Operator: Welcome to the Air New Zealand 2026 Interim Results Call. [Operator Instructions] And with that, I will turn the call over to Air New Zealand's Head of Investor Relations, Kim Cootes. Please go ahead.

Kim Cootes: Kia ora and good morning, everyone. Today's call is being recorded and will be accessible for future playback on our Investor Center website, which you can find at www.airnewzealand.co.nz/investor center. Also on the website, you can find our results presentation, interim report and market release as well as other relevant disclosures. I would like to take a moment to remind you that our comments today will include certain forward-looking statements regarding our future expectations, which may differ from actual performance. We ask that you read through the disclaimer and in particular, the forward-looking cautionary statement provided on Slide 2 of the presentation. I would also like to draw your attention to the fact that some of the 2025 comparative figures have been restated throughout the presentation to reflect the recognition of additional end of lease provisions. There is a reference to those changes in the supplementary section of the presentation. Within that section, we have also included slides that we will not specifically address during the webcast. These slides provide key financial and operational details, and we recommend that you take the time to review that information. Joining me on the call today are Chief Executive Officer, Nikhil Ravishankar; and Chief Financial Officer, Richard Thomson. We'll also be joined by Leila Peters, our General Manager of Corporate Finance, for the Q&A session at the end. Before I hand things over to Nikhil, I would like to take this opportunity to welcome him to his first Air New Zealand investor call. I know he is looking forward to meeting our investors and the analyst community in the coming weeks. With that, I will now turn the call over to Nikhil.

Nikhil Ravishankar: Thank you, Kim. Kia ora and good morning, everyone, and thanks for joining us on today's call. I'm both humbled and excited to lead Air New Zealand into the next chapter. This is an airline with an extraordinary history and an outsized role for our country, and I feel that responsibility very deeply. Before I talk about the numbers, I want to start where the airline starts with our people. Thank you to all Air New Zealanders across the airline for the way you've kept showing up for our customers and for each other in very tough conditions. I also want to make a special mention of our cabin crew. I know this has been a difficult period, and I want to be clear, we are one team. How we work through challenging moments matters, and I'm committed to doing that with respect and fairness. As I've stepped into the role, I've spent a lot of time listening on the ramp in cabins at airports with engineers and planners and with former CEOs of the airline. Two things have really stood out for me in those conversations, the strength of the foundations we have and the standard this airline has set over decades. And you can see those foundations on this slide, a strong safety culture, a loyal customer base supported by our koru loyalty program and a diverse global network and modern fleet. We also have a team of brilliant people who embrace innovation daily. And of course, we value the role of our strong balance sheet in providing resilience and giving us strategic flexibility. Those foundations give us real levers as we lift performance, and they also show up in the metrics. We carried 8.1 million passengers in the half. Customer satisfaction has held strong, and we were ranked second in the APAC region for on-time performance in 2025. At the same time, we're operating in an environment with some significant challenges. Capacity constraints, cost escalation and a slower-than-expected recovery in domestic demand have created real pressures on financial performance, and our response can't be to wait and hope that conditions improve. We have to act decisively and with discipline on the things within our control. That's how I approached my first 100 days, and I've set 5 clear priorities for the team. First is safe, punctual and world-class service for our customers. Reliability is not just a service metric, it's a cost metric and a revenue metric. A standout early outcome has been improved punctuality in our regional operations from the development of what we call our clean sheet schedule. This has led to a dramatic improvement in regional on-time performance improving to 83.9% from 73.3%, up over 10 points. My second priority has been driving profit improvement while cutting nonessential costs. That's particularly important when you consider the high inflationary environment we're currently in, and I'll speak more about that shortly. The third is getting grounded aircraft back faster. Restoring scale is critical. It improves utilization, reduces the need for higher cost substitutes and strengthens network economics. We're pleased with recent progress and now expect 4 grounded Airbus Neo and Boeing 787 aircraft to return to service throughout 2026. We also take delivery of 2 of 10 new 787 aircraft later in the year, providing wide-body capacity growth of around 20% to 25% over the next 2 years. Fourth is sharpening our strategy and operating model. This includes the strategy review now underway. And fifth is strengthening our advocacy for a fair, affordable aviation system for New Zealand. A meaningful element of the cost pressure we're seeing is structural within the domestic system, and we'll continue to engage constructively with airports and regulators because connectivity and affordability matter. Work is underway across all 5 priorities, and we're starting to see momentum. Turning to the result. We reported a loss before tax of $59 million and a net loss after tax of $40 million. That is not where we want to be and reflects a very challenging operating environment. The drivers of this are relatively straightforward, and I don't think will come as a huge surprise to anyone here. Global engine maintenance disruptions continue to constrain our fleet. While capacity was broadly flat in the half, we are still only operating at around 90% of pre-COVID capacity, almost 4 years on and have up to 8 aircraft grounded at times. As you've heard before, when you run a subscale network, the economics deteriorate quickly. You lose utilization, you carry more disruption costs and you end up doing things you wouldn't choose to do in a normal operating environment. We did receive $55 million of compensation in the half related to the engine issues. Even after taking that into account, our internal estimate is that we missed at least $90 million of earnings, net of compensation that the business would have made if our fleet had operated as intended. We've also seen meaningful cost inflation across the aviation system this half alone, especially in mandated domestic passenger levies and landing charges as well as engineering materials. This has been amplified by a weaker New Zealand dollar. Domestic demand has recovered more slowly than we expected, particularly across business purpose travel, which has weighed on mix and yield. Given the result, the Board has made the prudent decision not to declare an interim dividend, consistent with our capital management framework. Now alongside managing the near-term, we've also been progressing a company-wide strategy review since late last year because the environment has changed. We're operating with less scale, higher aviation system costs and more disruption risk. And we all know this isn't a business where you pull one lever and everything moves. It's a complex system, more like steering a super tanker than a speedboat, and profit improvement comes from coordinated changes across reliability, scale and cost discipline. At the same time, there are areas of real traction, and those matter because they show what this airline can deliver when constraints ease and when we execute the basics well. Customer satisfaction is at 84%, reflecting investments we have made in the hard product, including the 787 retrofit program as well as food and beverage in-flight entertainment and operational reliability, which I've touched on already. Near and dear to me is the refresh of our loyalty program, including the launch of Koru Black. This is the beginning of a series of benefits that we will be rolling out to our loyalty members. With over 5.2 million koru members, our loyalty program is a strategic platform for future growth and value. Turning to Slide 7 on revenue. The story is nuanced. International demand continues to hold up well, particularly offshore inbound. Premium cabins continue to be a genuine bright spot with premium cabin revenue growing 10% compared to economy cabin growth at 2%. Ancillary revenues continue to perform well, growing 10% compared to last year. That's encouraging because we see premium as a structural opportunity for us. It's where we can differentiate and where customers will pay for value if we get the proposition right. At the same time, domestic demand has recovered more slowly than we expected, but we are starting to see early signs that it is recovering. A weaker New Zealand dollar continues to have an impact on New Zealand outbound travel to the U.S. Conversely, it is helpful for U.S. inbound demand. We continue to see good outbound demand for travel into Southeast Asia and Japan, which is pleasing. Slide 8 speaks to the operational constraint that sits underneath a lot of what you're seeing in the numbers. At times, up to 8 aircraft were grounded. And as I've noted, when that happens, you don't just lose capacity, you also lose efficiency. You end up carrying costs you wouldn't normally carry and the network becomes harder to run with consistency and reliability. Looking forward, our aircraft availability assumptions remain fluid. At present, we expect a slight improvement in the second half versus the first half, but we still anticipate up to 3 A321neos and up to 4 787s may be grounded at times. We've taken a pragmatic approach. We've used wet leases to protect schedule integrity. We've carried significantly more spare engines than normal, around 20 when we would only typically need 4, and we've redesigned the schedule to prioritize reliability even where that means temporarily stepping back from some growth we had planned. We've also invested heavily in resiliency measures such as our automatic passenger rebooking toolbox to ensure that when things go wrong, we can address them quickly and efficiently. These actions keep our customers moving, but they come at a significant but temporary cost. But I want to be transparent about the recovery curve here. We are starting to see signs of progress, improved engine shop capacity and throughput as well as new fan blade certification that extends time on wing. Compared to what we noted in August, I would say we are cautiously optimistic, but the improvement will be patchy and nonlinear. Improvements in aircraft availability are unlikely to translate immediately into earnings uplift as capacity, particularly wide-body capacity, cannot be operationalized into the schedule and sold at short notice. The primary constraint is uncertainty in aircraft and engine return timing, which limits our ability to plan and sell additional flying with confidence. On top of this, once the engines are returned, our ability to get compensation from the OEMs declines even though we can't operationalize or commercialize that capacity immediately. Disruption-related costs and inefficiencies also take time to unwind, including the return of leased aircraft and engines. And importantly, we don't plan on hope. We will plan on what we can observe and what we can deliver reliably for our customers. As we get aircraft back into service, we'll accelerate where the evidence supports it. Again, I want to acknowledge our people here. This kind of operating environment is tough and the effort required to keep the airline running reliably under these constraints is significant. Alongside engines, the other dominant theme is nonfuel cost inflation. And importantly, it's not just a first half issue. In the first half, we saw around $75 million or around 3.5% of nonfuel cost inflation, driven mainly by mandated passenger levies, engineering and maintenance and landing charges. On its own, that number might not look out of line. The problem is a compounding effect. These costs have been stepping up for several years, and the base we are carrying today is materially higher than it was pre-COVID. Since 2019, the increases are significant. Landing charges, as an example, are up 64% across all airports and around 85% across domestic airports. Engineering materials are up 45%, and you can see a few other examples on the slide. Over the same period, New Zealand CPI is up around 29%. So aviation system inflation is running significantly ahead of the broader economy in categories that are fundamental to running an airline. That's why we view a meaningful portion of this as structural, not temporary. And in a domestic market that has been slower to recover, our ability to pass on these increases through fares is constrained. So our response has 3 parts. First, we have to keep pushing transformation and productivity because controllable cost per passenger matters more than ever in this environment. Second, we need sharper commercial execution to lift yields where the market will bear it, and we're continuing to build the proposition in places like premium and loyalty. And third, we will actively advocate for settings that support a fair and affordable aviation system. Despite the headwinds, we have made meaningful progress operationally for our customers. The clearest example of these improvements is regional on-time performance, which I've already spoken to. That matters because reliability reduces disruption costs, improves customer confidence and supports demand. We're applying the same discipline to the jet network, schedule integrity first, then capacity growth when we can do it reliably. What I will touch on here is our transformation program. We've delivered around $45 million in benefits for the half, $145 million since the program started, but I want to be candid. Much of that is being absorbed by the rate of cost inflation. That doesn't mean the program isn't working. It means we need more of it faster, and we need the aviation system settings to be fit for purpose. Finally, on resilience, liquidity at the end of the half was $1.3 billion, within our target liquidity range. Net debt-to-EBITDA is 2.6x. We're focused on executing earnings recovery while prudently managing capital investment as aircraft return to service. So my message is this, we're executing on the basics. We're being realistic about the near-term, and we're taking the steps needed to restore profitability and build resilience. With that, I will hand over to Richard to discuss the financials in more depth.

Richard Thomson: Thank you, Nikhil. Turning to Slide 12 and some of the key financial outcomes from the half year. As Nikhil said, this has been a challenging period for us, but one that we signaled several months ago. Despite seeing passenger revenue growth of 3.6%, the headwinds from engine availability issues and ongoing inflationary pressures continue to hurt the bottom line as network growth remained flat, making us unable to absorb increased costs through additional scale. The loss before taxation of $59 million came in slightly below our guidance range. That was due to fuel price, which was a headwind as crack spreads rose sharply in late October and later moderated alongside Brent crude. This resulted in an average fuel price of USD 88 per barrel versus the USD 85 a barrel that we based our guidance on. As a result of a net loss after taxation of $40 million, we've not declared an interim dividend, which is in line with our capital management policy of paying dividends based on a trailing 12-month net profit after tax. I will touch on liquidity and our leverage in a bit. So let's move on now to Slide 13. Ongoing engine availability issues continue to have a widespread impact on the cost base of the airline. That includes suboptimal aircraft deployment, loss of productivity, disruption management costs and wider network flow on effects. While challenging to isolate all these effects, we have estimated the combined direct and indirect impact for the first half of at least $90 million net of compensation. In terms of compensation, we've received $55 million from engine manufacturers, which was $39 million less than the compensation received in the prior corresponding period. That $55 million equates to about 1/3 of the financial impact of these issues. Turning now to Slide 14, we have our profit waterfall, and I'll touch on a few areas that deserve a bit more color. First, revenue for the period is up $42 million due mainly to RASK improvements across our long-haul and short-haul international networks, alongside a marginal increase in capacity. This includes unused customer credit breakage of $11 million. In addition, cargo revenue was adversely affected by increased freighter competition and mix changes towards more transshipment activity, both of which contributed to lower load factors and yields. There is more detail on cargo in the supplementary section of the slide pack. Then other income has been more than offset by less compensation received than the prior corresponding period. You may recall at the last annual result, I referenced that approximately $30 million of compensation received then was related to other periods. Moving on, we saw significant increases in maintenance, aircraft operations and passenger services costs, which were primarily caused by price inflation as well as the timing of life cycle engine costs. Labor grew 3% or about $26 million. We have been increasing our pilot onboarding in preparation for the new 787 deliveries later this financial year, and there was some near-term cost inefficiency related to that ramp-up. Foreign exchange has been a drag on earnings with the New Zealand dollar about $0.02 or 3% weaker than the U.S. dollar compared to the prior period. Then I'll just touch on the share of associate earnings, which is the Christchurch Engine Centre, our joint venture with Pratt & Whitney. Prior year issues with supply chain had led to constraints with overhaul capacity. Those issues have alleviated a bit now, and we are seeing the benefit of that come through. It's also worth mentioning that the expansion of that facility to cater to Geared Turbofan overhauls is well underway with expected completion by the end of the 2026 calendar year. Stepping back and looking at the overall movement in the period, approximately $75 million or about 35% of the net movement in the result is directly attributable to price inflation, most of this from aviation system costs. That has only been partially offset by the benefits of our transformation initiatives, which contributed approximately $45 million of benefits in the half. Moving now to CASK on Slide 15. I won't spend much time on this as the trends and drivers have already been discussed. The reported CASK increased by 7.7% in the period. Excluding the impact of fuel price and foreign exchange, underlying CASK increased by 5.7%. The ongoing costs of the engine availability issues, combined with a reduced network footprint are negatively impacting both the numerator and the denominator of the CASK measures. And as a reminder, much of the compensation received does not help CASK as for the most part, it is recorded in other revenue and income rather than as an offset against costs. Adjusting for the impact of engine availability issues, our estimates are that CASK for the period would have been approximately 3% better if not for the diseconomies and inefficiencies at play. We expect underlying CASK to remain under pressure until we get our more efficient aircraft back in the air flying and regrow the network. This is likely to begin in 2027. Turning to Slide 16 now, which provides an update on our fuel and FX position. For details on the first half fuel cost and relative performance compared to the prior period, you can refer to our supplementary slides. We are 83% hedged for the second half of the financial year and about 46% hedged for the first half of the 2027 financial year. We primarily hedge fuel using Brent crude, meaning that our fuel costs remain exposed to volatility in the crack spread between crude and jet fuel prices. That spread has been quite volatile over the first half, ranging between USD 17 and USD 30 as geopolitical events have impacted refinery capacity around the world. As such, we restructured some of our January and February hedge book to jet fuel swaps with an average price of around USD 80 a barrel. Geopolitical and policy risk remains high over major oil-producing countries, oil transit routes and sanctioned oil. This means ongoing volatility and uncertainty over oil prices and refining margins that may impact our fuel costs. And we have seen that in the past week or so, an elevated level on both Brent and crack spreads. Our hedge book is currently structured as collars with an average ceiling of around USD 67. And as you can see from the fuel sensitivity chart on the bottom right of the slide, there is room for some downside participation. We regularly look to restructure our hedge book to adjust the profile where appropriate. Also on this slide, we have provided our current estimate of fuel costs, which assume an average jet fuel price of USD 85 per barrel, again, noting that prices this week are a bit higher than that. Based on this, we have provided our current estimate of fuel costs in the second half, which range from around $730 million to $750 million based on varying volume consumption. Included in the assumed full year fuel costs are our expected SAF and emissions trading scheme costs and CORSIA obligations, which total around NZD 40 million to NZD 45 million in combination. Touching briefly on foreign exchange again. The U.S. dollar is our largest foreign exposure, mainly due to fuel bill expenses and some of our engineering services and materials costs. We cover our U.S. dollar cost base by selling our New Zealand dollars and other respective currencies into U.S. dollars. Like fuel, we hedge our net foreign operating exposures on a declining wedge basis. U.S. dollars and Aussie dollars are hedged, respectively, at 77% and 88% for the second half of this year at a rate of just over $0.59 and $0.89, respectively. Turning now to Slide 17 and an update on our aircraft CapEx profile. As noted in earlier results presentations, the 2026 and '27 financial years see a significant concentration of aircraft-related CapEx with the long-awaited delivery of the first new GE-powered 787s. Delivery of the first 2 aircraft is expected in April and June this year, with entry into service shortly thereafter. These will be 787-9 variants with a premium heavy layout that includes 94 business class and premium economy seats, broadly the same as our 777-300 fleet. We will be debt financing those 2 aircraft and are in the final stages of a very competitive RFP process that we expect to deliver attractive funding costs. The chart reflects our current assumptions on the timing of new aircraft deliveries and the phasing of retrofit programs. There may be further shifts in this profile as we align with Boeing on their production expectations, but those conversations remain ongoing. Moving on to our existing Rolls-Royce powered 787 fleet. As Nikhil already touched on, the retrofit program is well underway with half of those aircraft now complete. We expect the program to be finished in full by the end of calendar 2026. The total forecast aircraft CapEx is approximately NZD 3.4 billion through to 2031, although that amount assumes an exchange rate of $0.60 against the U.S. dollar, and that has been moving around. We ended the first half back within our liquidity target range of $1.2 billion to $1.5 billion. This has been actively managed down over the last couple of years. Since the end of financial year '23, we've repaid approximately $1.4 billion of debt and aircraft leases, including the voluntary early prepayment of some aircraft loans. Over the same 18-month period, we also raised just over $500 million of new cash funding through sale and leaseback transaction of 4 A320 aircraft in December '24 as well as the AUD 300 million medium-term note we issued in the first half of this financial year. Liquidity has been supported by the release of cash collateral as a result of transitioning to a new global payments provider, of which we have received $125 million in the first half. That collateral has now been fully returned to us. After tracking sideways since December '23, the first half saw our net debt increase as our CapEx program kicked into gear. Spend during the half included predelivery payments for upcoming aircraft, engine overhauls plus the 787 retrofit program. While this CapEx ramp-up has been long expected, it has coincided with a deterioration in EBITDA performance. So the resulting net increase in net debt over EBITDA has been higher than we would have liked. We remain committed to our capital management framework and are focused on returning to the target leverage range. Liquidity has performed slightly better than expectations through January and February, and the airline continues to assess its funding needs over the coming 6 to 12 months beyond the 787 financing I just mentioned. We were very pleased with our return to the Australian medium-term note market in September last year, which will deliver ongoing interest cost savings versus the existing notes that will be repaid this upcoming May. In summary, our balance sheet remains well positioned to withstand the combination of elevated CapEx alongside the temporary earnings pressure we're facing from the engine issues. That said, our focus is very much on returning our earnings to a sustainable level, and Nikhil will touch a little on that before we open things up for questions.

Nikhil Ravishankar: Thanks, Richard. I won't dwell on Slide 20, which outlines our expected capacity growth for the second half and full year of 2026. It is self-explanatory. Turning to Slide 21. If I step back, the second half and really FY '26 overall remains challenging because several moving parts have to line up at the same time. On the revenue side, we're planning for some capacity lift in the second half, around 3% to 4%, but that is conditional. It depends on improved engine reliability across the A321neo and 787 fleets and the delivery of the GE-powered 787 at the very end of the financial year. So the way we're thinking about capacity is practical. We will grow where we can do it reliably, and we won't put volume into the system that we can't operate with confidence. Domestic demand recovery has been slower than expected. However, in recent weeks, we have seen early signs of improvement in business purpose travel, which is encouraging. Leisure demand remains mixed. We are closely monitoring our revenue management and capacity settings as this evolves. Internationally, we do expect pressure as we move into the New Zealand winter. Inbound visitor mix typically slows and outbound demand to certain markets is still being held back by the weaker New Zealand dollar. So we are planning conservatively on long-haul yields, particularly through the winter period. A further nuance on the top line is that, other revenue and income includes the majority of OEM compensation. And while we've received compensation in the first half, a portion of second half compensation remains under negotiation. So there is still uncertainty there. On costs, the challenge is that, inflation is not easing fast enough. We're expecting full year nonfuel cost inflation to be higher by around $150 million to $175 million, with the biggest increases in maintenance driven by supply chain constraints, passenger services, including mandated domestic passenger levies and aircraft operations through landing charges. Those are not easy costs to avoid in the short-term, particularly when the network is operating below scale. And on top of that, we expect life cycle maintenance expense to be a material headwind of around $80 million to $100 million. Most of that is related to the 787 and A320 fleets, but we also have some GE90 engine shop visits contributing to this, which powers our 777 fleet. Against those headwinds, transformation remains an important offset. We're expecting $100 million to $120 million of transformation benefits for the full year with about $45 million of that delivered in the first half. But I want to be clear, those benefits are being absorbed by the scale of inflation and the inefficiencies created by fleet constraints. That's why our focus is not only on delivering transformation, but on restoring scale and reliability so the economics of the network normalize. Putting that all together and turning to Slide 22 and our outlook for the full year. Based on current trading conditions and assuming an average jet fuel price of USD 85 per barrel for the second half, Air New Zealand expects second half earnings to be broadly in line with or modestly below the first half. The outlook remains subject to material uncertainty, including engine return schedules, the timing and quantum of compensation and continued volatility across key input costs and demand conditions. Compensation arrangements in respect of certain engines are yet to be agreed for the second half. Air New Zealand is in active negotiations with the relevant manufacturers. While the airline is working hard towards a fair outcome, as mentioned, the timing and quantum of further compensation remains uncertain, and this could materially impact full year earnings. Finally, on the strategy review, all I will say at this time is that work is underway, and we will share it with you at the appropriate time. And with that, operator, please open the line for questions.

Operator: [Operator Instructions] First question comes from the line of Andy Bowley from Forsyth Barr.

Andy Bowley: Maybe if I just start off with picking up on your last comment there, Nikhil, with regards to the strategy review. I recognize you used something along the lines of the words of all I'll say is this, but could you give us a sense of its nature, scope and timing, i.e., when are we likely to hear more? And when will we see potentially the benefits of this accruing?

Nikhil Ravishankar: Andy, the review is as fulsome as you would expect it to be. So focus of the review extends to our network shape, where we fly, our fleet deployment, new revenue opportunities and accelerating our cost transformation agenda. And then, of course, how our capital management framework features. So we're looking across the airline, and we're making great progress actually. Next week, we engage about 4,000, 5,000 of our staff to get involved in that process, and we take it through all of the expected Board cycles. And then we'll look to lock it down post that process. We have spent, as you know, the last few years focused on rebuilding out of COVID and then dealing with these engine issues. And so those things have meant we've had to bake in some inefficiencies just by the very nature of the cards that we've been dealt. The focus really of this business review is to ensure that we can now change tack and focus on particularly as scale comes back and we can start to think about growth finally, what is a future fit Air New Zealand going to look like and also focused on ripping out some of those inefficiencies that have been baked in. That recovery path is neither going to be -- there isn't either a silver bullet or is going to be quick, but we're all committed to, a, building the plan and then executing it.

Andy Bowley: Great. Next question, just around engine compensation for the second half. I recognize you're still in negotiations with the manufacturers. But can we just clarify what you incorporated into your guidance for the second half, the full year in the context of, I guess, the benchmark being in line with or below the first half result?

Richard Thomson: Andy, Richard here. We're assuming in the second half roughly the same level of comp that we've got in the first half at this stage, but some of that remains subject to ongoing negotiation with the 2 OEMs.

Andy Bowley: Yes. So the risk -- I guess then from a guidance point of view, the risk in terms of being below or worse than the first half comes from less airline compensation, no credit breakage and other things impacting demand.

Richard Thomson: Yes, that's right. I think the only thing I'd add to that, Andy, the drag in the second half that we didn't anticipate, but is in the guidance is the strike action that we went through a week or 2 ago, which is a $9 million, $10 million drag on the half.

Andy Bowley: Yes. Great. And then final question for me. Just looking at the balance sheet, gearing is now above the top end of the target range. I look ahead to the $3.4 billion of CapEx over the next 5 years, which is front-end loaded and contemplate gearing getting worse before it gets better. I guess the question here has 2 parts. Firstly, what are you and the Board comfortable with in terms of gearing beyond the target band? And then secondly, what are the levers you'd pull initially, if you were trending towards being in that uncomfortable type range, recognizing that you talk about managing capital investment prudently?

Richard Thomson: Yes. That's a good question, Andy. Sort of aircraft CapEx in this financial year is actually at its highest. We're just over $1 billion of aircraft CapEx. I was going to say that moderates next year. It's $950 million, $975 million next year. So it's still a big number. I think what we're doing, it's a balancing act. On the one hand, scale matters in this business, as you well know. And so capacity growth is hugely important to us in rebuilding earnings and ensuring that we can protect our market positions as we manage our way out of this. On the other side of that coin, obviously, we do need to manage the balance sheet. We've got a significant level of unencumbered aircraft. So we've got plenty of borrowing capacity should we choose to use it. But we are looking at a range of possible outcomes. At the moment, we are expecting slight delays in the manner of months on the third, fourth and fifth 787 delivery, which may straddle financial years yet. And we are making this investment we've talked about before of $150-odd million in the 777-300 fleet to ensure that we don't need to retire that fleet early and it remains competitive out until the early 2030. So we've got a bit of flexibility around the fleet plan to manage the CapEx profile. But agree with you, we probably ended up just at the top of the range a little earlier than we had anticipated through a combination of the work we're doing on the strategy refresh, ensuring that we can rebuild the earnings and the flexibility that we've got in the fleet plan. I think we can manage our way through it successfully.

Operator: Next, we have Marcus Curley from UBS.

Marcus Curley: Firstly, I think you made the comment during the presentation that the return of the engines is broadly consistent with what you said back in the sort of full year result. I just -- so as a result -- I suppose at that time, you were talking to quite a significant progressive increase in seat capacity in FY '27, FY '28. Are those estimates still fairly accurate?

Richard Thomson: It was Marcus, wasn't it? Marcus, they are fairly accurate. Maybe I should sort of adjust your remark in that, I think the engine position today is slightly better than what we thought it was going to be at the end of last financial year.

Leila Peters: Mark, this is Leila. That's correct. That was in the August announcement and results presentation. That was just at the beginning of the blade certification for the Rolls-Royce engine and still just waiting to see some improvement in the Pratt & Whitney throughput. As Nikhil mentioned in his prepared remarks and just now, what we're saying is we're seeing a little bit better improvement in the second half of this year, which will also help flow on into the 2027 financial year. But the increases in capacity across the network over the next 2 years will be helped by the combination of the engines returning a little bit faster than we thought in August. And as Richard discussed, the phased delivery of the new GE 787s.

Marcus Curley: Okay. And on that basis, you wouldn't be expecting any significant level of engine compensation in FY '27. And hence, it's obviously a bridging year in terms of profitability.

Richard Thomson: I think that's a good way of characterizing it, Marcus. And we've alluded to it in the notes, will -- the engines will come back. At that point, the compensation will stop. And depending how reliable the OEMs estimates of when those aircraft will be back in action are, there will be a slight lead lag effect between the compensation stopping and us taking full advantage of having those airplanes back in the system because to keep customers or keep the service reliable for customers, we have to plan on the conservative side of putting them back in the schedule.

Marcus Curley: Okay. And then when you think, again, into, let's say, '27 and '28 and those aircraft being available and you look at the current opportunities within the international markets, do you still feel comfortable that they'll deliver a significant improvement in profitability for the business?

Richard Thomson: Yes, absolutely. They will. So just to put the whole thing in context, based on the current fleet and growth recovery plan, we get back to FY '19 levels of capacity by FY '28. And so there is -- and we're suffering, as you well know, from scale diseconomies currently. So anything we can get back in the system, I think, will be very helpful for earnings recovery. But to pick up on your earlier point, it's not going to be a linear path to full recovery because the comp will stop sometimes in instances where the flying is not programmed back into the system.

Marcus Curley: Okay. And then just a final question for me, really with regard to potential cost out as a part of the restructuring program. How difficult do you think that's going to be to achieve? Obviously, we've seen the cabin crew strike over the course of the last few months. Just maybe some context in terms of the challenges ahead to execute what you think you might need to deliver in terms of cost out.

Nikhil Ravishankar: I think cost out programs, as you know, are difficult at the best of times and will be difficult here given the complexity of the business. That said, our Kia Mau program is delivering to plan. So we've had $145 million of ongoing improvements that we've seen in the business, and that's real. But what the strategy review, the business review that's currently underway is doing is looking at what else would we need to look at. We know there are areas of -- areas where we do need to increase our focus. So engineering and maintenance being one of them. But there are other areas that are within our control that we'll be looking at. But equally, there is significant cost inflation in areas where we don't control, and that's why you will see us continuing to advocate for a more fairer and sustainable aviation system for New Zealand.

Richard Thomson: Marcus, Richard here. Just a couple of other things to add to that very briefly. So we've talked about scale mattering capacity growth. I think we've had a big price shock this year, which has been sort of well covered, particularly around aviation system costs in New Zealand. So we had those very big step-ups in the CAA and Avsec charges, which sort of in combination are $45 million, $50 million this year incremental. Our expectation is that we won't see increases like that again next year. CAA, for instance, was 145% increase. So I don't think you'd expect to see that every year. On maintenance costs, back to that fleet sort of issue we're talking about before, and we've alluded to it in the communications is, we do have some life cycle maintenance costs currently on the 787 fleet, which is now sort of 10, 12 years old and hit D-checks and sort of cycle limits. So we'll expect to see that come down over the next couple of years. So thrust reverses this year, 787 D-checks in the next couple of years, and then we'll retire all of the costs of these engine-related issues in sort of '28, '29. That will help. Nikhil has talked about the Kia Mau benefits, $145 million cumulatively so far. We're looking at another $115 million next year. So it will be $260 million cumulative. We need more than that, looking to improve on that. And that is obviously the focus of the strategic review that Nikhil has alluded to. Landing charge is probably the last one, and that is not going away. So our concern with landing charges, particularly at Auckland is the trajectory of those charges, and we'll be up against PSE5, the next pricing consultation over the next 12 months. And any increases, and we're expecting to see increases would kick in from 1 July 2027, I think it is. So that particular issue is still one that concerns us.

Operator: We have a question from Nick Mar. Unfortunately, he cannot make it today. So this is his question. In FY '25, the comparable PBT of $340 million to $380 million, while in first H '26 has fallen to $20 million to $40 million and H2 outlook appears similarly challenging given PBT outlook. How does Air expect to restore the comparable PBT run rate to deliver on ROIC targets as fleets return?

Richard Thomson: Nick, on behalf of the operator, Richard here again. I think I'll probably just repeat the comments I've made in response to Marcus' question. It is a combination of capacity growth, which we'll see plenty of in the next couple of years, although we get back to FY '19 levels of cap by FY '28. We will see with the exception of Auckland landing charges, putting those aside, we expect to see fewer price shocks in the New Zealand aviation system. We will see a reduction in some of these life cycle maintenance costs. Our focus is on making sure we maximize the benefits of the existing Kia Mau program and all the things we'll look to supplement that with through the strategic review.

Operator: Thank you. I see no further questions at this time. I will now hand back to Nikhil for closing remarks.

Nikhil Ravishankar: Thank you again for joining us today. I appreciate you listening in and for your support of Air New Zealand. If you would like to schedule a call or a meeting for any follow-up questions, please direct those requests through to Kim Cootes and our Investor Relations team. Thank you again.