air pacific 2003 annual report

Air Pacific Annual Report

2003

As a concerned corporatecitizen, Air Pacific is committedto environmental awareness and to ensuring that theCompany acts in a responsiblemanner where environmental issues are involved.

Whilst the concept and processof environmental reporting is arelatively new discipline in thispart of the world, Air Pacific iskeen to take a proactive stancein handling environmental riskmanagement issues on aprogressive basis.

We ensure that our fleet ofaircraft meets the specificenvironmental certificationstandards on emissions,developed by ICAO. The Air Pacific fleet comprises the latest technology aircraftand all comply with noiseabatement regulations.

As a major industry in Fiji, we support the development of tourism in the country. We also support themaintenance of a clean and natural environment to not only support butenhance our tourism product.Employees of Air Pacific areencouraged to participate in various ‘clean-up’ campaigns that take place in the community.

Air Pacific’s overall commitmentis to the maintenance andpromotion of a clean and pureenvironment. We will continueto practice recycling wherever possible, for its economic and environmental benefits,and to reduce waste materialand engine emission.

By taking such a proactivestance we hope that we canserve as a positive role modelfor all other companies we deal with as well asfocussing attention on thisimportant issue.

> A Commitment To The Environment

>Contents

Chairman’s Report ... 2

Members of the Board ... 3

Corporate Governance ... 4

Managing Director & Chief Executive

Officer’s Report ... 5

Executive Management Profiles/

The Year At A Glance ... 8

The Year in Review ... 10

Financial Statements and Reports ... 17

Ten Year Comparative Statistics ... 34

Route Map ... 36

Air Pacific Offices ... IBC

Air Pacific Annual Report Page 1

P03982_Main_R 12/9/03 10:29 AM Page 1

I am pleased to report that, in what was a very difficultyear for airlines worldwide, Air Pacific was able to achieve a before tax profit of $25.14 million for the financial year ended 31st March 2003. This represents an increase of 160% on the pre-taxprofit of $9.67 million for the previous year. The after-tax profit was $16.5 million. Revenueimproved 14% to $407 million against a cost increase of 10% to $382 million. A dividend of 12.5 cents pershare has been declared by the Board. Staff will also receive a profit-share bonus in addition to their 4% pay rise during the year.

Whilst it has been a year in which the airline continuedto consolidate and improve its financial position, we still face considerable challenges. The pre-tax result achieved this year represents only 6.2% profit on turnover against a worldwide industry target of 10%.This is an area that both the Board and Management are continually addressing.

Management and staff are to be congratulated for their efforts over the past twelve months. Costs were tightly controlled and revenue optimised to achieve a satisfactory result under difficultcircumstances.

It is encouraging to see Fiji visitor arrivals continuing to climb. For calendar year 2002, visitor numbersalmost topped 400,000 - a near record which Air Pacific, as the principal carrier of traffic into Fiji, helped to achieve. Industry experts are confident that this growth pattern will continue, providing much-needed support for Fiji’s economy.

Of significance were a number of one-off events thatinfluenced this year’s result. This included a temporarysurge in Fiji arrivals following the tragic events in Baliduring October 2002. The continuation of the lease to Qantas of our Boeing 737-700 aircraft to operate on their New Zealand - Australia routes provided a full twelve month’s revenue and profit for Air Pacific as well as employment for our pilots.

The staging of the ACP Heads of State meeting in Fiji and several other major meetings also contributed additional traffic and revenue.

Substantial cost increases in a number of areasimpacted on expenditure throughout the year.Insurance, airport handling fees, security and en-route fees all exceeded budget expectations.Training and engineering costs associated with the planned introduction of the new B747-400 aircraft also caused overall expenditure to rise.

Fuel continued to be a major cost item, however fuelhedging helped to cushion the worst effects of the oilprice ‘spike’ caused by the Iraqi War. A weakening US dollar in the latter part of the financial year provided unexpected assistance in cost containment.

High rates of aircraft utilisation - among the highest in the aviation world - ensured optimum employment of the airline’s fleet.

A major disappointment was the industrial dispute in July 2002 that disrupted operations at a critical time.However, thanks to the tireless efforts of our pilots,engineering management and non-striking ground staff and cabin crew, the airline was able to continue to operate profitably and maintain scheduled services.

Information technology continues to play a vital role in the future direction and success of the Company.Considerable ongoing investment was made in ITbusiness systems throughout the year to improve the speed and accuracy of data capture, financialreporting and management information.

Air Pacific Annual ReportPage 2

> Chairman’s Report

> Gerald W.S. Barrack CF, CBE > Chairman

PROFIT BEFORE ABNORMAL ITEMS & TAX

$ MILLIONS FINANCIAL YEAR ENDING 31 MARCH

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

40

30

20

10

0

-10

-20

-30

-40

-50

P03982_Main_R 12/9/03 10:30 AM Page 2

> Board of Directors

As a Company, Air Pacific must continue to look forward, to plan and re-focus onour future direction.

Following an exhaustive and detailed reviewof aircraft requirements, Air Pacific hasmade a major commitment to wide-bodiedaircraft as part of its future fleet plans. This commitment, totalling $1.25 billion,

demonstrates the airline’s determination to grow.

Air Pacific is committed to the development of Fiji’s tourism and export industries. We can onlyachieve success through the continued support and involvement of government and industry stakeholders. I would like to record my sincere appreciation for theongoing support provided to Air Pacific by the Ministerand Ministry for Transport & Civil Aviation.

I also thank the Board of Directors, Management and Staff for their efforts and support during what has been a difficult and eventful year. We must nowredouble our efforts to ensure Air Pacific remainsprofitable and is able to meet future challenges.

Gerald W.S. Barrack CF CBEChairman

Gerald Barrack, CF CBE, Chairman

Nalin Patel, Deputy Chairman

John Campbell, MD & CEO

Geoff Dixon

Damend Gounder

Peter Gregg

Charles Harvey

Narendra Kumar

Radike Qereqeretabua


From top - left to right

SHAREHOLDERS’ EQUITY

$ MILLIONS120

100

80

60

40

20

0

FINANCIAL YEAR ENDING 31 MARCH

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

P03982_Main_R 12/9/03 10:31 AM Page 3

> Corporate Governance

BOARD RESPONSIBILITIES• Protect and enhance shareholder value• Set and review corporate strategies

and strategic direction• Monitor operating and financial performance• Set and review senior executive succession planning • Risk management• Report to shareholders

BOARD STRUCTURE• Minimum of five and maximum of nine Directors• Four Non-Executive Fiji Directors are appointed

by the Fiji Government• One Executive Fiji Director (Chief Executive)

is appointed by the Fiji Government• Four Non-Executive Directors are appointed

by Qantas, providing Qantas holds more than forty per cent of all voting shares

• Chairman is a Non-Executive Director

To ensure the independence of the Air Pacific Board and to protect the airline’s position as the Fiji flag carrier, the Articles of Association (Articles) provide that:• The location of the Head Office and Principal

Operational Centre will be in Fiji;• Fiji Directors (who must be Fiji Nationals)

will comprise the majority of Directors;• The Chairman and Deputy Chairman must

be a Fiji Citizen;• Whilst Qantas has the right to appoint Qantas

Directors and holds more than ten per cent of voting shares in the Company, it cannot vote in any election or removal of Fiji Directors by shareholders;

• Each Non-Executive Fiji Director is appointed for a term of three years;

• Quorum for a Directors’ meeting is five Directors and must include one Qantas Director while Qantas holds more than ten per cent of voting shares;

• Approval by two-thirds of Directors for specific major decisions (as shown in the Articles) by the Board.

BOARD MEETINGS • Minimum of six meetings a year

COMMITTEES • Board does not delegate major decisions

to Committees• Committees are responsible for considering

detailed issues and making recommendations to the Board.

• Audit Committee- four meetings a year- assists the Board in fulfilling its accounting and

financial reporting responsibilities, corporate policies and procedures reviews and monitors internal and external auditors

- consists of four Directors, of which one must be a Qantas Director.

• Remuneration Committee- one meeting a year- recommend to the Board remuneration packages

for the Managing Director & Chief Executive Officer and senior management

- consists of three Directors, of which one is a Qantas Director.

STANDARDS• Formal review of Board performance• Active participation by all Directors at all meetings• Open access to information• Independent professional advice is available

to all Directors• Formal Code of Conduct – covering conflict of interest.

CODE OF CONDUCTThe Air Pacific Code of Conduct governs Air Pacificcommercial operations and the conduct of the Directors,employees, consultants and all other people when theyrepresent Air Pacific.

GENERAL PRINCIPLESAll Directors and employees of Air Pacific are toundertake their duties with honesty and integrity, and ina manner consistent with the highest ethical standardsprevailing in the business communities. Air Pacificemployees must act in the best interest of Air Pacific.


P03982_Main_R 12/9/03 10:31 AM Page 4


> Managing Director & Chief ExecutiveOfficer’s Report

2002/03 was a year of many parts. For much of theyear, performance was demand-driven with capacitycarefully managed into our core markets of Australia and New Zealand.

It is no secret that Air Pacific’s performance isinextricably linked to that of Fiji’s tourism industry. We are a willing participant making a major contribution from which all stakeholders prosper.

Currently, in our core markets of New Zealand andAustralia, Fiji holidays are in favour. But given thefickleness of the travelling public and our inability to control the flow-on effects of natural and man-madeevents, the situation can change overnight.

In October/November 2002 we experienced a micro‘spike’ in passenger numbers due to the terrorismincident in Bali. But the market softened measurablytowards the end of the financial year as the aviationindustry and tourism worldwide bore the brunt of theeffects of the Iraqi War and the SARS epidemic in Asia.

Considering the dampening effect the war in Iraq, the SARS crisis and fear of terrorism attacks had on world travel, Air Pacific’s result is a credibleachievement. Many airlines and countries have beenseriously affected by these events and while Fiji and Air Pacific have not been immune to the impact, it is pleasing to see how well we have coped.

Key drivers behind our profit were to exit unprofitableroutes and to place capacity into and focus marketingefforts on those core markets where Fiji currently enjoyspopularity. Aircraft utilisation was optimised to ensuremaximum revenue from destinations such as Auckland,Melbourne, Sydney and Brisbane, which we were ableto grow significantly during the year.

Once weekly services were withdrawn from Christchurchand Wellington and replaced by daily code-sharearrangements.

Export of Fiji’s products, predominantly perishables and garments, grew steadily throughout 2002/03 as Fiji’s economy recovered. Air Pacific works closelywith exporters to expand the market for Fiji’s productand with it the carriage of air freight. This was animportant contributor to Air Pacific, representing some9% of turnover for the year.

Cost control remains a vital and ongoing concern.However, we still invested to materialise our plans.Given the continued loss of professional skills in Fiji, we must enhance productivity through technology.Therefore, we have made major investments in IT, particularly Financial Information Systems and Revenue Accounting software.

Virtually the entire airline has been re-equipped with new PC’s capable of handling all the software updatesintroduced. Shared data have become important tools within the airline as we continue to streamlineoperations. The quality of management information is consistently improving.

In addition to providing staff with the equipment to improve productivity, the work environment wasaddressed with a refurbishment. Despite the need to minimise costs, this expenditure was seen as a necessary part of the overall improvement process as it co-located departments within the same divisions,improving work flow and communication.

Throughout the year, management endeavoured to engage and inform staff directly. A series of face-to-face staff briefings kept employees informedabout the airline’s performance. Working groups,comprising senior and middle management, wereformed to plan improved communications, enhancedmorale and productivity.

Linked to this is a focus on performance planning and appraisal, which will ultimately lead to theimplementation of productivity-based pay as a fair

> John Campbell > MD & CEO

PASSENGER65%

CAPACITY SEAT SALES

20%

PROFIT/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS

$ MILLIONS30

20

10

0

-10

-20

-30


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

REVENUE COMPOSITIONOTHER

6%CARGO & MAIL9%

P03982_Main_R 12/9/03 10:32 AM Page 5

and equitable recognition of the efforts of staff and assistin improving the overall performance of the business.

We have in place a continuing effort to improve staffrelationships and create a partnership environment.

The emphasis on productivity improvement extends to management, with a number of changes taking place as part of the management development andsuccession-planning programme. Changes were madeto enable our team to widen their skills and disciplinesas we implement the strategies necessary to achievecontinued growth and expansion for the airline.

Unfortunately, the perceived improvement in profitabilitywas taken as an opportunity by certain elements withinthe union linked to Air Pacific to attempt to leverage theirown positions.

It was no coincidence that illegal strike action was timedto create maximum embarrassment to Government andimpact on Air Pacific. The ‘guerrilla’ tactics employed by union officials in the peak school holiday travel periodand lead-up to the ACP Conference in July 2002 were part of an orchestrated plan to obtainunreasonable concessions and to attract unions to a breakaway faction by demonstrating they couldcripple one of the country’s highest profile companies.

Their efforts were foiled due to the dedicated efforts of management engineers, pilots, non-striking cabin and ground crew and management, who filled the voidduring the strike.

Continuing high fuel prices pose an ongoing threat to profitability and although we have been able to offset some of the impact of this frustratingly high cost commodity through hedging, the price escalationemphasises what a volatile business aviation is.

Fortunately, a weakening US dollar assisted in reducingfuel and other aviation-related cost impacts, particularlyin the latter half of the financial year.

The result of the major fleet study conducted andfinalised during the year will see Air Pacific’s continuedmove towards becoming a Pacific Rim airline. This plan enabled us to make the decision to add two Boeing 747-400 and up to four Airbus A330-300aircraft to our fleet. By September 2003 we will havewide-bodied aircraft operations to Auckland, Brisbane,Sydney, Melbourne, Los Angeles and Narita in place. Narrow-bodied aircraft will service our Honolulu,Vancouver, Apia, Tonga, Vila, Suva routes and someAuckland and Brisbane services.

High potential growth markets such as North Americaand Japan continue to be loss makers. In order to develop frequency and establish a viable presence in these markets, which will not happen overnight, we must cross-subsidise these routes from ourprofitable ones.

It is our intention to drive profitable routes through use of larger aircraft. Ultimately we aim to grow frequencyinto the North American and Japanese markets toprofitable daily services. All markets will be served with capacity carefully balanced to demand.

The year ahead will not be an easy one with increasedcompetition on profitable routes, continuing costpressures and a world where terrorism and turmoil still exist.


MD & CEO Report continued

OPERATING REVENUE

$ MILLIONS450

400

350

300

250

200

150

100

50

0


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

P03982_Main_R 12/9/03 10:32 AM Page 6


Flexibility, speed of response,cost minimisation and qualitymanagement information arekey strategies for Air Pacific.Aviation is extremely volatileworldwide and involves delicatebalancing to maintain profitableoperations.

Management at Air Pacific are working to provide the tools, spirit and skills to enable the airline to addressissues and take advantage of the opportunities thatarise.

Air Pacific and Fiji’s tourism industry are inextricablylinked. We will continue to promote Fiji as an attractive,value-for-money destination and provide frequency and services which allow profitable growth.

John CampbellManaging Director & Chief Executive Officer

MD & CEO Report continued

FUEL19%

OTHERS12% ENGINEERING &

MAINTENANCE15%

PACIFIC IS.2%

NEW ZEALAND17%JAPAN

17%

AUSTRALIA30%

LOS ANGELES25%

HONOLULU/VANCOUVER9%

AIRPORT11%

PASSENGER & CREW

9%

SELLING &MARKETING

11%

EXPENDITURE COMPOSITION

PASSENGER REVENUE

MANPOWER11%

LEASE & HIRE12%

P03982_Main_R 12/9/03 10:32 AM Page 7


Executive Management Profiles

THE YEAR AT A GLANCE

Apr 2002 Jul 2002 Sep 2002 Oct 2002

3rd WEEKLY B767SERVICE to NaritaJapan commences

INDUSTRIAL ACTIONtaken by elements of staff. Minimumdisruption to operations(due to efforts of non-striking staff &management)

WINGLETS installed onAir Pacific B737-800aircraft

EIB LOAN (for construction ofAdministration & HangarFacility at Nadi Airport)repaid in full 12 monthsearly

4th WEEKLY B747seasonal service comes on line to Los Angeles to cater for increased vacation traffic

BALI BOMBING takesplace creating increasedfear of air travelworldwide.

AIR CANADA takesover from CathayPacific as Air Pacific’sground handling agentsin Vancouver

ECO-CHALLENGEsuccessfully stagedin Fiji. Event seen bymillions around theworld on syndicatedcable networks. AirPacific - ‘OfficialAirline’ of event.

SYDNEY GOES TO 4xB747 servicesper week

JOHN CAMPBELLManaging Director& Chief Executive Officer

Joined Jul '01. Commencedwith Qantas leaving to joinMalaysian Airlines as Sales & Mktg Mgr Aust/NZ in 1973. Moved to Air Pacific in 1983 as RegDir Aust, Asia & SW Pacific

and then as Dir Mktg 1984-86. Returned to Qantas in 1987 and held a number of management positionsin marketing, scheduling, planning & pricing. Servedas GM Qantas in Indonesia, Thailand, Switzerland &Eastern Europe. Holds B.Com, University of NSW,Graduate Diploma in Mktg and MBA from University ofTechnology, Sydney.

JOSEPHINE YEE JOYExecutive GeneralManager, CorporateSupport & CompanySecretary

Joined Apr.‘86 as Financial Analyst. Promoted to FinancialPlanning Accountant 1987. Appointed Company

Secretary & Financial Planning Manager 1988; headed Finance Division 1991 and General ManagerCommercial 1996. Holds B.A.& M.A.T. from NotreDame & M.B.A. from Pepperdine University, U.S.A.Was appointed to current position in March 1998.

MANOA KAMIKAMICAGeneral Manager,Strategic Planning

Joined Sept.’96 from Price Waterhouse as Director of FinanceDesignate. Spent 7 years in chartered accounting in Fiji and Australia, specialising in internal

audit and manufacturing. Holds a B.Com inAccounting/Information Systems from University of New South Wales. Moved to GM Strategic Planningin Sept. ‘02 - formerly GM Finance from 1997.

ISAKE KOMAILEVUKAGeneral Manager,Customer Relations &Services

Joined Sept.‘95. Startedbusiness career in 1978 with Fiji Development Bank and later joined the U.S.Embassy in Fiji as Economics & Trade

Adviser in 1988, serving in that position until he joinedAir Pacific. Graduate of the University of the SouthPacific (1977) with a B.A. (Majors in Economics &Administration). Moved to GM Customer Relations &Service in Sept. ‘02 - formerly GM Human Resourcesand Services from 1995.

CAPT. MATERETI TUISUEGeneral Manager, FlightOperations & Chief Pilot

Joined Jan.‘72 as a DC-3First Officer direct from flying school in the U.K.Graduated through theairline’s fleet as it grew. Was first Fiji National to qualify as a B747

captain in September 1985. Became Manager Flight Operations in November 1988. Still flying for Air Pacific as a B747 captain.

TONY WONGExecutive GeneralManager, Operations/Service

Joined Jan.‘67 as TrafficOfficer. Gained first managerial position in 1973 as TrafficSuperintendent. Was appointed General

Manager Operations in 1992. Has undergoneextensive training over the years. Graduated with an M.B.A. (Aviation) from Concordia University,Montreal in 1996.

P03982_Main_R 12/9/03 10:35 AM Page 8


> The Year At A Glance

Nov 2002 Dec 2002 Feb 2003 Mar 2003

AMADEUSRESERVATIONSSYSTEM comes onlinefor Air Pacific replacingQUBE and making airlineoperations morestreamlined, integratedand efficient.

LEASE for 2 B747-400AIRCRAFT signed withSingapore Airlines. First aircraft due fordelivery April 2003,second June 2003

SARS VIRUS emergesas threat to airlines,tourism and travelworldwide. Air Pacificand other world airline’straffic affected.

AIMS (a fully integratedairline operating system)software purchase givengo ahead. Specialisedprogram that integratesflight operations/scheduling and crewrostering

ASHWIN SINGHGeneral Manager, Finance

Joined Apr.’95 as GraduateTrainee – Finance afterspending 15 months withKPMG after graduating with a Bachelor of Commerce & Administration fromVictoria University inWellington (NZ) 1994.

Appointed Freight Accountant in 1996. Promoted toManager Logistics & Crew Resources in 1998. Moved to GM Finance in Sept. ‘02 - formerly GMCustomer Relations and Services from 2001.

DINESH CHANDRAGeneral Manager,Network Development

Joined Dec.‘72 as TrafficOfficer. Moved throughranks to position of TrafficController in 1982. HeadedFinancial Planning in 1982and was subsequentlymoved to Market Planning

in 1986. Has undergone a number of trainingprogrammes and spent four months on attachment to Qantas in 1996. Moved to newly-created positionof GM Network Development in Sept. ‘02 - formerlyGM Strategic Planning from 1998.

CRAIG McCARTHYGeneral Manager, Sales& Marketing

Joined Oct. ‘01 afterspending 22 years withQantas in Finance,Planning, Sales andRevenue Management. Was seconded to Air Pacificfor one year in 1986/87

as Financial Planning Accountant on John Schaap’smanagement team. Holds a Bachelor of Economicsfrom Sydney University.

WATSON SEETO General Manager Freight & OperationalServices

Joined May '78 as TrafficOfficer. Moved through the ranks gaining firstmanagerial position in 1990 as Manager AirportOperations. Appointed

Freight Director in 1996 and Manager Sales in 1998.Has undergone a number of training programmes.Assumed newly-created current position in Oct. ‘02.

JIMMY SAMSONGeneral Manager,Engineering

Joined Feb '76 as anapprentice, serving his 5-year term in AircraftEngineering including 12 months attachment with Singapore Airlines. Licensed and rated on

the Company's B747/B767/B737 Boeing fleet inairframe, engines and limited avionics categories.Held various Engineering Management positions and was appointed to current position in 1998. Has undertaken a number of senior managementcourses and is a member of the New ZealandInstitute of Management.

P03982_Main_R 12/9/03 10:38 AM Page 9

As an airline operating totally in the international arena, Air Pacific experienced a year in which worldwide occurrences, outside the airline’s control, had a major influence on performance. Events such as the Bali bombing, the SARS epidemic and the IraqiWar were issues we could not budget for but had to address.

These had an obvious impact on our passengernumbers in comparison to budgeted targets but, thanks to the steady performance of traditional markets such as Australia and New Zealand,we were able to achieve a satisfactory result.

Sales & Marketing

Network Performance

AustraliaDriving demand and increasing capacity from Australiawas a key focus. Overall, an additional 30% capacitywas injected into the market with good results. This, combined with the continuation of marketinginitiatives like the ‘Early Bird travel’ discounted fareoption, helped to generate substantial tourism growth.

At the peak, prior to the softening of the market in September/October 2002, Air Pacific operated a totalof 18 flights a week into Australia – four Melbourne,five Brisbane and nine Sydney, including two to Suva.

New ZealandUnfortunately the New Zealand market did not grow as strongly as Australia. As in Australia, additionalcapacity was poured into the market, however it was not taken up by New Zealand travellers. The route grew 12% with take-up mainly from US/UK visitors proceeding to Fiji as part of a long, multi-destination itinerary.

Frequency was increased to eleven services a week,which included two Auckland-Suva direct flights.Following the peak winter season, a decision was madeto withdraw from Christchurch. A code share agreement

was entered into with Qantas New Zealand to providedaily Auckland connecting flights to and fromChristchurch and Wellington to replace the previouslyonce weekly flights.

JapanAt the end of April 2002, Japan flights increased 50% with a third B767 frequency from Narita. While the first month’s results were steady rather thanspectacular, the growth in demand almost coincidedwith the growth in seats until October.

The Japanese market is very sensitive to security threatsand the Bali bombing in October 2002 was the firstincident to have an effect on demand. The Iraqi War, andthen the SARS epidemic, had a further adverse impacton passenger numbers. Despite this downturn, the threeweekly flight frequency was maintained as an investmentin this potentially lucrative but very sensitive market.

North AmericaThe Northern hemisphere market delivered consistent traffic for most of the year withsupplementary B747 services added in July andAugust 2002 to accommodate peak demand generatedby summer vacation traffic. The three B747 weekly


> The Year In Review

PRODUCTIVITY

THOUSANDS1200

1000

800

600

400

200

0


1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

RTK’s per employee

ATK’s per employee

P03982_Main_R 12/9/03 10:38 AM Page 10



Los Angeles services were maintained but when the anniversary of September 11 rolled around, numbers declined and targets were not met. The Iraqi War followed and, towards the end of thefinancial year, demand fell away even further.

Honolulu/VancouverTwo B737-800 services per week were operated to Vancouver and in March 2002, an additionalWednesday Nadi-Honolulu B737-800 terminator was added. However, this service did not perform to expectations, given SARS and Iraq war impacts, and was withdrawn before the end of the financial year.

Fiji/Pacific IslandsFrequencies were maintained using B737-800 aircraftinto Tonga (two services per week), Apia (one service)and a once a week code share service into Port Vila with Air Vanuatu. Additional capacity into Samoa (Apia) and Vanuatu is planned in 2003/2004.

New fare initiatives from Auckland to Nadi and PacificIslands targeted to Pacific Island communities, resident in New Zealand, were developed in light of increased fare discounting by Korean Airlines on the Auckland-Nadi route.

Other Activity

Eco ChallengeThis high profile international event was successfullystaged in Fiji in October 2002. As the ‘Official Airline’

for the event, Air Pacific not only generated additionalbusiness from the more than three hundred competitorswho took part, but also received considerable mediacoverage internationally as the event was beamed to millions of people worldwide via a U.S. cabletelevision network.

RugbyWith the Rugby World Cup to be staged in Australia later in 2003, Air Pacific’s sponsorship involvement withthe Fiji Rugby Union is proving to be quite beneficial. In conjunction with Qantas, promotional opportunities forthe event in Fiji should create additional revenuegenerating opportunities.

Amadeus Reservations SystemAir Pacific changed over to this new system on 2nd November, 2002. Apart from a few initial faults this technologically advanced system provides the airline with access to more valuable booking informationas well as increased operational efficiency.

The true benefits will become evident when DepartureControl and Inventory Systems (currently still usingQUBE) cut over to Amadeus in the new financial year.

Livery Change Coinciding with the introduction of two new B747-400aircraft into the Air Pacific fleet is a new-look livery for the airline. Although not a major departure from the current design, the new livery highlights the rainbowcolours that have been a feature on the Air Pacific fleetfor many years. The livery is gradually being introducedonto aircraft in the fleet and should be fully integrated by late 2003.

Website Update A major update of the airline’s website is currentlyunderway. With the growing trend towards on-linebooking and information sourcing, a comprehensivewebsite is now an integral sales and marketing tool.Work is progressing on the update which has been a joint effort between local IT company DATEC and New Zealand software supplier Certus.

Freight

Freight business continues to provide important incomefor the Company and recorded a 11.7% performanceimprovement. The Australian and Japan marketsexperienced good tonnage growth due to increasedwide-body capacity. Growth in Japan freight wasaugmented by the introduction of the third weeklyservice to Narita. The New Zealand market freightperformance experienced a decline with competitive rate pressures from other carriers on the route. Owing to the U.S. economic downturn, a decline wasalso experienced in freight revenue out of Los Angeles.

P03982_Main_R 12/9/03 10:38 AM Page 11

Finance

The maintenance of fiscal discipline within theorganisation remained a top priority with the continuationof monthly Cost Centre reviews with the MD&CEO.Cost saving measures were adopted and practisedthroughout the year.

Fuel remained our single largest expenditure item at around 19% and was the subject of constantattention. A comfortable level was hedged prior to the Iraqi War, which saw prices soar to a high of US$44 a barrel.

A challenging project was the annual fuel tenderprocess. We were able to strike the best possible deal for the Company at specific ports.

B737-700 Qantas LeaseA full year’s lease of the B737-700 aircraft to Qantas New Zealand made a valuable and significant contribution to the $52 million improvement in the Company’s cash reserves. With the aircraft out of the system, the others in the fleet worked harderand generated additional revenue.

US Dollar GainsA 6.9% shift downward in the US dollar value over

the year worked to Air Pacific’s advantage in reducingthe Fiji Dollar impact of aircraft leases, payments, loans and insurance premiums which are all denominated in US dollars.

Automation

With the airline heavily reliant on computerised systems,a primary objective to provide information more readily isthe networking of data and upgrading of hardware forCompany-wide access.

Networking has been streamlined through the efforts of Ranjan Naidu, Manager Information Technology, and his team. They have diligently worked to implementsystems like intranet e-mail and wireless technical data access, an advance that has created significantadvantages for the Engineering division whentroubleshooting.

This automation has led to a greater focus on securitywith a new IT Policies and Procedures manualformulated to protect the integrity of sensitiveinformation on the airline’s internal systems. This system addresses changes of passwords,monitoring of e-mail and internet abuse.

One of the most challenging projects was the new Revenue Accounting System (Fastrac) implemented on 16th December, 2002. The system was obtained from Mercator, a subsidiary of Emirates Group in Dubai.

A lot of additional hours and hard work was demanded of the IT and Finance team created for the implementation of the project. The dedication and commitment shown ensured that the target date for the cutover was achieved. The benefits of this system are becoming apparent as revenue resultscan be generated more rapidly and provided to management as an evaluation tool.



2002/03 FUEL PRICES

APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC JAN

45.00

43.00

41.00

39.00

37.00

35.00

33.00

31.00

29.00

27.00

25.00

USD

FEB MAR

P03982_Main_R 12/9/03 10:39 AM Page 12

The financial accounting system continued to be installed throughout our network. The first regional office to go ‘live’ on-line with the system was New Zealand. They now have direct on-line access to general ledger and financial reporting.

Australian and North American regional offices are to follow early in 2003/04 fiscal year. Implementation of the system in Japan may be delayed due to language difficulties, currently beingresolved with the software suppliers.

In line with the overall automation of the Company’soperation, maintenance manuals for theB737/B767/B747 aircraft were brought online in April 2002. The huge benefits associated with this move include a reduction in office space and the re-allocation of library staff to other activities.

The digital database will also help to reduce overtime costs and minimise the amendment process.This is a prime example of the level of necessarytechnology change taking place within Engineering.

The introduction of APIS (Advanced PassengerInformation System) for all flights to the USA was a challenging task for Freight & Operational Servicesdivision.

After 11 September 2001, the US introduced manyshort leadtime measures to ensure secure and safe airtravel. APIS was trialled to provide immigration serviceswith advance passenger information prior to landing on US soil. The system became mandatory fromOctober 2002.

Another similar automated system introduced was APP (Advanced Passenger Processing) for all Australianflights. This came online in January 2003. The maindifference is that the Australian system is an interactiveone where approval to board is granted from Canberra

after all passenger details and visa information are entered on computer.

Canada, New Zealand, Japan and other countries areproceeding in similar directions, but unfortunately eachnation requires a different system resulting in significantIT complexity and cost.

Another new system now being introduced throughAirports Fiji Limited is MUSE (Multi-User SystemEquipment). This application allows airlines to use their own software to access information on its flightsfrom any AFL-supplied computer station. This improvescounter space allocation at check-in and means that airlines do not need to install their own equipment and software.

Arrangements of this sort are commonplace at otherinternational airports. MUSE is a user-pays system withcharges based on the number of passengers processedby each airline.

In addition, as a working tool for Operations, Cabin and In-flight Services, an enhanced CustomerService Database has been developed. This providesinformation sharing on customer feedback and decisionstaken on complaints, ensuring transparency andavoiding duplication in the resolution process as well asmanagement reports and target tracking.

One of the most exciting developments was thedecision, in March 2003, to implement a fully integratedairline operations system, AIMS. This will fully automatecabin and flight crew rosters and scheduling andmaintenance for aircraft. It is expected to be completedtowards the end of 2004. Progressive delivery ofsegments, starting with crew rostering, will occur fromOctober 2003.



P03982_Main_R 12/9/03 10:40 AM Page 13

Operations

MaintenanceA number of scheduled Checks took place, in almost all cases, below budgeted expenditure. These cost-savings help improve our efficiency andmake an obvious contribution to our bottom line.

Maintenance tenders and support agreements were also either negotiated or finalised during the year.

These included:• the finalisation of a further 3-year support program

with Qantas for maintenance monitoring and heavy maintenance on our B767 aircraft. Air New Zealand will provide support for the components and engines.

• the successful completion of the tender process for B737 Spares Support.

• conclusion of the evaluation for B767 engine maintenance and lease.

• management of the operation and maintenance support for the Company’s B737-700, damp-leased to Qantas New Zealand. The remote management of the aircraft was a success due to the outstanding efforts of the team working on the program and the good working relationship established with Air New Zealand counterparts on the ground in New Zealand.

• the successful conclusion of the HF radio contract with Airports Fiji. This contract helps minimise delays and disruptions by improving communications.

Successful negotiations also took place with AnsettWorldwide Aviation Services regarding payment ofengine maintenance reserves for work carried out by Air New Zealand on the B767 Number 2 engine.

Further savings were gained on APU leases for the B737 fleet. Three overhauls were carried out on the fleet during the year (Air Pacific’s APUs were the highest utilisation in the world with the last removal at 24,000 hours).

A review of B747/767 spares pooling was carried out with the assistance of Qantas.

WingletsA significant event was the installation of winglets on the two B737-800 aircraft. Aviation Partners Boeingundertook the installation in September 2002 and the results in reduction of fuel burn and improvement in take-off performance have already been evident. The project is meeting its internal rate of return hurdle.

SecuritySecurity continued to be a concern for Air Pacific withincreased precautions being taken to protect cockpitcrew in particular. Strengthened doors were installed

on all cockpits and were completed and fitted wellbefore the FAA compliance date of 9th April, 2003.

On-time Departure/Aircraft UtilisationThe airline’s average on-time departure performance for the year continued to be above the internationalnorm at 86.3%. Average technical despatch reliabilitywas also extremely high with our B747 aircraft achieving96.3%, B767 96.2% and B737 98.1% reliability.

Average aircraft utilisation hours per day demonstratejust how hard-working and impressive Air Pacific’s fleet reliability is. On average the B747 aircraft flew 12.88 hours a day, the B767 15.86 hours and the B737 12 hours each day.

Quality Assurance/AuditingQuality assurance is a key area for Operations and theairline in general. Audits carried out during the yearconfirmed compliance at the highest levels. The airline’sCertificate of Airworthiness and AOC were renewed and the implementation of MEDA (Maintenance ErrorDecision Aid) to establish causes of incidents, hashelped to reduce the number of reported incidentscompared with last year.

Overall, the number of audit findings has reduced andtimely responses to external and internal audits hasimproved. In the new year, the Manager QualityAssurance will put in place safety indicators that willenable measurement of the effectiveness of ourstandards and compliance.

Although Engineering and Maintenance division alreadyoperates under ISO9002 accreditation, a new ‘QualitySystems in Flight Operations’ program was initiated inJanuary 2003 to ensure levels are maintained to thehighest international standards.

Airport HandlingTwo new passenger-handling appointments were made during the year.

Due to conflicts with Cathay Pacific’s own operatingschedules, which precluded them from supplying staff to handle flights, Air Canada was appointed as passenger handling agent in Vancouver in October 2002.

In New Zealand, a change was brought about by United Airlines withdrawal. United Airlines flights into Auckland ceased from 20th March, 2003 and, after careful evaluation, Air New Zealand was appointed as passenger-handling agent and the Menzies Aviation Group (NZ) became freight-handling agents.



P03982_Main_R 12/9/03 10:41 AM Page 14

Human Resources

The loss of skilled and qualified manpower, particularly in key management positions, remained an ongoingchallenge throughout the airline over the year but, in Operations and Finance divisions, it was an arearequiring significant attention. Most of these losses were due to migration and filling the void whilstmaintaining continuity was a high priority.

A number of changes were made in Engineering as staff retired early and expatriate contracts expired.These changes, however, created positives within theengineering area as steps were taken to improve themanagement process and raise efficiency/competencylevels at the same time.

Graduate TraineesFour of twelve recently recruited graduates wereattached to Finance where they were provided with a broad overview of the division’s operations and the airline industry. By year’s end all had securedpermanent senior staff positions.

The recruitment of graduates to fill Planning Engineerpositions in Operations enabled the movement of staffbetween Engineering Planning and Technical Serviceswhen required.

The retirement of a number of key members of theEngineering team, while ending an era, created theopportunity to bring on younger replacements withqualifications that will allow the airline to better manage the constant and ongoing developments in aviation engineering worldwide and meet withthe Company’s Succession Planning program.In Engineering, a total of eight new appointmentswere made, all except two being filled by locallyengaged staff, reinforcing Air Pacific’s commitment

to training and localisation.

TrainingOngoing training is an important priority for Air Pacific.However, the impending arrival of the new B747-400aircraft early in 2003 necessitated a massive additionaltraining investment for the Company.

Hand-in-hand with the training required to integratethese new aircraft into the fleet was the recruitment of short-term contract pilots to fly B767 and B747aircraft, so that national pilots progressing to the B747-400 could be released for training.

The introduction of the new aircraft resulted in theCompany undertaking one of the largest pilot trainingprograms in its history.

Every engineer was also put through rigorous anddetailed training programs to ensure that the divisionwas prepared and qualified to handle the new aircraft.

Cabin crew were re-trained and certified to operate on the new B747-400 aircraft.

With the increase in capacity on major routes, an additional 100 flight attendants were recruited and trained throughout the year. Back-to-back ab-initio programs were conducted by our traininginstructors who ensured that the new recruits maintained the quality service standards.

Management RestructureIn addition to management changes necessitated by resignations, Air Pacific also went through a management restructure during the year, designed to enable senior executives to develop new and broadenexisting skills. The changes were also seen as timely as the airline gears up for its next growth phaseassociated with the move to add wide-bodied



P03982_Main_R 12/9/03 10:41 AM Page 15

inter-continental aircraft to its fleet.

Freight & Operational Services was a new divisioncreated during the year, under the direction of WatsonSeeto, to enable the airline to focus on longer termrequirements in the areas of logistics, crew resources,airports and freight. The new division also has a role to play in the ongoing process of automation of the airline’s operations.

Network Development, headed by Dinesh Chandra, was created during the restructure that took place in September 2002, and is designed to focus greaterattention and emphasis on scheduling and operationalcoordination for the airline’s fleet and network. With the impending inclusion of new wide-bodied aircraft into the Air Pacific fleet, the role of networkdevelopment will assume greater significance.

An early challenge for Network Development was thestaging of additional capacity to meet market demandsrequiring significant in-house coordination. On top ofthis, heavy maintenance checks on the B747 and B767aircraft meant that temporary replacement aircraft had tobe found.

Customer Service

Dealing with customer concerns is a key area of Customer Services operations. During the year a new Customer Services Standards manual, for use by all divisions within the Company, was introduced. The manual lays down procedures for handlingcustomers and outlines standards for service levelsand service delivery.

In an effort to address customer complaints in-flight, a service recovery procedure was implemented with cabin crew, empowering them to resolve issues that may arise with a customer on the spot.

The very successful Air Pacific Care team concept hasbeen developed further with up to twenty volunteer teammembers being more visible and proactive duringdisruptions at Nadi. Air Pacific works closely with bothairports in Fiji and reservations to train and preparethese volunteers, who are drawn from staff.

In-flight ServicesAir Pacific’s in-flight product was given plenty ofattention during the year in an effort to raise andmaintain standards of service and presentation.

Following extensive reviews, a number of changes to Air Pacific’s in-flight product were implemented. These included:• the development and issuance of an audit plan on

Food and Safety Guidelines for Hazardous Analysis of Critical Control Points (HACCP) for all the airline’s caterers

• the conducting of six HACCP audits with Fiji caterers ATS, Nadi and Holiday Inn, Suva. From these audits, a number of initiatives and improvements were identified and implemented

• the review and successful negotiation of a three-year laundry contract for the airline with a local supplier

• ad hoc surveillance on at least two services per week to provide a first-hand audit of in-flight service and presentation

Customer SafetyAs the SARS threat grew internationally, Air Pacificadopted positive action to protect cabin crew and customers and keep them informed of updates from WHO, IATA and other bodies.

Fleet Planning

With major changes planned to the airline’s fleetstructure taking place, the emphasis on strategicplanning of the airline’s fleet and network assumedcentre stage over the course of the year.

One of the most important tasks for Strategic Planningwas the finalisation of the Fleet Study program. Theprogram, which addressed the airline’s wide-bodiedaircraft requirements, involved almost every divisionwithin the Company in some form or another. Approvedin November 2002, the recommendations led to theacquisition of two B747-400 aircraft from SingaporeAirlines and the initial ordering of two firm and twooptions for Airbus A330-300 aircraft.

Freight & Operational Services, like most otherdepartments and divisions, were involved in preparatorywork for the arrival of the B747-400 aircraft. Crew resources, manuals, procedures and policies,compliance and regulatory requirements and trainingwere just some of the issues that arose and had to be addressed prior to the aircraft’s arrival.

Negotiations with Singapore Airlines on the acquisition of the two B747-400 aircraft began in November (for an April 2003 delivery) headed by Tony Wong,Executive General Manager, Operations/Service. This left a much shorter lead time than normal for producing all necessary documentation related to the aircraft leases and getting schedules into the marketplace.

Associated with the negotiation of the B747 deal with Singapore Airlines was an aircraft support deal. With several options open on how enginemaintenance would be carried out, Air Pacific finallynegotiated a ‘power by the hour’ arrangement, which effectively means paying for maintenance as the aircraft is flying.

Still ongoing is the negotiation of engine choice to power the Airbus aircraft.



P03982_Main_R 12/9/03 10:41 AM Page 16

> Financial Statements for the Year Ended 31 March 2003


Directors’ Report ... 18

Independent Auditors’ Report ... 19

Income Statement ... 20

Statement of Recognised Gains and Losses ... 20

Balance Sheet ... 21

Statement of Cash Flows ... 22

Notes To and Forming Part of the Financial Statements ... 23

Air Pacific Limited

Directors’ Report For The Year Ended 31 March 2002

The Directors present their report together with the financial statements of Air Pacific Limited (“the Company”) for the year ended 31 March 2003 as set out on pages 20 to 33 and the auditors' report thereon in accordance with the Companies Act, 1983.

DIRECTORSThe Directors of the Company at the date of this report are:

Gerald Barrack CF, CBE ChairmanNalin Patel Deputy ChairmanJohn CampbellGeoff DixonDamend GounderPeter GreggCharles Harvey Narendra KumarRadike Qereqeretabua

STATE OF AFFAIRSIn the opinion of the Directors:

(i) the accompanying Income Statement, Statement of Recognised Gains and Losses and Statement of Cash Flows are drawn up so as to give a true and fair view of the profit and cash flows of the Company for the year ended 31 March 2003.

(ii) the accompanying Balance Sheet is drawn up so as to give a true and fair view of the state of affairs ofthe Company as at 31 March 2003.

There has been no material change in the nature of the Company’s business or in the classes of business in which theCompany has an interest.

OPERATING RESULTSThe operating profit after income tax expense of $8.625M (2002: $4.340M) for the year ended 31 March 2003 was$16.516M (2002: $5.335M).

RESERVESThe Directors recommend that no amounts be transferred to or from reserves.

DIVIDENDSThe Directors declared that a final dividend of twelve and a half cents per share amounting to $3.262M be paid.

EVENTS SUBSEQUENT TO BALANCE DATEThere has not arisen any item, transaction or event of a material nature that, in the opinion of the Directors, has significantlyaffected or may significantly affect the operations or results of the Company, or the state of affairs, in future financial years.

Dated at Nadi this 30th day of May, 2003.Signed in accordance with a resolution of the Directors.

DIRECTOR DIRECTOR


> Air Pacific LimitedDirectors’ Report For The Year Ended 31 March 2003


> Air Pacific LimitedIndependent Auditors’ Report To The Members of Air Pacific For The Year Ended 31 March 2003

SCOPEWe have audited the financial statements of Air Pacific Limited for the year ended 31 March 2003, consisting of the income statement, statement of recognised gains and losses, balance sheet, statement of cash flows and accompanying notes, set out on pages 20 to 33. The Company’s directors are responsible for the preparation and presentation of the financial statements and the information they contain. We have conducted an independent audit of these financial statements in order to express an opinion on them to the members of the Company.

Our audit has been conducted in accordance with Fiji Standards on Auditing to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with Fiji Accounting Standards and statutory requirements so as to present a view which is consistent with our understanding of the Company’s financial position and the results of its operations and its cash flows.

The audit opinion expressed in this report has been formed on the above basis.

AUDIT OPINIONIn our opinion:

(a) proper books of account have been kept by the Company, so far as it appears from our examination of those books, and

(b) the accompanying financial statements of the Company, which have been prepared under the historical cost convention as stated in Note 1 to the financial statements:

(i) are in agreement with the books of account;

(ii) to the best of our information and according to the explanations given to us:

(a) give a true and fair view of the state of affairs of the Company as at 31 March 2003 and of the result and cash flows of the Company for the year then ended;

(b) give the information required by the Companies Act 1983 in the manner so required.

We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

30th May, 2003 KPMGLautoka, Fiji Islands Chartered Accountants


> Air Pacific LimitedIncome Statement For The Year Ended 31 March 2003

Note 2003 2002

$'000 $'000

Revenue 381,829 337,892

Other Income 2 25,673 18,819407,502 356,711

Manpower and Staff Related Costs 41,336 34,039Operations 3 142,990 118,702Selling and Marketing 39,799 37,154Fuel 71,451 71,575Depreciation and Amortisation 9 14,761 14,401Administrative Expenses 63,436 57,815

373,773 333,686

PROFIT FROM OPERATIONS 33,729 23,025

Net Financing Costs 4 8,588 13,350

OPERATING PROFIT BEFORE INCOME TAX 25,141 9,675

Income Tax Expense 5 8,625 4,340

OPERATING PROFIT AFTER INCOME TAX 16,516 5,335

Basic Earnings Per Share 0.63 0.20

Diluted Earnings Per Share 0.63 0.20

The above Profit and Loss Statement is to be read in conjunction with the Notes to and Forming Part of the Financial Statements on Pages 23 - 33.

2003 2002

$'000 $'000

Net Profit for the Year 16,516 5,335

TOTAL RECOGNISED GAINS 16,516 5,335

Statement Of Recognised Gains and Losses For The Year Ended March 2003


> Air Pacific LimitedBalance Sheet As At 31 March 2003

Note 2003 2002

$'000 $'000

Current AssetsCash 6 20,391 6,904Term Deposits 6 90,804 52,134Trade Receivables 7 41,332 37,599Deferred Expenditure 8 - 3,554Other Receivables, Prepayments & Deposits 21,018 19,449General Inventories 433 348Total Current Assets 173,978 119,988

Non-Current AssetsDeferred Expenditure 8 165 18,921Aircraft, Property, Plant & Equipment 9 219,515 228,952Deposits 11,099 6,302Investment 10 1 1Advance to Subsidiary 11 9,640 9,218Future Income Tax Benefit 5(c) 32,921 31,042Total Non-Current Assets 273,341 294,436

Total Assets 447,319 414,424

Current LiabilitiesLoans 12 - 1,777Lease Liability 13 15,826 17,125Trade Creditors & Accrued Expenses 120,527 61,440Revenue Received in Advance 19,168 30,907Provisions 14 6,349 5,869Total Current Liabilities 161,870 117,118

Non-Current LiabilitiesLoans 12 - 1,832Lease Liability 13 140,977 179,121Provisions 14 53,965 42,362Total Non-Current Liabilities 194,942 223,315

Total Liabilities 356,812 340,433

Net Assets 90,507 73,991

Shareholders’ EquityShare Capital 15 26,093 26,093Capital Reserve 15 7,513 7,513Retained Earnings 15 53,639 40,385Proposed Dividend 16 3,262 -Total Shareholders Equity 90,507 73,991

Commitments and Contingent Liabilities 19/17

Signed in accordance with a resolution of the Board:

DIRECTOR DIRECTOR

The Balance Sheet is to be read in conjunction with the Notes to and Forming Part of the Financial Statements set out on pages 23 to 33.


> Air Pacific LimitedStatement of Cash Flows For the Year Ended 31 March 2003

Note 2003 2002

$'000 $'000

Cash Flows from Operating ActivitiesReceipts in the Course of Operations 389,262 353,041Payments in the Course of Operations (303,159) (298,364)Interest Received 2,026 992Interest Paid – Lease (9,461) (11,156)Interest Paid – Loan (131) (155)

Net Cash Provided by Operating Activities 78,537 44,358

Cash Flows from Investing ActivitiesAdvance to Subsidiary (422) (180)Payments for Property, Plant and Equipment (5,333) (2,163)Proceeds from Sale of Property, Plant and Equipment 117 -

Net Cash (Used In) Investing Activities (5,638) (2,343)

Cash Flows from Financing ActivitiesRepayment of Loan (3,609) (1,948)Repayment of Leases (17,133) (13,367)

Net Cash (Used In) Financing Activities (20,742) (15,315)

Net Increase in Cash Held 52,157 26,700

Cash and Cash Equivalents at the Beginning of the Financial Year 59,038 32,338

Cash and Cash Equivalents at the End of the Financial Year 6 111,195 59,038

The Statement of Cash Flows is to be read in conjunction with the Notes to and Forming Part of the Financial Statements set out on pages 23 to 33.


> Air Pacific LimitedNotes to and Forming Part of the Financial Statements For the Year Ended 31 March 2003

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIESAir Pacific Limited (the ‘Company’) is a Company domiciled in the Fiji Islands. The financial statements of the Company for the year ended 31 March 2003 were authorised for issue by directors on 30th May, 2003.

(a) Statement of ComplianceThe financial statements have been prepared in accordance with the accounting standards and disclosure requirements of the Fiji Institute of Accountants and the requirements of the Laws of Fiji. These statements have been prepared on a historical cost basis except where stated.

(b) Foreign Currency TransactionsForeign currency transactions are translated to Fiji dollars at the rates of exchange published by the International Air Transport Association (IATA) at transaction date. In respect of aircraft, property, plant and equipment and revenue received in advance the values calculated at transaction date are not adjusted at balance date to reflect exchange rates then applying. Foreign currency loans and lease liabilities are translated to Fiji dollars at the bank exchange rates ruling at balance date. Other foreign currency assets and liabilities are adjusted by applying the IATA rate ruling at balance date. Exchange differences relating to long term foreign currency loans and lease liabilities and hedges relating thereto are amortised over the period of the related loans and lease liabilities. The balance of unrealised exchange gains/losses is carried forward as deferred expenditure in the balance sheet. Other exchange differences are brought to account in the income statement as exchange gains or losses in the financial year in which the exchange rates change.

(c) Aircraft, Property, Plant and EquipmentItems of aircraft, property plant and equipment are recorded at cost and depreciated or amortised on a straight line basis at rates estimated to write off the cost less residual value over the useful life of each class of asset.

(d) DepreciationDepreciation is charged to the income statement over the estimated useful lives of items of aircraft, property, plant and equipment, and major components that are accounted for separately.

The annual rates in use are:

Aircraft and Spares:- B737-700/800 Aircraft and Spares: 15 years to 25% residual value- B767 Spares: 15 years to 20% residual value

Other- Plant and Equipment: 10.00 – 33.33%- Motor Vehicles:

- Cars 25.00%- Trucks and Vans 33.33%

- Buildings:- Concrete 1.25%- Wooden 2.50%

Buildings are depreciated at the above rates or over the period of the lease whichever is the shorter.

(e) Provision for Aircraft/Engine OverhaulProvision is made for the future expected cost of major airframe and engine overhauls equal to the expected cost per flight hour of such overhauls in respect of flight hours since acquisition or the previous overhaul. The cost of major overhauls is subsequently debited directly against the provision. Adjustments in respect of reassessment of provisions and provisions no longer required upon the disposal or return of aircraft to lessors are charged or credited to operating profit before income tax.

(f) Leased AssetsFinance LeasesAssets acquired under finance lease are included as non-current assets in the balance sheet. Leased assets are recognised at the lower of the present value of the minimum lease payments or their fair value and amortised on a straight-line basis to estimated residual value over the expected useful life of the asset. A corresponding liability is also established and each lease payment is allocated between the liability and finance charge.

Air Pacific Limited

Notes To And Forming Part Of The Financial Statements For The Year Ended 31 March 2002

Operating LeasesOperating lease rentals are included in the determination of the operating profit or loss for the year in accordance with the contractual lease payment obligations.

(g) InvestmentInvestment in the subsidiary is carried in the financial statements of the Company at the lower of cost and recoverable amount.

(h) Trade ReceivablesThe collectability of trade receivables is assessed at year end and provision is made for any amounts considered doubtful.

(i) General InventoriesGeneral inventories are valued at the lower of cost (calculated using a weighted average formula) and net realisable value.

(j) Employee EntitlementsContributions are paid to the Fiji National Provident Fund on behalf of employees to secure retirement benefits. Costs are included in the income statement. Outstanding annual leave and long service liabilities due to employees at balance date are brought to account based on current legal and contractual entitlements. Provision is made for the future expected retirement benefits based on current contractual entitlements.

(k) Cash and Cash EquivalentsCash and cash equivalents comprise cash balances and term deposits for the purposes of the statement of cash flows.

(l) ImpairmentThe carrying amount of the Company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.

(m) Trade and Other PayablesTrade and other payables are stated at their cost.

(n) RevenuePassenger and freight sales are recorded as ‘revenue received in advance’ and transferred to revenue earned when the service is performed. Passenger and freight sales are included in the income statement net of sales discounts. Agents’ commission is included as sales and marketing expense and is recognised on the same basis as revenue.Where services sold are not availed within the following periods, the sales values are transferred to revenue:

- for passenger services 24 months- for cargo service 12 months

(o) Net Financing CostsNet financing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable on funds invested and amortisation of unrealised exchange gains or losses.

(p) Income TaxThe Company adopts the liability method of tax effect accounting. Income tax expense is calculated on operating profit adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences which arise from items being brought to account in different periods for income tax and accounting purposes is carried forward in the balance sheet as a future income tax benefit or a provision for deferred income tax. Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt or in the case of income tax losses, unless realisation of the asset is virtually certain.



Air Pacific Limited




2003 2002

$'000 $'000

2. OTHER INCOMEIncluded in the operating profit are the following items of income and expenditure:

Charters 18,138 11,843Gain on Disposal of Assets 108Sundry 7,427 6,976

25,673 18,819

3. EXPENSESOperations

Operating Lease Rentals 41,940 32,218Lease and Related Costs 3,734 4,086Airport Related Costs 42,749 40,405Engineering and Maintenance 54,567 41,993

142,990 118,702

Included in Engineering and Maintenance expense is :

Provision for Aircraft Maintenance 936 3,082

Administrative Expenses

Included in the Administrative Expenses are the following items:

Directors’ Fees 78 70

Audit Fees - Remuneration 32 32- Other Services 49 55

Bad Debts Written Off 4,660 256

Provision for:- Employee Entitlements 642 862- Doubtful Debts (1,999) 4,210

4. NET FINANCING COSTS Interest Income 2,026 992Interest Expense (9,592) (11,311)Amortisation of Unrealised Exchange Gains/(Losses) (1,022) (3,031)

(8,588) (13,350)



2003 2002

$'000 $'000

5. TAXATION(a) Income Tax Expense/(Benefit)

Prima facie income tax expense calculated at 32% (2002 : 34%) on operating profit/(loss) 8,045 3,290

Increase/(decrease) in income tax expense due to:Non-tax deductible items 258 235Income derived from overseas locations not subject to tax in Fiji (5) (35)Other 327 1,030Effect of change in tax rate - (180)

Income tax expense attributable to operating profit 8,625 4,340

Income tax expense attributable to operating profit is made up of:Deferred income tax expense 10,506 6,383Future income tax (benefit) (1,881) (2,043)

8,625 4,340(b) Provision for Deferred Income Tax

Provision for deferred income tax comprises the estimated expense at current income tax rates on the difference in depreciation of aircraft, property, plant and equipment for accounting and tax purposes 44,432 33,927

(c) Future Income Tax Benefit

Future income tax benefit comprises the estimated future benefit at current income tax rates on the following items:Provisions Not Currently Deductible 7,568 6,214Income Tax Losses Carried Forward 25,353 24,828

32,921 31,042

The potential future income tax benefit will only be obtained if:

i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit to be realised;

ii) the Company complies with the conditions for deductibility imposed by the law; and

iii) no changes in tax legislation adversely affect the Company in realising the benefit.



2003 2002

$'000 $'000

6. CASH AND CASH EQUIVALENTS

Cash on Hand and at Bank 20,391 6,904Term Deposits 90,804 52,134

111,195 59,038

7. TRADE RECEIVABLES

Trade Receivables 44,333 42,599Provision for Doubtful Debts (3,001) (5,000)

41,332 37,5998. DEFERRED EXPENDITURE

CurrentUnrealised Exchange Losses on Future Loan Repayments - 3,554

Non-currentUnrealised Exchange Losses on Future Loan Repayments 165 18,921

9. AIRCRAFT, PROPERTY, PLANT AND EQUIPMENT

Aircraft Aircraft Plant, Land & TotalLeased Spares Equipment Buildings

& Vehicles$'000 $'000 $'000 $'000 $'000

CostBalance at 1 April 2002 233,566 15,521 8,852 21,462 279,401 Acquisitions 2,619 467 2,247 5,333Disposals (376) (376)Balance at 31 March 2003 236,185 15,988 10,723 21,462 284,358

Depreciation and AmortisationBalance at 1 April 2002 35,092 4,352 5,867 5,138 50,449Depreciation and Amortisation for the year 12,176 923 1,131 531 14,761Disposals (367) (367)Balance at 31 March 2003 47,268 5,275 6,631 5,669 64,843

Carrying AmountAt 1 April 2002 198,474 11,169 2,985 16,324 228,952

At 31 March 2003 188,917 10,713 4,092 15,793 219,515



2003 2002

$'000 $'000

10. INVESTMENT

Investment in Subsidiary* $100 rounded up to $1,000 1* 1*Air Pacific Limited currently owns 100 shares in Richmond Limited at $1 per share. The principal activity of Richmond Limited is to act as an investment vehicle for the development and construction of an upmarket hotel at Denarau Island in Nadi.

A provision for non-recovery of deferred charges was brought to account by the directors of Richmond Limited in a prior year.Group accounts comprising of the financial statements of the Company and its subsidiary, Richmond Limited, have not been prepared as the Directors of the Company are of the opinion that control is temporary and consolidation would add no real value.

The abridged balance sheet as at 31 March 2003 of the subsidiary company based on its audited financial statements is as follows:

2003 2002

$ $

Current AssetsCash 202,371 200,338Other Receivables and Deposits 1,500 1,500Total Current Assets 203,871 201,838

Non-Current AssetsLand 8,799,600 8,799,600Plant and Equipment 3,544 1,277Investments 1,022 3,544Deferred Charges 655,953 233,242Total Non-Current Assets 9,460,119 9,037,663

Total Assets 9,663,990 9,239,501

Current LiabilitiesAccrued Expenditure 23,383 21,350Total Current Liabilities 23,383 21,350

Non-Current LiabilitiesAmount Payable to Holding Company 14,653,283 14,230,827Total Non-Current Liabilities 14,653,283 14,230,827

Total Liabilities 14,676,666 14,252,177

Net Assets (5,012,676) (5,012,676)

Shareholders EquityShare Capital 100 100Accumulated (Losses) (5,012,776) (5,012,776)

(5,012,676) (5,012,676)

Air Pacific Limited




2003 2002

$'000 $'000

11. ADVANCE TO SUBSIDIARY

Balance at the beginning of the Year 14,231 14,051Advances made during the Year 422 180

14,653 14,231Provision for Non-recovery of Advance to Subsidiary (5,013) (5,013)

9,640 9,218

The advance to the subsidiary is for the value of land acquired and other costs relating to the project. The directors of Air Pacific Limited have deemed it appropriate to revalue the carrying amount of this advance to its recoverable amount.

12. LOANS

Annual Interest

Rate% Terms of Repayment

Current LiabilitiesSecuredEuropean Investment Bank 3.0 6-monthly repayment - 1,777

in currency of disbursement. This loan is denominated in USD and JPY.

Total Secured - 1,777

Non-Current LiabilitiesSecuredEuropean Investment Bank 3.0 6-monthly repayment - 1,832

in currency of disbursement. This loan is denominated in USD and JPY.

Total Secured - 1,832

The above loan was fully repaid during the year.



2003 2002

$'000 $'000

13. LEASE LIABILITY

The finance lease liability in respect of B737-700/800 aircraft is allocated between current and non-current elements.The principal component of the lease payments due as at the end of the succeeding financial year is shown as current and the remainder of the liability as non-current.

The future lease payments under finance leases are:

Not later than one year 24,057 27,482Later than one year but not later than two years 24,057 27,482Later than two years but not later than five years 73,421 82,444Later than five years 73,658 113,048Minimum lease payments 195,193 250,456Deduct: future finance charges 38,390 54,210Provided for in the accounts 156,803 196,246

Represented by:

Current 15,826 17,125Non-Current 140,977 179,121

156,803 196,246

14. PROVISIONS

CurrentAircraft/Engine Overhaul 2,847 3,009Employee Entitlements 3,610 2,968Income Tax (108) (108)

6,349 5,869Non-CurrentAircraft/Engine Overhaul 9,533 8,435Deferred Income Tax 44,432 33,927

53,965 42,362



2003 2002

$'000 $'000

Authorised Share Capital100,000,000 Shares of $1 each 100,000 100,000

Issued and Paid-Up Share CapitalShareholders as at 31 March 2003 were

CALLED PAID-UP PAID-UP& PAID-UP CAPITAL CAPITAL

SHARES % $ $’000 $’000 %

Government of Fiji 13,307,178 51.00 1.00 13,307 13,307 51.00Qantas Airways Limited 12,084,729 46.32 1.00 12,086 12,086 46.32Air New Zealand Limited 505,000 1.94 1.00 505 505 1.94Government of Kiribati 70,400 0.27 1.00 70 70 0.27Government of Tonga 70,400 0.27 1.00 70 70 0.27Government of Samoa 32,000 0.12 1.00 32 32 0.12Government of Nauru 22,800 0.08 1.00 23 23 0.08

26,092,507 100.00 26,093 26,093 100.00

16. DIVIDENDS

On 30 May 2003, the Board of Directors declared a dividend payout of profits for the year ended 31 March 2003 of 12.5 cents per share, totalling $3,261,563.

17. CONTINGENT LIABILITIES

Guarantees and letters of credit to support operating lease commitments and other arrangements entered into by the Company. Bank facilities in respect of the above are secured by a registered mortgage debenture over the Company’s assets. 2,061 2,447

15. SHAREHOLDERS’ EQUITY

Share Capital Retained Proposed TotalCapital Reserve Earnings Dividend$'000 $'000 $'000 $’000 $'000

Balance at 1 April 2001 26,093 7,513 35,050 - 68,656Total Recognised Gains and (Losses) 5,335 - 5,335Balance at 31 March 2002 26,093 7,513 40,385 - 73,991

Balance at 1 April 2002 26,093 7,513 40,385 - 73,991Total Recognised Gains and (Losses) 16,516 - 16,516Proposed Dividend (Note 16) - - (3,262) 3,262 -Balance at 31 March 2003 26,093 7,513 53,639 3,262 90,507



18. FINANCING FACILITYThe Company established a secured stand-by overdraft facility of $30.0M on 22 August 2001. This facility is guaranteed by the Government of the Republic of the Fiji Islands (subject to review in April 2004) and Qantas Airways Limited in proportion to their overall shareholding in the Company.

19. COMMITMENTSAs at balance date the Company had entered into the following commitments. These commitments are not provided for in the financial statements.

(a) The Company had entered into a six-year operating lease agreement for a Boeing 747-200 aircraft with effect from August 1998 with an option for a one year extension. The lease will be terminated in June 2003.

(b) The Company had entered into a nine-year operating lease agreement for a Boeing 767-300 Extended Range aircraft effective September 1994 and exercised an extension for a further four years.

(c) The Company entered into a five-year operating lease for two Boeing 747-400 aircraft with effect from April and June 2003 with an option for a one year extension.

(d) The following is a summary of future operating lease commitments for aircraft and properties payable by the Company translated (where applicable) at exchange rates prevailing at balance date:

2003 2002

$'000 $'000

Not later than one year 40,424 33,432Later than one year but not later than two years 45,109 30,410Later than two years but not later than five years 69,241 65,507Later than five years 14,283 24,075

169,057 153,424

(e) The Company has committed to providing on-going support to its subsidiary, Richmond Limited.

20. RELATED PARTIESThe Company has a controlling related party relationship with its major shareholder, the Government of the Republic of the Fiji Islands.

The Company has a commercial agreement with Qantas Airways Limited which includes code share agreements on various routes, leasing of aircraft and obtaining engineering services. These transactions are in the normal course of business and on normal terms and conditions.

In addition to the Directors’ Fees disclosed in Note 3 the Directors of the Company receive certain travel benefits.

21. MANPOWERThe average staff strength for the year was 675 compared with 672 in the prior year.

22. PRINCIPAL BUSINESS ACTIVITYThe principal business of the Company is to provide air transport services.

23. COMPARATIVESCertain comparative figures have been reclassified to conform with the 2003 presentation.



24. SEGMENT REPORTINGThe Company’s operations are predominantly in one industry segment being the transportation of passengers and cargo on scheduled airline services to or from and within Fiji Islands. The principal assets are located at Nadi, Fiji Islands.

25. REGISTERED OFFICEThe Company’s registered office is located at:

Air Pacific Maintenance & Administration CentreNasoso Road, Nadi FIJI ISLANDS


> Air Pacific Limited10 Year Comparative Statistics

ATK: AVAILABLE TONNE KILOMETRES : Available payload of the aircraft times the kilometre distance travelled.

RTK: REVENUE TONNE KILOMETRES : Total weight of all products carried i.e. passengers, cargo, mail and excess

baggage on the aircraft times the kilometre distance travelled.

RPK: REVENUE PASSENGER KILOMETRES : Number of revenue passengers carried times the kilometre distance travelled.

ASK: AVAILABLE SEAT KILOMETRES : Number of saleable seats on the aircraft times the kilometre distance travelled.

DEFINITIONS

2002/03 2001/02 2000/01 1999/00 1998/99

FINANCIAL

Revenue (000) $407,502 $357,703 $322,368 $471,743 $370,782

Expenditure (000) $382,362 $348,028 $360,911 $441,302 $348,231

Operating Profit/(Loss) (000) $25,141 $9,675 ($38,543) $30,441 $22,551

Cost per ATK 65.6c 65.0c 69.3c 58.6c 62.1c

Yield per RTK (Air Pacific services only) 111.6c 109.2c 128.7c 123.5c 115.2c

Paid up Capital as at 31 March (000) $26,093 $26,093 $26,093 $26,093 $26,093

OPERATIONS

Unduplicated Route Km as at 31 March 47,729 54,629 63,296 73,920 73,920

Available Tonne Km (000) 583,149 535,816 521,073 752,478 560,579

AIRCRAFT UTILISATION (Actual Hours per Aircraft Type)

B747 4,810 4,431 4,805 8,656 5,791

B767 5,347 4,263 3,099 4,361 4,348

B737-500 1,290 3,864

B737-300 322 3,379

B737-700 4,017 3,259 2,363 3,254 1,498

B737-800 8,562 7,811 6,752 5,154

ATR 42

TRAFFIC (Excluding Charters to Other Airlines)

Passengers Carried 453,709 415,521 327,150 458,167 411,926

Revenue Passenger Kilometres (000) 2,871,589 2,537,301 1,986,607 2,845,622 2,356,076

Available Seat Kilometres (000) 3,956,884 3,605,558 3,500,752 5,129,456 3,969,885

Revenue Seat Factor 72.6% 70.4% 56.7% 55.5% 59.3%

Cargo & Excess Baggage Tonne Kilometres (000) 66,206 65,171 67,684 99,552 78,831

Mail Tonne Kilometres (000) 939 879 682 791 496

Revenue Tonne Kilometres (000) 365,031 327,434 260,609 369,172 303,741

Revenue Load Factor 62.6% 61.1% 50.0% 49.1% 54.2%

AVERAGE KM FLOWN BY PASSENGER

Average all Services 6,329 6,106 6,072 6,211 5,720

PERSONNEL

Average Staff Strength 675 672 707 725 721

Revenue per Employee $603,707 $532,560 $456,074 $650,680 $514,261

ATKs per Employee 863,924 797,741 737,194 1,037,901 777,502

Expenditure per Employee $566,462 $518,156 $510,602 $608,692 $492,983

Air Pacific Limited - 10 Year Comparative Statistics


> Air Pacific Limited10 Year Comparative Statistics

CARGO & EXCESS BAGGAGE

TONNE KILOMETRES : Total weight of cargo and excess baggage carried times the kilometre distance travelled.

MAIL TONNE KILOMETRES : Weight of mail carried times the kilometre distance travelled.

REVENUE SEAT FACTOR : Revenue Passenger Kilometres expressed as a percentage of Available Seat Kilometres.

REVENUE LOAD FACTOR : Revenue Tonne Kilometres expressed as a percentage of Available Tonne Kilometres.

Note: All weights are expressed in metric tonnes.

DEFINITIONS

1997/98 1996/97 1995/96 1994/95 1993/94

FINANCIAL

Revenue (000) $284,317 $264,328 $260,438 $233,872 $211,863

Expenditure (000) $274,372 $252,632 $246,284 $221,149 $206,673

Operating Profit/(Loss) (000) $9,945 $11,696 $14,154 $12,723 $5,190

Cost per ATK 54.5c 54.2c 58.5c 79.0c 94.2c

Yield per RTK (Air Pacific services only) 106.3c 110.4c 122.1c 124.8c 144.8c

Paid up Capital as at 31 March (000) $19,480 $19,480 $19,480 $19,480 $19,480

OPERATIONS

Unduplicated Route Km as at 31 March 69,606 53,437 49,954 47,387 31,172

Available Tonne Km (000) 503,151 466,191 420,749 304,300 243,687

AIRCRAFT UTILISATION (Actual Hours per Aircraft Type)

B747 5,128 4,669 4,303 3,887 3,093

B767 4,451 4,393 4,295 3,808 3,942

B737-500 3,865 3,948 3,504 3,318 2,764

B737-300 3,624 3,374 3,496 528

B737-700

B737-800

ATR 42 1,905

TRAFFIC (Excluding Charters to Other Airlines)

Passengers Carried 338,222 313,914 315,175 301,682 282,080

Revenue Passenger Kilometres (000) 1,977,294 1,814,301 1,537,198 1,123,691 963,902

Available Seat Kilometres (000) 3,575,480 3,289,654 3,000,127 2,146,878 1,768,908

Revenue Seat Factor 55.3% 55.2% 51.2% 52.3% 54.5%

Cargo & Excess Baggage Tonne Kilometres (000) 66,848 70,488 64,749 60,448 40,904

Mail Tonne Kilometres (000) 566 591 527 507 288

Revenue Tonne Kilometres (000) 254,826 234,353 198,839 162,180 127,944

Revenue Load Factor 50.6% 50.3% 47.3% 57.8% 58.3%

AVERAGE KM FLOWN BY PASSENGER

Average all Services 5,846 5,780 4,877 3,725 3,417

PERSONNEL

Average Staff Strength 772 757 708 640 579

Revenue per Employee $368,286 $349,179 $367,850 $365,425 $365,913

ATKs per Employee 651,749 615,840 594,279 475,469 420,876

Expenditure per Employee $355,404 $333,729 $349,887 $346,384 $356,948

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HEAD OFFICEAir Pacific LimitedPrivate Mail BagNadi Airport, Fiji IslandsPhone: (679) 6720777 Fax: (679) 6720512

CARGOAir Pacific LimitedNadi Airport, Fiji Islands

Air Pacific Limited263-269 Grantham Plaza, Grantham Rd, Raiwaqa,Suva, Fiji Islands

REGIONAL OFFICES:

FIJIAir Pacific LimitedGround Floor, CML BuildingVictoria Parade, Suva

Air Pacific LimitedArrival Concourse, Nadi Airport

AUSTRALIAAir Pacific LimitedWorld Aviation Systems-GSALevel 5, 217 George Street,Brisbane QLD 4000

Air Pacific LimitedWorld Aviation Systems-GSALevel 10, 403 George Street,Sydney NSW 2000

Air Pacific LimitedWolrd Aviation Systems-GSAGround Floor, 310 King Street,Melbourne VIC 3000

HONG KONGAir Pacific LimitedDeks Air (Hong Kong) Ltd-GSARoom 1804-5, Jubilee Centre,18 Fenwick Street, Wanchai

JAPANAir Pacific LimitedRoom 251, Kokusai Building3-1-1, Marunouchi,Chiyoda-Ku, Tokyo 100-0005

MALAYSIAMalaysian Airlines System–GSA 3rd Floor, MAS BuildingJalan Sultan IsmailKuala Lumpur 50250

NEW CALEDONIAAir Pacific LimitedAgence de Voyages Jean Brock- GSA, 14 Rue GeorgeClemenceau,BP 122, 98845, Noumea

NEW ZEALANDAir Pacific LimitedLevel 12, 17 Albert Street,Auckland

Cargo Handling Agent-Menzies Aviation GroupP.O.Box 73115,Auckland International Airport

NORTH AMERICA - U.S.A.Air Pacific LimitedSuite 490, 6080 Centre DriveLos Angeles, California

Cargo Handling Agent-Mercury Air Cargo Inc6041 Avion Drive, Los Angeles CA 90045

HAWAIIAir Pacific Limited300 Rodgers Boulevard #60Honolulu International Airport Hawaii 96819

CANADAAir Pacific LimitedCathay Pacific-GSAVancouver International AirportRoom #4400. P.O. Box 23825,Vancouver, BC V781XO

REPUBLIC OF KOREAAir Pacific LimitedHan Young Air Agency-GSA5th Floor, Soon Hwa Buildings5-2 Soon Hwa-Dong,Choong-Ku, Seoul

SAMOAAir Pacific LimitedPolynesian Airlines-GSA 1st Floor, National ProvidentFund Building, P.O.Box 599,Apia

SINGAPOREAir Pacific LimitedDeks Air (Singapore) Pte Ltd-GSA 01-05 Beach Centre, 15 Beach Road, Singapore189677

Cargo Handling Agent-International Air Cargo Services Pte LtdRoom 230 Sats AirfreightTerminal 2, Core E, Airport Cargo RoadP.O.Box 656, Airmail Transit Centre Singapore Changi Airport918105

SOLOMON ISLANDSAir Pacific LimitedTravel Industry Services-GSA,City Centre Building,Mendana Avenue, Honiara

Cargo Handling Agent-Solomon Airlines–FreightHenderson Airport

TAHITIQantas-GSA1st Floor, Viama Centre,P.O. Box 1695, Papeete

TAIWAN, ROCAir Pacific LimitedHoliday Tours & Travel–GSA10F1-6 Chag-An West RoadTaipei 103

JPK Air Freight Co. Ltd- Cargo GSA, 5th Floor, No.1, Nanking Road East, Sec. 3, Taipei

TONGAAir Pacific LimitedE.M.Jones Limited-GSAP.O.Box 34, Nuku’alofa

UNITED KINGDOMAir Pacific LimitedP.O.Box 4154Maldon Essex CM9 8UR

Qantas–GSA395/403 King StreetHammersmith London W69NJ

CARGO-182 Strand WC2 1ET

VANUATUAir Pacific LimitedVanuatu Travel Services-GSAC/- South Pacific TravelPort Vila

GERMANYQantas-GSAFrankfurt Airport Terminal 2

ITALYQantas-GSACorso Italia 8, Milan Via Bissolati 54, Rome

FRANCEQantas-GSA13/15 Boulevard de laMadeleine, Paris

SWEDENQantas-GSAKungsgatan 64, Stockholm

SWITZERLANDQantas-GSALoewemstrasse 51, Zurich

> Offices (Including General Sales & Cargo Agents)

air pacific 2003 annual report

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