Air New Zealand Stock Exchange Announcement

Air New Zealand has been requested by the Market Surveillance Panel of the Stock Exchange to clarify reported comments made by the Prime Minister over the past 24 hours recommending that shareholders not sell their shares in the Company. The Exchange has imposed a trading halt on the Company's shares pending this clarification.

The Company has read the statements made by the Prime Minister, and considers that the media has made more of them than is warranted or was intended.

On examining the transcript from a TV One interview of the Prime Minister's comments, it appears that the Prime Minister was asked whether, when she said that people should hold on to their shares, she was saying that the Company would not go into statutory management, or was implying that it could trade out if it did go that way. She responded "I think that whatever path is chosen, Air New Zealand has a very viable future as a company". While the Prime Minister's views are reassuring, they do not constitute a statement as to the Company's future structure.

The situation remains as reported by the Company's Acting Chairman, Dr Jim Farmer QC late last night. That statement advised that talks between the Company, its major shareholders and representatives of the Government on steps to recapitalise Air New Zealand were continuing to make satisfactory progress and that the Directors of Air New Zealand remain hopeful that a successful outcome will be achieved soon. That remains the position.

The Company has also been asked to comment on alleged calls from the Prime Minister's office to major sharebroking houses to determine market reaction to alternative structures under which the Government might contribute capital to the Company or underwrite a rights issue. The Company has no knowledge of any such calls, and it and the Market Surveillance Panel have been assured by the Prime Minister's office that it made no such calls.

The Company believes that statements by its Acting Chairman have kept the market adequately and properly informed of the correct status of the recapitalisation talks.