Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (December 2013)
26 slides from Transat A.t's investor presentation, December 2013
Slide 1: On Target with 2011-2015 Turnaround Plan
POSTS PROFITABLE YEAR IN 2013 FOLLOWING RECORD SUMMER $100 MILLION MARGIN IMPROVEMENT OVER PREVIOUS YEAR ON TARGET WITH 2011-2015 TURNAROUND PLAN TRANSAT’S INVESTORS PRESENTATION DECEMBER 2013
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE CORPORATION. THESE FORWARD-LOOKING STATEMENTS, BY THEIR NATURE, NECESSARILY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE
Slide 3: Agenda
AGENDA TRANSAT MARKET KEY FINANCIAL RESULTS COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES FLEET STRATEGY RESHAPED EXECUTIVE TEAM WINTER 2014 SUMMER 2014 UP-SELLING STRATEGY FINANCIAL POSITION ROAD MAP FOR 2014 AND 2015 3
Slide 4: 2 Seasons and 3 Main Markets
2 SEASONS AND 3 MAIN MARKETS SUMMER SEASON WINTER SEASON May - October Nov. - April M A South (10%) South (80%) R K Transatlantic (65%) Transatlantic (10%) E T France (25%) France (10%) S MULTI-BRAND, MULTI-CHANNEL 4
Slide 5: Key Financial Results: Annual 2013
KEY FINANCIAL RESULTS ANNUAL 2013 12-month ended October 31 HIGHLIGHTS (vs. 2012) (in thousands of C$) 2013 2012 2013 vs. 2012 Back to profitability Actual Actual $ % $100M margin improvement REVENUES 3,648,158 3,714,219 (66,061) -1.8% • Winter improved by $40M EBITDAR(1) 197,916 105,316 92,600 87.9
Slide 6: Key Financial Results: Fourth Quarter 2013
KEY FINANCIAL RESULTS FOURTH QUARTER 2013 4th quarter ended October 31 HIGHLIGHTS (vs. 2012) (in thousands of C$) 2013 2012 2013 vs. 2012 Best fourth quarter ever Actual Actual $ % Transatlantic markets REVENUES 808,616 763,441 45,175 5.9% • Good balance between supply & demand EBITDAR(1) 100,327 77
Slide 7: Cost Reduction and Margin Improvement Initiatives
COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES TARGETS 2012: Achieved targeted cost reductions of $20M, mainly through reductions in headcount and general expenses. 2013: Achieved targeted cost reductions of $15M, stemming in part from new operational processes at Air Transat, including the remov
Slide 8: Air Transat Fleet Strategy
AIR TRANSAT FLEET STRATEGY WIDE-BODY W13 S13 W14 S14 W15 S15 Air Transat Base Fleet 21 21 21 21 21 21 Less:Temporarily withdrawn(1) - - (4) - (6) - Less:Sub-Lease (1) - (1) - (1) - Total 20 21 16 21 14 21 1) As announced in July, we signed an agreement for the renewal of six A330 with improved terms
Slide 9: Reshaped Executive Team
RESHAPED EXECUTIVE TEAM CORE BUSINESS UNITS Jean-Marc Eustache President and CEO Jean-François Lemay Annick Guérard Patrice Caradec Airline Sun destinations and Tour Operating Transatlantic Distribution (France) All core operating units All support services now Merged all French business reporting d
Slide 10: Global Capacity – Sun Destinations
GLOBAL CAPACITY – SUN DESTINATIONS WINTER 2014 (AS OF DECEMBER 12, 2013) Winter Capacity Estimated capacity Final capacity Variation Company 2013-2014 2012-2013 # % Sunwing / Signature Vacations 1,105,000 1,015,000 90,000 9% Transat A.T. Inc.(1) 1,020,000 990,000 30,000 3% WestJet Vacations 770,000
Slide 11: Key Financial Results: Winter 2014
KEY FINANCIAL RESULTS WINTER 2014 (AS OF DECEMBER 12, 2013) Winter season ended April 30 Sun destinations (in thousands of C$) 2014 2013 2012 Avg. 2004-2008 • Our capacity up by 3% Outlook Actual Actual Actual • 41% of inventory sold • Load factor down by 2% REVENUES 1,912,538 2,041,722 1,482,107 •
Slide 12: Sun Destinations
PRODUCT AND CUSTOMER EXPERIENCE SUN DESTINATIONS THE SUN DESTINATIONS MARKET TRANSAT ‘ALL-INCLUSIVE’ STRATEGY Highly competitive market posing differentiation Differentiated experience through: and seasonality challenges • Exclusive properties Lifestyle discretionary purchase, no easy substitution •
Slide 13: Differentiated Experience: Exclusive Properties
ALL-INCLUSIVE SUN & SAND DIFFERENTIATED EXPERIENCE: EXCLUSIVE PROPERTIES EXCLUSIVE ROOM HOTELS NIGHTS IN WINTER 2013, TRANSAT HAD 62 14% EXCLUSIVE HOTELS (OUT OF 452) SOLD 38% UNDER ITS TWO MAIN BRANDS, REPRESENTING 38% OF 2.7M ROOM NIGHTS SOLD TRANSAT HOLIDAYS NOLITOURS Mainly 4- to 5-star hotels:
Slide 14: Differentiated Experience: Branded Collections
ALL-INCLUSIVE SUN & SAND DIFFERENTIATED EXPERIENCE: BRANDED COLLECTIONS VOLUME MARGIN IN WINTER 2013, FOR TRANSAT HOLIDAYS 19% 46% AND NOLITOURS, DISTINCTION & LUXURY COLLECTIONS ACCOUNTED FOR 19% OF VOLUME AND 46% OF MARGIN DISTINCTION LUXURY OTHER COLLECTIONS (24 clubs in 2013 to 26 in (12 clubs i
Slide 15: Global Capacity - Transatlantic
GLOBAL CAPACITY - TRANSATLANTIC SUMMER 2014 (AS OF DECEMBER 12, 2013) Summer Capacity Estimated capacity Final capacity Variation Company 2014 2013 # % Air Canada(1) 1,635,000 1,405,000 230,000 16% Transat A.T. Inc. 885,000 870,000 15,000 2% Air France-KLM 540,000 540,000 0 0% British Airways 345,00
Slide 16: Key Financial Results: Summer 2014
KEY FINANCIAL RESULTS SUMMER 2014 (AS OF DECEMBER 12, 2013) Summer season ended October 31 Too early to make forecast (in thousands of C$) 2014 2013 2012 Avg. 2009-2013 Outlook Actual Actual Actual Transatlantic REVENUES 1,735,620 1,672,497 1,667,991 • Our capacity up by 2% EBITDAR(1) 175,228 121,91
Slide 17: Transatlantic Market: Air and Land
PRODUCT AND CUSTOMER EXPERIENCE TRANSATLANTIC MARKET: AIR AND LAND Europe: largest tourism market in the world CAPACITY Transat (more than 50% of travelers inbound & outbound) SUMMER Air France 3.8M seats in summer 2013 between Canada and Europe British Airways 2013 Air Canada Other TRANSAT STRATEGY
Slide 18: Transatlantic Market: Air and Land
PRODUCT AND CUSTOMER EXPERIENCE TRANSATLANTIC MARKET: AIR AND LAND EACH YEAR, TRANSAT SELLS: More than 100,000 tours to destinations all 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 ro
Slide 19: Air Transat Up-Selling Strategy
AIR TRANSAT UP-SELLING STRATEGY ANCILLARY REVENUES Revised terms and conditions: more flexibility for a fee (2012) IN DOLLAR / Coming in Q1 2014: variable airfares on Air Transat PESSENGER Core business ancillary revenues: more than $40M/year • Seat selection • Option Flex introduced in winter 2013
Slide 20: Financial Position
FINANCIAL POSITION AS OF OCTOBER 31, 2013 As at HIGHLIGHTS Oct. 31, Oct. 31, (in thousands of C$, except ratios) 2013 vs. 2012 Generated $70M of free cash in 2013 2013 2012 • Income tax payable due by the end of Actual Actual $ % December ($20M) Free cash + ABCP investment (fair 265,818 198,525 67,2
Slide 21: Road Map for 2014 and 2015
ROAD MAP FOR 2014 AND 2015 Creating Shareholder Value • On target with our 2011-2015 turnaround plan • Significant cost savings from internalization of narrow-body and renewed wide-body leases to kick in 2014, with full effect in 2015 • In the process of developing 2015-2017 strategic plan, includin
Slide 22: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 1,912,538 2,041,722 1,911,263 1,852,948 2,006,331 EBITDAR(1) 22,688 (16,594) 26,440 23,386 57,554 EBITDA(1) (18,287) (58,065) (5,470) (4,211) 30,632 As % of revenues -1.0% -2.8% -0.3% -0
Slide 23: Annex: Summer Financial Results
ANNEX: SUMMER FINANCIAL RESULTS (5-YEAR HISTORICAL) Summer (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 1,735,620 1,672,497 1,746,901 1,645,929 1,539,010 EBITDAR(1) 175,228 121,910 78,907 157,145 90,128 EBITDA(1) 134,933 75,020 41,967 131,793 62,763 As % of revenues 7.8% 4.5% 2.4% 8.0% 4.1
Slide 24: Annex: Annual Financial Results
ANNEX: ANNUAL FINANCIAL RESULTS (5-YEAR HISTORICAL) Annual (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 3,648,158 3,714,219 3,568,164 3,498,877 3,545,341 EBITDAR(1) 197,916 105,316 105,347 180,531 147,682 EBITDA(1) 116,646 16,955 36,497 127,582 93,395 As % of revenues 3.2% 0.5% 1.0% 3.6% 2
Slide 25: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at April 30 As at October 31 (in thousands of C$) 2013 2012 2011 2010 2009 2013 2012 2011 2010 2009 Free cash + ABCP investment (fair value) 336,148 349,457 356,431 281,340 320,612 265,818 198,525 260,327 252,973 251,953 Cash in trust or otherwise res
Slide 26: Thank You!
POSTS PROFITABLE YEAR IN 2013 FOLLOWING RECORD SUMMER $100 MILLION MARGIN IMPROVEMENT OVER PREVIOUS YEAR ON TARGET WITH 2011-2015 TURNAROUND PLAN THANK YOU !