Aeroflot · RUS:AFLT
Aeroflot — 9M 2015 Earnings Presentation
43 slides from Aeroflot's earnings presentation, Nov 30, 2015
Slide 1: Aeroflot Group 9 Months 2015 Financial Results
Aeroflot Group 9 Months 2015 Financial Results Shamil Kurmashov, Deputy CEO for Finance, Network and Revenue Management Giorgio Callegari, Deputy CEO for Strategy and Alliances Moscow, Russian Federation 30 November 2015 1
Slide 2: Disclaimer
Disclaimer This document has been prepared by PJSC “Aeroflot” (the “Company”). By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following. This document does not constitute or form part of any advertisement of securities, any offer or i
Slide 3: 9M 2015 Highlights
9M 2015 Highlights Aeroflot Group • Aeroflot Group carried 3.5 million more passengers in 9M 2015 compared to 9M 2014 (+13.3% passenger traffic; stable seat load factor of 79.3%). • Expansion in the number of customers resulted in market share increase by 5.0 p.p. from 30.2% in 9M 2014 to 35.2% in 9
Slide 4: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 4
Slide 5: Russian Air Transportation Market
Russian Air Transportation Market 2010 – 2014 3Q 2015/2014 9M 2015/2014 150.0 International Routes 7.8% 130.0 (2.6%) Domestic Routes 150.0 110.0 111.8 87.7 85.5 103.7 90.0 (0.8%) Russian Total 91.6 Growth CAGR Growth Growth Passenger100.0 70.5 80.1 FY13-14 FY09-14 70.0 3Q 14-15 52.3 44.3 9M 14-15 65
Slide 6: Aeroflot Group Market Position
Aeroflot Group Market Position Increase in Aeroflot Group Passenger Number Faster Growth vs. the Market1 (PAX) million PAX, 9M 2015 Change, y-o-y 17.7% 2 13.5% 14.3% 15.1% 14.1% 13.3% 13.0% 13.3% +3.5 10.6% 10.6% 0.3 % (1.1)% (0.7)% 30.1 (0.6)% (2.6)% (3.9)% (4.6)% (3.2)% (8.1)% (7.5)% (5.5)% (5.2)%
Slide 7: Capacity Optimization by Russian and Foreign Airlines
Capacity Optimization by Russian and Foreign Airlines Russian Carriers Capacity Dynamics1 (ASK) Russian Peers Capacity Optimization (ASK phase out) Change, y-o-y 9M 2015 vs. 9M 2014 13.0% 10.3% 9.3% 8.3% 7.6% 6.1% 6.4% 5.6% 6.0% 5.7% Transaero 23.4% 15,072 mln UTAir (3.4)% ASK phased (5.1)% (5.0)% (
Slide 8: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 8
Slide 9: Multi-Brand Strategy
Multi-Brand Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth • Flagship carrier • Moscow 9M 2015 9M 2015 (Sheremetyevo) y-o-y 10.3% Premium • Premium product 19.7 65.4% carrier • High income and middle class • Hub and spoke model • Focus on direct and transit routes via • Sai
Slide 10: Rossiya: the New Vision
Rossiya: the New Vision Overview of the Initiative Current Fleet Structure and Targeted Fleet As of • Unite Rossiya, Donavia and Orenair under one brand-name Aircraft Aircraft type Target 30-Sep-2015 Description • Focus on regional operations in the middle price segment with selective exposure to in
Slide 11: Low Cost Carrier - Pobeda
Low Cost Carrier ‒ Pobeda Overview of Pobeda Pobeda’s Network • Operating from Vnukovo airport (3rd Moscow airport by PAX) 35 Arkhangelsk • Network comprising 18 unique destinations or 22 routes (as of Surgut Surgut Khanty-Mansiysk September 30) 60 Network 4 40 • In addition to scheduled destination
Slide 12: Structural changes in the industry and within Aeroflot Group
Structural changes in the industry and within Aeroflot Group 1 • New slots and designations for 56 routes out of 141 international routes serviced by Transaero previously (until November 2016 with prolongation option) New markets (Kazakhstan) 56 New routes Increased flight frequencies to congest
Slide 13: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network – 2015-2016 Winter Schedule (9M 2015, y-o-y) Murmansk Arkhangelsk Novy Urengoy 20.0 %Russia St. Petersburg Syktyvkar Surgut Nizhnevartovsk Yakutsk Magadan Stockholm Ekaterinburg Tomsk Kaliningrad MOSCOW Tyumen Krasnoyarsk Om
Slide 14: Transit Strategy
Transit Strategy Increasing Frequency of Flights1 Improves …and Supports Aeroflot’s Transit Traffic Growth in Connectivity… Sheremetyevo CAGR Share of Transit of Aeroflot airline in Sheremetyevo by type Connectivity ratio 2012-2014 44.9% 11.0x 12.7x 13.5x 14.0x 39.2% 5.6% 35.5% 32.7% Average weekly
Slide 15: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 15
Slide 16: Operating Data - 3Q & 9M 2015
Operating Data – 3Q & 9M 2015 Aeroflot airline Aeroflot Group 3Q 3Q 9M 9M 3Q 3Q 9M 9M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2014 2015 2014 2015 2014 2015 2014 2015 Indicator Unit Passenger Traffic th PAX 6,871 7,689 11.9% 17,833 19,669 10.3% 10,865 12,199 12.3% 26,531 30,054 13.3% International Routes th PAX 3,49
Slide 17: 3Q 2015 Traffic and Capacity Dynamics (Y-o-Y)
3Q 2015 Traffic and Capacity Dynamics (Y-o-Y) Americas Russia CIS 3.5% 35.3% 35.6% 3.5% 32.0% 2.8 p.p. 0.9% 1.6% 0.1% (1.0)% (1.6) p.p. Passengers RPK ASK SLF (2.4) p.p. carried Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried Europe Middle East Asia 2.2 % 4.1 p.p. 11.5% 1.1 p.p. 9.4% 5
Slide 18: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 18
Slide 19: Revenue Analysis
Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUBm)1 9M 2015 9M 2015, % of total 3Q 2014 3Q 2015 Y-o-Y Region 9M 2014 9M 2015 Y-o-Y scheduled revenue Scheduled Passenger Flights Charter 96.1% Passenger 35,806 53,068 48.2% Russia 78,542 110,490 40.7% 42.8% Flig
Slide 20: Scheduled Flights Revenue Units
Scheduled Flights Revenue Units 3Q 2015 Yield (PAX Revenue / RPK) 3Q 2015 RASK (PAX Revenue / ASK) RUB RUB 40.8% 44.8% 26.5% 27.2% 12.3% 9.3% 4.18 3.53 3.31 3.88 3.09 3.59 2.82 3.19 3.07 2.44 2.60 2.97 Domestic International Total Domestic International Total 9M 2015 Yield (PAX Revenue / RPK) 9M 201
Slide 21: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 21
Slide 22: Aeroflot Group Fleet Overview
Aeroflot Group Fleet Overview Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 Aircraft Average Age Azul 4.2 10.4 4.5 8.8 Hainan Airlines 4.5 7.7 Lion Air 4.7 7.0 6.9 Garuda Indonesia 4.9 Sichuan Airlines 5.1 251 260 209 222 232 Xiamen Airlines 5.1 China Eastern Airlines 5.3 Qatar Airw
Slide 23: Aeroflot Group Fleet Structure
Aeroflot Group Fleet Structure Aeroflot Group’s Total as of Finance Operating Total as of Change vs. Type airline subsidiaries 30-Sep-2015 lease lease 31-Dec-2014 31-Dec-2014 Boeing 767 - 3 3 - 3 3 - Long-haul Airbus A330 22 - 22 8 14 22 - Boeing 777 13 3 16 10 6 13 3 Total 35 6 41 18 23 38 3 Airbus
Slide 24: Aeroflot Group Fleet Order and Phase-Out Schedule
Aeroflot Group Fleet Order and Phase-Out Schedule Total Aircraft Delivery Schedule in Accordance with Existing Contracts Type of Aircraft Delivered during 9M 2015 Q4 2015 2016 2017 2018 2019 - 2024 Long-haul 3 - 2 1 5 17 B777 3 - 2 1 - - A350 - - - - 5 17 Medium-haul 12 2 25 34 20 0 A319 1 - - - - -
Slide 25: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 25
Slide 26: Financial Highlights
Financial Highlights RUBm 3Q 2014 3Q 2015 Change 9M 2014 9M 2015 Change (where applicable) Revenue 96,417 133,043 38.0 % 236,698 309,510 30.8 % EBITDAR1 23,523 45,935 95.3 % 40,180 79,187 97.1 % EBITDAR1 margin 24.4 % 34.5 % 10.1 p.p. 17.0 % 25.6 % 8.6 p.p. EBITDA 18,529 34,535 86.4 % 23,559 47,846
Slide 27: Revenue Analysis
Revenue Analysis 30.8% 51,579 3,681 17,553 RUBm 309,510 236,698 9M 2014 Volume Currency Pricing 9M 2015 and other • Positive contribution of volume and RUB devaluation to revenue growth was reinforced by stronger fare policy in hard currency terms notwithstanding the volatile macro environment 27
Slide 28: Cost Analysis
Cost Analysis Change Change Operating Expense % of total operating 3Q 2014 3Q 2015 Change ex. FX & (RUB million If not stated otherwise) 9M 2014 9M 2015 Change ex. FX & expense (9M 2015) NRE NRE 24,502 26,287 7.3 % (18.8)% Fuel 64,738 71,001 9.7 % (19.3)% 26.0% 56,869 75,814 33.3 % 5.3 % Opex (ex. F
Slide 29: Group Unit Costs
Group Unit Costs Cost per ASK (RUB) 3Q 2014 3Q 2015 Change Operating Expense 9M 2014 9M 2015 Change 0.74 0.75 1.4 % Fuel 0.74 0.76 1.9 % 1.71 2.16 26.0 % Opex (ex. Fuel): 1.81 2.15 18.4 % 0.53 0.62 16.9 % Aircraft, Traffic and Passenger Servicing 0.52 0.60 15.4 % 0.42 0.38 (8.9)% Staff 0.44 0.43 (1.
Slide 30: Effective Cost Management and Productivity Gains
Effective Cost Management and Productivity Gains Flight Hours Fuel Consumption per ASK Fuel Consumption per TKM (thousand hours) (gr/ASK) (gr/TKM) 6.0% (1.4)% (1.8)% (2.9)% (2.8)% 649.9 613.3 23.3 23.0 23.5 23.1 195.8 197.0 190.1 191.6 3.5% 229.9 237.9 3Q 2014 3Q 2015 9M 2014 9M 2015 3Q 2014 3Q 2015
Slide 31: EBITDA Evolution
EBITDA Evolution (RUBm) Net FX ∑=(157) RUBm 51,579 (51,736) Net volume and price Net effect ∑=21,234 RUBm ∑=3,207 RUBm 12,519 (1,606) (3,216) (2,076) 13 (2,427) 4,221 3,681 5 17,553 52,067 47,846 23,559 NRE*** FX benefit Staff** Maintenance Fuel** Other OPEX** ReportedEBITDA 9M 2015 FX drag Reported
Slide 32: Operating Income Evolution
Operating Income Evolution (RUBm) Net FX ∑=(157) RUBm 51,579 (51,736) Net volume and price ∑=21,234 RUBm Net effect ∑= 2,066 RUBm 12,519 (1,606) (3,216) (2,076) 4,221 (1,141) 13 (2,427) 3,681 5 17,553 36,808 41,029 13,662 Maintenance FX benefit Staff** FX drag Fuel** Reported Operating Income 9M 201
Slide 33: Adjusted Operating and Net Income Analysis
Adjusted Operating and Net Income Analysis 9M Adjusted Operating Income Build-Up (RUBm) 3,653 567 41,029 36,808 Reported Operating Income 9M 2015 Pre-term return of aircraft at Orenair FA write off at Vladavia Adjusted Operating Income 9M 2015 and Rossiya Airlines 9M Adjusted Net Income Build-Up (RU
Slide 34: Hedge accounting and Finance income/costs
Hedge accounting and Finance income/costs P/L Other RUBm 9M 2015 Change in Ineffective Actual Comprehensive Instrument Fair Value Portion Cost Income Statement of Profit or Loss Currency Financial income 7,987 (1,255) - - - options Foreign exchange gain 2,437 Fuel options 3,982 1,226 (23,171) 6,578
Slide 35: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 35
Slide 36: Leverage and Liquidity
Leverage and Liquidity Debt Profile Net Debt / LTM EBITDA¹ RUBm 31-Dec-2014 30-Sep-2015 Change 5.9 4.7 Borrowings 24,203 40,311 66.6% 3.6 3.3 Finance Lease Liabilities 149,278 154,986 3.8% Pension Liabilities 659 734 11.4% Customs Duties 169 - n/a 30-Sep-2014 31-Dec-2014 30-Jun-2015 30-Sep-2015 Tota
Slide 37: Operating Free Cash Flow
Operating Free Cash Flow (RUBm) 33,201 (2,683) (6,744) (3,744) (5,022) 3.7% (5,486) 54,184 5,465 (2,437) 51,501 10,035 30,505 29,418 7,920 Profit Before D&A Interest Foreign Other Adj. Cash Flows Working Net Cash Net Capital Deposit Transaero Net Pre- Free Cash Free Cash Income Tax Expense Exchange
Slide 38: Agenda
1. Market Update 2. Monthly Traffic Statistics 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 38
Slide 39: Growth Potential of Russian Air Transportation Market
Growth Potential of Russian Air Transportation Market Russian Market Remains Significantly Underpenetrated Domestic Passenger Traffic (Russian Carries) Airline PAX per capita per year1 million PAX 0.3 Domestic PAX per capita 17.9% 3.4 10.8% 16.1% 8.1% 2.7 12.0% 46.3 22.6% 41.2 39.2 35.4 2.1 32.7 1.6
Slide 40: Aeroflot Group YTD Monthly Operating Results
Aeroflot Group YTD Monthly Operating Results Monthly Passenger Traffic (m PAX) Monthly Passenger Turnover (bn pkm) 9M 2015: +13.3% Y-o-Y 9M 2015: +7.7% Y-o-Y September 2015: +13.3% Y-o-Y September 2015: +6.3% Y-o-Y 6.0% 6.8% 6.3% 10.6% 13.0% 13.3% 6.3% 10.6% 10.3 10.5 14.1% 4.2 4.3 7.9% 9.8 9.8 9.6%
Slide 41: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Orenair Donavia Aurora Vladavia Pobeda Total Passenger Traffic, 9M 2015 3,850 2,301 1,203 868 - 2,163 10,385 thousand PAX 9M 2014 3,970 2,500 1,361 795 5 68 8,698 Y-o-Y (3.0)% (8.0)% (11.6)% 9.3% - - 19.4% Passenger Turnover, 9M 2015 7,129 5,074 1,59
Slide 42: Key Financial Data for Aeroflot Group
Key Financial Data for Aeroflot Group RUBm, Unless 3Q 2014 3Q 2015 Change 9M 2014 9M 2015 Change Otherwise Stated Revenue 96,417 133,043 38.0 % 236,698 309,510 30.8 % RPK1 (m pkm) 28,181 29,975 6.4 % 69,109 74,453 7.7 % Yield2 (RUB/pkm) 2.99 3.87 29.4 % 2.93 3.52 20.3 % EBITDAR3 23,523 45,935 95.3 %
Slide 43: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 43