Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (December 2014)
35 slides from Transat A.t's investor presentation, December 2014
Slide 1: Transat Investors' Presentation December 2014
DESPITE A SIGNIFICANT CAPACITY INCREASE IN THE TRANSATLANTIC MARKET: 2014 SECOND BEST SUMMER EVER TRANSAT INVESTORS’ PRESENTATION DECEMBER 2014
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE CORPORATION. THESE FORWARD-LOOKING STATEMENTS, BY THEIR NATURE, NECESSARILY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE
Slide 3: Agenda
AGENDA 1. TRANSAT MARKET p. 4 2. KEY FINANCIAL INFORMATION • ANNUAL 2014 p. 6 • FOURTH QUARTER 2014 p. 8 • WINTER 2015 p. 15 3. FINANCIAL POSITION p. 22 4. COST REDUCTION AND MARGIN p. 23 IMPROVEMENT INITIATIVES 5. FLEET STRATEGY p. 24 6. UP-SELLING STRATEGY p. 26 7. OUR INVESTMENT PROPOSITION p. 27
Slide 4: Transat Markets
TRANSAT MARKETS 3 MARKETS AND 2 DISTINCT SEASONS 25 Sun 10 65 % 80 % Transatlantic 10 10 France 4
Slide 5: Key Financial Information - Annual
KEY FINANCIAL INFORMATION - ANNUAL 55
Slide 6: Key Financial Information – Annual: 2014 Results
KEY FINANCIAL INFORMATION – ANNUAL 2014 RESULTS HIGHLIGHTS (vs. 2013) 12-month ended October 31 2014 2014 vs. 2013 Profitability maintained (in thousands of C$) 2013 • Range of 80-120M EBITDA Actual Actual $ % 5 record summers in last 6 years REVENUES 3,752,198 3,648,158 104,040 2.9% • France profit
Slide 7: Key Financial Information – Summer
KEY FINANCIAL INFORMATION – SUMMER 77
Slide 8: Key Financial Information - Summer: Fourth Quarter Results
KEY FINANCIAL INFORMATION - SUMMER FOURTH QUARTER RESULTS HIGHLIGHTS (vs. 2013) 3-month ended October 31 2014 2014 vs. 2013 Significant increase in global (in thousands of C$) 2013 capacity (+10%) Actual Actual $ % Transatlantic REVENUES 844,655 808,616 36,039 4.5% • Capacity similar EBITDAR(1) 97,7
Slide 9: Transatlantic Market
TRANSATLANTIC MARKET CAPACITY AND MARKET SHARE ON TRANSAT ROUTES (2013-2014) (1) 1,800,000 +16% Summer 2013 Actual Market share – 1,600,000 Summer 2014 Actual TOTAL SEATS Transatlantic routes SUMMER 2013 Summer 2014 1,400,000 1,200,000 3,775,000 11 1,000,000 21 -2% 7 800,000 8 600,000 +7% TOTAL SEAT
Slide 10: Transatlantic Market – Summer
TRANSATLANTIC MARKET – SUMMER (TRANSAT ROUTES, SUMMER 2014) Netherlands 46 39% Total sales: % 54 European passengers 860,000 seat Ireland Close to 50% UK & France passengers Belgium UK 39% 39 Germany In foreign currency 61 % 55 France Switzerland % 45 Italy Greece Sales in Canada Spain Sales in Euro
Slide 11: Transatlantic Market: Air and Land
TRANSATLANTIC MARKET: AIR AND LAND PRODUCT AND CUSTOMER EXPERIENCE 2% Europe: largest tourism market in the world 6% SUMMER 21% Transat (more than 50% of travellers inbound & outbound) 34% CAPACITY 22% 50% Air France 4.1M seats in summer 2014 between Canada and Europe 27% British Airways 2014 Air Ca
Slide 12: Transatlantic Market: Air and Land
TRANSATLANTIC MARKET: AIR AND LAND PRODUCT AND CUSTOMER EXPERIENCE EACH YEAR, TRANSAT SELLS: More than 100,000 tours to destinations around the world (40% in Canada or Europe), with an average margin of over 10% More than 200,000 room nights in Europe, to Canadian travellers More than 325,000 room n
Slide 13: Transat France
TRANSAT FRANCE MARKET CONDITIONS AND TRANSAT POSITION Demand still weak due to economic conditions Greece, Spain and Italy performed well by replacing North African destinations Transat doing better than its peers Profitable in 2013 and 2014 VACANCES TRANSAT LOOK VOYAGES AND DISTRIBUTION Nearly 80,0
Slide 14: Key Financial Information – Winter
KEY FINANCIAL INFORMATION – WINTER 14
Slide 15: Key Financial Information – Winter: Fuel Price
KEY FINANCIAL INFORMATION – WINTER FUEL PRICE DEPRECIATION (IN CAD) 3.60 Fourth quarter 2014 results release Winter 2014-15 hedging Fuel price : 2.30 CAD program start Winter 2015 - Inventory sold : 41% 3.40 Fuel price : 2.90 CAD Summer 2015 – Small Inventory sold 3.20 3.00 2.80 Summer 2015 hedging
Slide 16: Currency & Fuel Impact on Costs (2015 vs. 2014)
KEY FINANCIAL INFORMATION - WINTER CURRENCY & FUEL IMPACT ON COSTS (2015 VS. 2014) Sun destinations Q1 Q2 Winter Average selling price 2014(1) $1,370 $1,370 $1,370 % Fuel expenses in USD 15% 15% 15% % Other expenses in USD 50% 50% 50% 2015 average - FX Blended Rate 1.11 1.12 1.12 - Fuel Blended Pric
Slide 17: Sun Destinations Market
SUN DESTINATIONS MARKET CAPACITY AND MARKET SHARE (TRANSAT MARKETS) 1,400,000 +18% Winter 2014 Actual Market share – Winter 2015 Forecast 1,200,000 TOTAL SEATS Sun, Winter 2015 -6% WINTER 2014 1,000,000 +9% 3,580,000 8 23 800,000 16 +25% 600,000 % TOTAL SEATS 21 400,000 +64% WINTER 2015 32 200,000 4
Slide 18: Impact on Adjusted EBITDA
KEY FINANCIAL INFORMATION – WINTER IMPACT ON ADJUSTED EBITDA (AS AT DECEMBER 3, 2014) Significant increase in global capacity (+13%) Q1 Q2 Winter Sun destinations • Capacity decreased by 6% • 41% of inventory sold Adj. EBITDA 2014 (24M) (4M) (28M) • Load factor up by 1.2% • Prices up by 1.4% • Costs
Slide 19: Transat Sun Destinations
TRANSAT SUN DESTINATIONS OUTBOUND FROM CANADA Winter 2014: 990,000 travellers (excluding Florida) 4 18 6 8 3 30 % 45 24 % 33 29 19
Slide 20: Sun Destinations: A Distinctive Experience
SUN DESTINATIONS A DISTINCTIVE EXPERIENCE Exclusive hotels Transat Holidays Collections 1 EXCLUSIVE HOTELS ROOM NIGHTS TRANSAT HOLIDAYS DISTINCTION 11 23 Relaxation, discovery and 27 resorts in 2014 peace of mind % % 19 exclusive hotels ROOM NIGHTS MARGIN NOLITOURS LUXURY Exciting packages 15 resort
Slide 21: Key Financial Information – Others
KEY FINANCIAL INFORMATION – OTHERS 21
Slide 22: Financial Position
FINANCIAL POSITION AS AT OCTOBER 31, 2014 As at HIGHLIGHTS October 31, October 31, (in thousands of CAD, except ratios) 2014 vs. 2013 2014 Free cash of $309M ($43M 2013 Actual $ % increase YoY) Actual • Due to profitability higher than Free cash 308,887 265,818 43,069 16.2% CAPEX Cash in trust or ot
Slide 23: Initiatives – Costs & Margins
INITIATIVES – COSTS & MARGINS 2012: Achieved targeted costs reduction of $20M, mainly through headcount and TARGETS general expenses. 2013: Achieved targeted costs reduction of $15M, stemming in part from new 75 operational processes at Air Transat, including the removal of one flight 55 attendant o
Slide 24: Fleet Strategy
FLEET STRATEGY AIR TRANSAT WIDE-BODY W13 S13 W14 S14 W15 S15 Air Transat Base Fleet 21 21 21 21 21 21 Less:Temporarily withdrawn (1) - - (4) - (6) - Less:Sub-Lease (1) - (1) - (1) - Total 20 21 16 21 14 21 1) As announced in July, we signed an agreement for the renewal of six A330 with improved term
Slide 25: Fleet Strategy
FLEET STRATEGY AIR TRANSAT BEFORE IN WINTER 2015 Transat used a mix of wide-body aircraft Transat will migrate towards a fleet of variable (operated by Air Transat) and depending on the size for both wide-body and narrow-body in season, a variable number of narrow-body order to adjust the mix of air
Slide 26: Up-Selling Strategy
UP-SELLING STRATEGY AIR TRANSAT Airline Ancillary Revenues* Revised terms and conditions: more flexibility for a fee (2012) 70 25 Increase in the selling price of Club seats (new configuration) 60 New search engine for selling tours on airtransat.ca 20 50 48.5 38.8 42.9 43.5 Core business ancillary
Slide 27: Our Investment Proposition
OUR INVESTMENT PROPOSITION Summer (Transatlantic market): • Lowest cost producer among market leaders • Strong brand and award-winning products and services • Selling well on both sides of the Atlantic and offering a large array of leisure products (minimize our market exposure) Winter (Sun mark
Slide 28: Annex
ANNEX Kadws Np8a4re Bienvenido Bem-vindo Bem-\ RBIENVENL Willke Welkom\WVillkommenBienvenido® Hos geldiniz Bienvenue\Welkor Benvenuto 28
Slide 29: Mark-to-Market
MARK-TO-MARKET FOURTH QUARTER 2014 Fuel (P&L impact) Currency (B/S impact) TOTAL HIGHLIGHTS (in thousands of C$) MtM Quarterly MtM Quarterly MtM Quarterly variation variation variation Fuel and USD hedging – In line with our bookings for Winter October 31, 2013 (574) 585 3,613 1,273 3,039 1,858 2015
Slide 30: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter Avg. 2004- (in thousands of CAD) 2014 2013 2012 2011 2010 2008 REVENUES 1,965,842 1,912,538 2,041,722 1,911,263 1,852,948 1,482,107 EBITDAR(1) 11,197 22,688 (16,594) 26,440 23,386 110,072 EBITDA(1) (27,826) (18,287) (58,065) (5,470) (4,211)
Slide 31: Annex: Summer Financial Results
ANNEX: SUMMER FINANCIAL RESULTS (5-YEAR HISTORICAL) Summer Avg. 2009- (in thousands of CAD) 2014 2013 2012 2011 2010 2014 REVENUES 1,786,357 1,735,620 1,672,497 1,746,901 1,645,929 1,687,719 EBITDAR(1) 167,867 175,228 121,910 78,907 157,145 131,864 EBITDA(1) 119,661 134,933 75,020 41,967 131,793 93,
Slide 32: Annex: Annual Financial Results
ANNEX: ANNUAL FINANCIAL RESULTS (5-YEAR HISTORICAL) Annual Avg. 2004- (in thousands of CAD) 2014 2013 2012 2011 2010 2014 REVENUES 3,752,198 3,648,158 3,714,219 3,568,164 3,498,877 3,231,252 EBITDAR(1) 179,064 197,916 105,316 105,347 180,531 166,905 EBITDA(1) 91,835 116,646 16,955 36,497 127,582 103
Slide 33: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at April 30 As at October 31 (in thousands of CAD) 2014 2013 2012 2011 2010 2014 2013 2012 2011 2010 Free cash + ABCP investment (fair value) 404,554 336,148 349,457 356,431 281,340 308,887 265,818 198,525 260,327 252,973 Cash in trust or otherwise re
Slide 34: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at January 31 As at July 31 (in thousands of CAD) 2014 2013 2012 2011 2010 2014 2013 2012 2011 2010 Free cash + ABCP investment (fair value) 359,596 247,877 291,234 274,009 220,880 497,072 389,337 318,692 385,778 286,960 Cash in trust or otherwise res
Slide 35: Thank You!
DESPITE A SIGNIFICANT CAPACITY INCREASE IN THE MARKET: 2014 SECOND BEST SUMMER EVER THANK YOU!