Air New Zealand Statement to Stock Exchange 6 September 2001

In response to speculations surrounding yesterday's meeting of the Air New Zealand Board, the Company's Chairman, Dr Jim Farmer has issued the following statement:

"The Board met yesterday to discuss and progress the strategies being pursued by the Group in relation to its recapitalisation. Over the past four months, the Board has frequently met on short notice outside its usual schedule of meetings and will meet again late today. The meetings are not in any sense 'crisis' meetings but are an active response by the Board to ensure that its strategy remains appropriate as circumstances change. Shareholders and the market should expect no less than prompt action by the Board in addressing the recapitalisation proposal.

"As has been previously well publicised, the intense competition in the Australian domestic market compounded by fuel prices and foreign exchange have significantly affected Ansett's financial performance. Although those factors remain, current passenger volumes on Ansett services have been significantly increasing in recent weeks in response to new commercial initiatives and forward bookings are particularly strong with many sectors being well ahead of equivalent performance this time last year. The underlying financial issue remains the need to achieve satisfactory yields on revenue and it is the Board's view that this can best be addressed by substantial reinvestment in equipment. It is the need for that reinvestment which drives the requirement for additional capital.

"The inability to reach any agreement involving an acquisition of Virgin Blue is disappointing but simply means that the Board is now placing greater focus on other strategies. The alternatives have different levels of equity requirement. The Board is in the process of discussing among the Company's major shareholders and the New Zealand and Australian Governments, the financial and other measures required to secure positive outcomes from the different strategies now under consideration.

"The Board has had no indication from Singapore Airlines that it has changed its position in relation to seeking additional equity in the Company up to a level of 49%. Discussions with the Government continue in relation to the regulatory approvals required to achieve an increase. There has been no agreement between the Company and Singapore Airlines as to the pricing of equity participation other than the publicised price of $1.31 per share contained in a non-binding Memorandum of Understanding between the Company and Singapore Airlines.

"As the New Zealand Government has already commented, the situation remains fluid pending a decision by the Board on its strategy and then a decision by the Company's major shareholders as to the consequent capital requirements of the selected strategy. The Board is highly conscious of the need to establish certainty for the market and that a clear path must be reached."