2021 ANNUAL FINANCIAL RESULTS AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2021 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2021 AIR NEW ZEALAND GROUP DIRECTORS’ STATEMENT The directors of Air New Zealand Limited are pleased to present to shareholders the Annual Report* and financial statements for Air New Zealand and its controlled entities (together the “Group”) for the year to 30 June 2021. The directors are responsible for presenting financial statements in accordance with New Zealand law and generally accepted accounting practice, which give a true and fair view of the financial position of the Group as at 30 June 2021 and the results of the Group’s operations and cash flows for the year ended on that date. The directors consider the financial statements of the Group have been prepared using accounting policies which have been consistently applied and supported by reasonable judgements and estimates and that all relevant financial reporting and accounting standards have been followed. The directors believe that proper accounting records have been kept in accordance with the requirements of the Financial Markets Conduct Act 2013. The directors consider that they have taken adequate steps to safeguard the assets of the Group, and to prevent and detect fraud and other irregularities. Internal control procedures are also considered to be sufficient to provide a reasonable assurance as to the integrity and reliability of the financial statements. This Annual Report is signed on behalf of the Board by: Dame Therese Walsh Jan Dawson Chairman Deputy Chairman 26 August 2021 Contents Statement of Financial Performance 2 Independent Auditor’s Report 44 Statement of Comprehensive Income 3 Five Year Statistical Review 50 Statement of Changes In Equity 4 Corporate Governance Statement 55 Statement of Financial Position 5 Climate-Related Disclosures 64 Statement of Cash Flows 6 Directors’ Profiles 69 Statement of Accounting Policies 7 Interests Register 71 Notes to the Financial Statements Directors’ Interests in Air New Zealand Securities 72 1. Revenue Recognition and Segmental Information 10 Indemnities and Insurance 72 2. Expenses 11 Employee Remuneration 73 3. Other Significant Items 12 Subsidiary and Joint Venture Companies 77 4. Taxation 13 Other Disclosures 78 5. Earnings Per Share 14 Operating Fleet Statistics 79 6. Cash and Cash Equivalents 14 Securities Statistics 80 7. Trade and Other Receivables 15 General Information 82 8. Inventories 15 Shareholder Directory 83 9. Other Assets 16 10. Property, Plant and Equipment 17 11. Right of Use Assets 20 12. Intangible Assets 21 13. Investments in Other Entities 22 14. Revenue in Advance 23 15. Interest-Bearing Liabilities 24 16. Lease Liabilities 25 17. Provisions 27 18. Other Liabilities 28 19. Distributions to Owners 28 20 . Share Capital 29 21. Reserves 31 22 . Commitments 32 23 . Contingent Liabilities 32 24 . Financial Risk Management 33 25 . Offsetting Financial Assets and Financial Liabilities 41 26 . Related Parties 42 * This document, in conjunction with the Air New Zealand Annual Shareholder Review 2021, constitutes the 2021 Annual Report to shareholders of Air New Zealand Limited. 1 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2021 STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR TO 30 JUNE 2021 2021 2020 NOTES $M $M Operating Revenue Passenger revenue 1,470 3,942 Cargo 769 449 Contract services 161 216 Other revenue 117 229 1 2,517 4,836 Operating Expenditure Labour (830) (1,197) Fuel (311) (1,022) Maintenance (254) (441) Aircraft operations (350) (575) Passenger services (84) (258) Sales and marketing (73) (253) Foreign exchange (losses)/gains (29) 18 Other expenses (247) (324) 2 (2,178) (4,052) Operating Earnings (excluding items below) 339 784 Depreciation and amortisation (716) (841) Loss Before Finance Costs, Associates, Other Significant Items and Taxation (377) (57) Finance income 8 34 Finance costs (90) (103) Share of earnings of associates (net of taxation) 13 19 39 Loss Before Other Significant Items and Taxation (440) (87) Other significant items 3 29 (541) Loss Before Taxation (411) (628) Taxation credit 4 122 174 Net Loss Attributable to Shareholders of Parent Company (289) (454) Per Share Information: Basic and diluted earnings per share (cents) 5 (25.7) (40.4) Net tangible assets per share (cents) 82 101 2 The accompanying accounting policies and notes form part of these financial statements. AIR NEW ZEALAND GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR TO 30 JUNE 2021 2021 2020 NOTE $M $M Net Loss for the Year (289) (454) Other Comprehensive Income: Items that will not be reclassified to profit or loss: Actuarial gains on defined benefit plans 6 6 Taxation on above reserve movements 4 (2) (2) Total items that will not be reclassified to profit or loss 4 4 Items that may be reclassified subsequently to profit or loss: Changes in fair value of cash flow hedges 64 (249) Transfers to net loss from cash flow hedge reserve 35 112 Net translation loss on investment in foreign operations (3) - Changes in cost of hedging reserve 4 9 Taxation on above reserve movements (32) 37 Total items that may be reclassified subsequently to profit or loss 68 (91) Total Other Comprehensive Income/(Loss) for the Year, Net of Taxation 72 (87) Total Comprehensive Loss for the Year, Attributable to Shareholders of the Parent Company (217) (541) The accompanying accounting policies and notes form part of these financial statements. 3 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2021 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR TO 30 JUNE 2021 FOREIGN CURRENCY SHARE HEDGE TRANSLATION GENERAL TOTAL CAPITAL RESERVES RESERVE RESERVES EQUITY NOTES $M $M $M $M $M Balance as at 1 July 2020 2,209 (123) (11) (757) 1,318 Net loss for the year - - - (289) (289) Other comprehensive income for the year - 74 (6) 4 72 Total Comprehensive Loss for the Year - 74 (6) (285) (217) Transactions with Owners: Equity-settled share-based payments (net of taxation) 4, 20 4 - - - 4 Total Transactions with Owners 4 - - - 4 Balance as at 30 June 2021 2,213 (49) (17) (1,042) 1,105 FOREIGN CURRENCY SHARE HEDGE TRANSLATION GENERAL TOTAL CAPITAL RESERVES RESERVE RESERVES EQUITY NOTES $M $M $M $M $M Balance as at 1 July 2019 2,219 (31) (12) (184) 1,992 Net loss for the year - - - (454) (454) Other comprehensive loss for the year - (92) 1 4 (87) Total Comprehensive Loss for the Year - (92) 1 (450) (541) Transactions with Owners: Equity-settled share-based payments (net of taxation) 4, 20 5 - - - 5 Equity settlements of long-term incentive obligations 20 (15) - - - (15) Dividends on Ordinary Shares 19 - - - (123) (123) Total Transactions with Owners (10) - - (123) (133) Balance as at 30 June 2020 2,209 (123) (11) (757) 1,318 4 The accompanying accounting policies and notes form part of these financial statements. AIR NEW ZEALAND GROUP STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021 2021 2020 NOTES $M $M Current Assets Bank and short-term deposits 6 266 438 Trade and other receivables 7 252 305 Inventories 8 92 106 Derivative financial assets 24 79 38 Income taxation - 3 Other assets 9 137 119 Total Current Assets 826 1,009 Non-Current Assets Trade and other receivables 7 92 142 Property, plant and equipment 10 3,128 3,336 Right of use assets 11 1,989 2,357 Intangible assets 12 179 186 Investments in other entities 13 138 162 Other assets 9 342 351 Total Non-Current Assets 5,868 6,534 Total Assets 6,694 7,543 Current Liabilities Trade and other payables 524 322 Revenue in advance 14 689 828 Interest-bearing liabilities 15 524 160 Lease liabilities 16 383 353 Derivative financial liabilities 24 11 116 Provisions 17 58 104 Other liabilities 18 164 219 Total Current Liabilities 2,353 2,102 Non-Current Liabilities Revenue in advance 14 503 491 Interest-bearing liabilities 15 1,023 1,303 Lease liabilities 16 1,378 1,885 Provisions 17 241 295 Other liabilities 18 30 32 Deferred taxation 4 61 117 Total Non-Current Liabilities 3,236 4,123 Total Liabilities 5,589 6,225 Net Assets 1,105 1,318 Equity Share capital 20 2,213 2,209 Reserves 21 (1,108) (891) Total Equity 1,105 1,318 Dame Therese Walsh Jan Dawson Chairman Deputy Chairman For and on behalf of the Board, 26 August 2021 The accompanying accounting policies and notes form part of these financial statements. 5 AIR NEW ZEALAND ANNUAL FINANCIAL RESULTS 2021 STATEMENT OF CASH FLOWS FOR THE YEAR TO 30 JUNE 2021 2021 2020 NOTES $M $M Cash Flows from Operating Activities Receipts from customers 2,471 4,660 Payments to suppliers and employees (2,111) (4,418) Income tax refunded 35 40 Interest paid (83) (92) Interest received 11 40 Net Cash Flow from Operating Activities 6 323 230 Cash Flows from Investing Activities Disposal of property, plant and equipment, intangibles and assets held for resale 10 67 Proceeds from sale of slots - 42 Distribution from associates 26 38 35 Acquisition of property, plant and equipment, right of use assets and intangibles (231) (615) Interest-bearing asset receipts/(payments) 9 (66) Investment in associate 26 (8) (5) Net Cash Flow from Investing Activities (182) (542) Cash Flows from Financing Activities Interest-bearing liabilities drawdowns 380 45 Lease liabilities drawdowns 16 - 225 Rollover of foreign exchange contracts* (184) 74 Equity settlements of long-term incentive obligations 20 - (15) Interest-bearing liabilities payments (178) (154) Lease liabilities payments 16 (331) (350) Dividends on Ordinary Shares 19 - (130) Net Cash Flow from Financing Activities (313) (305) Decrease in Cash and Cash Equivalents (172) (617) Cash and cash equivalents at the beginning of the year 438 1,055 Cash and Cash Equivalents at the End of the Year 6 266 438 *Relates to gains/losses on rollover of foreign exchange contracts that hedge exposures in other financial periods.