ago from the global conglomerate Unilever, where he was most recently President and CEO of their Canadian operation. Christopher will take over on the 1 st of January next year, and the Board has every confidence in his ability to lead Air New Zealand into the future.

I will now hand over to Rob Fyfe.

CEO ADDRESS Thanks John. It’s always great be back home in . As one of the largest employers in the region, with close to 2,000 employees here in Christchurch, we are keenly aware of the difficulties that are still affecting many in the city. We have continued to prioritise our response to the earthquakes, by putting community interest ahead of short term commercial objectives, maintaining capacity ahead of demand and continuing with standby fares and a range of other promotional and pricing strategies to stimulate demand. The road to recovery for Christchurch is going to be long, and we will continue to play our part in assisting and contributing to the economy where possible.

The 2012 financial year saw a marked improvement in our performance compared with the previous year, although as John noted, we still have some way to go before we are delivering the level of return that you, as our shareholders, can expect. The tough operating conditions of the past several years have clearly impacted earnings, but we have remained committed to our core strategy, continued to invest in the business and continued to innovate and adapt to changing market and competitive conditions. As a result we are now well positioned to deliver improved performance, even at these elevated fuel prices and despite many airlines projecting further deterioration in their performance. We now live in, and plan for, an environment where jet fuel prices remain elevated and we are confident we have the fleet strategy, the network strategy, the product strategy, the agility and the execution capability, to deliver far improved financial performance, notwithstanding these fuel prices. The days when we could count on steady growth in the world’s developed economies may not return anytime soon.

With that in mind we have been working to build a business that is lean and efficient, while retaining the elements that our customers know and love. To survive in today’s environment, an airline needs to be able to move rapidly in responding to an ever changing operating environment. To truly succeed, you need to be ahead of the curve.

Maintaining the most up to date, fuel efficient fleet – tailored to our route network has always been a priority for us. While buying new aircraft obviously involves significant capital expenditure and weighs on the company’s balance sheet, our analysis shows that over the long run this creates a superior shareholder value outcome. The alternative approach of operating an ageing fleet and interior product proposition results in increased fuel costs, increased maintenance cost, reduced reliability, inferior customer experience, and reduced yields, all while compromising competitiveness and customer loyalty.

Our decision to sign up as launch customer for the new Boeing 787-9 Dreamliner reflects our desire to be the first to benefit from this step change in technology, performance and economics. While we have been frustrated by the delivery delays, we remain confident that when these aircraft enter into service in 2014 they will be a game changer and the payoffs will be tangible.

We are already benefiting from the performance improvements that our new fleet of Boeing 777-300s has brought – with 23 percent improved fuel efficiency over the 747s they replaced, 40 percent more Cargo capacity and far lower maintenance costs, they have materially improved our financial performance, particularly on the key North American routes.

Our programme to replace the 737-300s with Airbus A320s on the Domestic network is on track and again delivering significant performance improvements and increased competitiveness against our budget competitor. Again we are achieving close to a 20 percent fuel efficiency gain against the Boeing 737s they replace and benefiting from longer maintenance intervals. We are also getting very positive passenger feedback on the seating, quieter cabin environment and interior configuration. Our regional network is being boosted with the introduction of new ATR72-600 turboprops as well, with the first aircraft arriving in the next few weeks.

We are continuously reviewing our route network, optimising capacity and frequency to address underperforming routes and identifying new opportunities. In recent months we have seen the suspension of our Beijing route, with our Mainland China services consolidated onto Shanghai, where we intend to increase to daily services by early 2013. We have commenced a seasonal service to Bali and significantly increased services and capacity into Perth. We have increased services into Los Angeles following the withdrawal of Qantas and have been able to increase capacity into Japan as the market recovers following the disastrous earthquake and tsunami.

Domestically we have significantly grown capacity into Queenstown as visitor numbers continue to soar and have added a Mount Cook service back into our network. The ability to adjust capacity quickly to changing market conditions is key to our competitiveness and to sustainable financial performance.

We have seen a number of changes to our competitive landscape over the past year. On the international front, in addition to the Qantas withdrawal from the -Los Angeles route, Aerolineas Argentina have discontinued their direct service to South America from Auckland, and United Continental shelved plans for an Auckland-Houston service.

That said, domestically we are seeing a renewed challenge from Qantas-owned , who have recently announced plans to add another aircraft to their New Zealand fleet and concentrate services on the main trunk routes. We continue to adapt our business to compete strongly in this intensely competitive market.

Our decision to make standby fares available on all domestic flights is paying great dividends as is the increased number of grabaseat deals that we are now offering. As a result of these initiatives we expect to offer well in excess of 1 million fares under $100 during the course of this year. You will continue to see us act decisively to enhance and protect our market position.

In April this year we announced a new environmental tourism partnership between Air New Zealand and the Department of Conservation (DOC). The partnership is our second largest sponsorship, and is based around New Zealand’s nine Great Walks – Rakiura, Kepler, Milford, Routeburn, Heaphy, Abel Tasman Coastal, Whanganui River Journey, Tongariro Northern Circuit, and Lake Waikaremoana.

Through the partnership Air New Zealand will deliver a promotional campaign aimed at encouraging people to Get Out & Walk the Great Walks, in doing so promoting domestic tourism. We are currently undertaking a global social media and PR driven campaign – the following short video clip is an example of this.

On the Tasman and Pacific Islands network, our Seats to Suit offering has been a highly effective response to the diverse needs of those markets. We are giving our customers the option of a full service experience including meals, inflight entertainment and premium lounge access, or simply a seat and bag offering priced to compete with the budget airlines.

Our alliance with is also proving to be a strong success. We view it as a win- win strategy, where we can provide customers with a complete Australasian network offering consisting of 62 destinations across Australia and New Zealand. This network has high frequency, competitive pricing and seamless booking processes and connections. As a result, our combined market share has already grown significantly.

Our equity interest of 19.99 percent in Virgin Australia further cements this relationship. Virgin are in the process of upgrading their product offering to provide closer alignment to the Air New Zealand offering and to increase the appeal to corporate clients – a crucial segment of the Australian domestic market that has long been dominated by Qantas.

The benefit for Air New Zealand, from our equity stake in Virgin Australia, is that we gain a genuine economic interest in the Australian aviation market, without having to make the major capital commitments that would be required if we were to deploy our own fleet of aircraft and battle for a share of that market – something we would not contemplate. Our Loyalty business continues to expand and deliver results. Membership of our Airpoints programme grew by 19 percent during the year to 1.2 million members, and we have recently announced the addition of Shairpoints, which allows members to combine Airpoints Dollars between friends and family to buy flights and other rewards. Our OneSmart credit card is performing well, with high rates of activation and usage among customers.

As I stand here today, I can report to you that the airline is in good heart. We are increasingly being recognised for our unique company culture, and this has been highlighted with us being voted New Zealand’s most desirable employer for the second year running. We have also separately been recognised as New Zealand’s most reputable company. I am very proud of our team of Air New Zealanders who go well beyond the call of duty in keeping our day-to-day operations running smoothly and delivering the award winning customer service that sets us apart from our competitors.

As I now enter my final few months in my role as CEO, I feel proud with what’s been achieved during my 7 year tenure and proud of how Air New Zealand and our people represent New Zealand on the world stage. It has been a special privilege to lead such an iconic company, and it is certainly the highlight of my career to date. As the national carrier of New Zealand, we have a proud tradition which I’m sure will be continued under Christopher’s watch.

I sincerely wish Christopher and the team all the very best in taking the company forward into the future.