Air New Zealand Stock Exchange Announcement

The following statement was released by Air New Zealand to the New Zealand and Australian stock exchanges this morning:

Business Plan

The Board of Air New Zealand yesterday approved a Five Year Business Plan prepared by management. The plan takes into account latest trading conditions as a result of the separation from Ansett and the impact on global air travel as a result of the terrorist attacks in the USA on 11 September. In accordance with the Heads of Agreement entered into on 3 October 2001, the business plan will be subject to due diligence by the Crown.

The plan is aimed at stabilising the business, reducing debt and financial risk and creating a platform to return to sustainable profitability in the medium term.

Current Trading

The plan includes the unaudited trading results for the three months ended 30 September 2001, and unusual charges that have been incurred during that period.

The operating deficit of $52.0 million before tax for the first quarter is $24.8 million worse than the corresponding period last year. This is due primarily to lower yield from international services and continuing low foreign exchange rates. The prior year also included the benefits from additional international traffic associated with the Olympics. Notwithstanding the losses, operating cashflow for the quarter was positive.

The unusual charges incurred in the quarter include $347.4 million associated with the separation from Ansett, of which the most significant component is the settlement with the Voluntary Administrator of A$150 million.

The unusual charges also incorporate the write-off of carried forward tax losses of $66.4 million relating to the potential change of ownership that will occur when the Crown completes the acquisition of an interest in Air New Zealand of more than 49 percent. Loss of continuity of shareholding will mean that the Group will not be able to take advantage of prior or current years' carried forward tax losses.

In addition, and for the same reason, the Group has not recognised the estimated tax benefit on losses incurred during the quarter ended 30 September 2001.

The remaining unusual items reflect redundancy provisions related to the organisational restructuring of the Group and the announced initial service reductions by Air New Zealand. This has been more than offset by a restatement of the obligation to News Corporation for settlement due after 30 June 2002, in relation to the acquisition of shares in Ansett Holdings Limited. This change arises from the change in share price between 30 June 2001 and 30 September 2001.

In terms of the balance sheet, unaudited Net Shareholders Equity has fallen from $518 million at 30 June 2001 to $106 million at 30 September 2001. This does not include the $300 million subordinated loan advanced by the New Zealand Government on 15 October as the first phase of funding under the recapitalisation plan. Total assets at 30 September 2001 (excluding Ansett) amounted to $4.07 billion

Outlook

Trading conditions remain very difficult for the core continuing airline businesses of Air New Zealand. Global economic activity, and in particular international airline travel, is likely to remain subdued throughout the current year as the impact of recent terrorist attacks and the subsequent retaliatory military actions continue market uncertainty.

The immediate areas of focus included in Five Year Business Plan which has now been completed are to stabilise the business, reduce financial and operational risk and return the business to sustainable profitability in the medium term. Air New Zealand will continue to monitor industry developments and adjust the business as conditions demand.

A Point of Clarification

The company is concerned by a number of media reports related to the departure at the end of the year of the company's Chief Financial Officer, Mr Adam Moroney. The company sought to retain Mr Moroney's services as a permanent and valuable member of the Senior Management team, however he has chosen to leave the company to return to Australia with his family.