Airways Statement of Corporate Intent 2019

Airways Corporation of New Zealand Limited Statement of Corporate Intent    2020-2022

INTRODUCTION AND NATURE & SCOPE OF ACTIVITIES

Following a comprehensive consultation process with customers and other stakeholders, Airways has recently set core business ATM prices for the FY20-FY22 period. These prices and related revenue estimates are reflected in the financial budgets for the three years from FY2019/20, set out below.

STRATEGIC CONTEXT

AIRWAYS’ BUSINESS UNITS

Forecast FY19

Plan FY20

Plan FY21

Plan FY22

Revenue (Includes internal revenue) X X Core business

FY20 KEY STRATEGIC WORKSTREAM

196.0

224.1

235.6

245.2

Commercial businesses X X Digital

4.1

4.7

5.2

5.7

MEASURE OF SUCCESS

X X Aeropath/Aviation Services

28.4

29.1

30.2

32.4

X X Training course delivery

8.3

10.1

11.1

12.2

40.8

43.9

46.5 282.1

50.3

FINANCIAL FORECAST BY UNIT ($NZM)

Group revenue

236.8

268.0

295.5

NOPAT X X Core business

15.8

17.9

20.3

19.1

DIVIDENDS

Commercial businesses X X Digital

0.4

0.3

0.7

1.1

REPORTING TO SHAREHOLDING MINISTERS

X X Aeropath/Aviation Services

5.2

5.1

6.0 2.6 9.3

6.4

X X Training course delivery

2.0 7.6

2.4 7.8

2.9

10.4 29.5

POLICY FOR SHARE ACQUISITION

Group NOPAT

23.4

25.7

29.6

Key financial metrics X X Capital investment

44.0

75.6

72.8

47.4

COMPENSATION FROM THE CROWN

X X Group FTEs

783

818

823

816

X X Group return on capital (GAAP)

17.4%

17.1% 16.5% 16.5%

THE CROWN’S INVESTMENT IN AIRWAYS

ACCOUNTING POLICIES Airways prepares financial statements in accordance with GAAP, with a complete list of accounting policies available in the latest annual report available on Airways’ website. In addition to these accounting policies, Airways will adopt the new IFRS 16 lease accounting standard from 1 July 2019. The impact of this standard is set out in the financial budgets above and in the latest annual report. The financial forecasts and budgets set out in this SCI comply with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) and other

applicable Financial Reporting Standards (as appropriate for profit-oriented entities) except for revenue, which is determined at the individual business unit level. As a result, the Group revenue number above includes internal revenue earned by Airways’ commercial businesses from the statutory business. This internal revenue is eliminated in the annual financial statements, which are prepared at a Group level only. This has no impact on Group NOPAT. Airways also uses Economic Value Added (EVA) principles to guide pricing decisions. Further detail is provided in Appendix B.

APPENDICES

DIRECTORY

11

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