Aeroflot · RUS:AFLT
Aeroflot — Non-Deal Roadshow (January 2020)
54 slides from Aeroflot's roadshow presentation, January 2020
Slide 1: January 2020
JANUARY 2020
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: Aeroflot Russian Airlines
AEROFLOT#* te Ruy | ——e
Slide 4: Airlines of Aeroflot Group
Airlines of Aeroflot Group Business Flight Aircraft Focus International RPK PAX Positioning model range fleet airport Share1 contribution1 Scheduled flights • Short- to long-haul • Narrow-body aircraft • Moscow SVO Premium product • Flagship carrier • Wide-body aircraft • Krasnoyarsk • Hub and spoke
Slide 5: Aeroflot Russian Airlines
¥ AEROFLOT 2” ssi = Russian Airlines ——
Slide 6: Competitive Dynamics on Russian market
Competitive Dynamics on Russian market Passenger Traffic: Russian Air Transportation Market Growing Market Share (PAX) mn PAX ml PAX 9M 2019 CAGR: 5.2% 137.0 123.7 +7.6% Other Russian Airlines 111.8 114.0 41.0% 107.2 21.8% 105.9 +10.8 p.p. 102.8 -9.1 p.p. 68.1 57.7 114.0 Foreign Airlines million 13.
Slide 7: Russian Market Continues its Robust Growth
Russian Market Continues its Robust Growth Passenger traffic, mn PAX CAGR +6.5% CAGR 189 +10.2% 147 137 124 112 107 104 103 92 80 70 57 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Reported Forecast Sources: FAVT, internal analysis 1 Structural trends 2 Evolving airport
Slide 8: Trends Supporting Industry Structural growth
Trends Supporting Industry 1 Structural (long-term) growth trends 2 Evolving airport infrastructure 3 Stimulation effect of LCCs 8
Slide 9: Long-term Market Growth Drivers
1 Long-term Market Growth Drivers 1 We remain constructive on Aeroflot’s prospects in the long-term, viewing it as well- 3 positioned to benefit from long-term growth in air traffic Recovering passenger traffic Passenger traffic Domestic air and railways PAX, mn 139 mln Domestic air transportation P
Slide 10: Infrastructure: Upgrade Over the Recent Decade
2 Infrastructure: Upgrade Over the Recent Decade Russia’s comprehensive modernization of regional airport network in the last decade… Volgograd, 2018 Nizhniy Novgorod, 2017 Novosibirsk, 2015 Kazan, 2012 1.1mn 1.3mn 1.6mn 1.3mn New Perm, 2017 Rostov-on-Don, 2017 Samara, 2014 Vladivostok, 2012 termina
Slide 11: Stimulation Effect of LCCs
3 Stimulation Effect of LCCs Capacity at selected destinations: Aeroflot, Pobeda, Others Since its establishment in December 2014 Pobeda has expanded to ~351 Mn Seats destinations operated by Aeroflot from 5 Moscow. 4 Other carriers: CAGR +1% 2 3 2 Pobeda: CAGR +21% 3 1 Aeroflot: CAGR +10% 2 0 Jul-1
Slide 12: Case Study 1: Moscow – Yekaterinburg Route
3 Case Study 1: Moscow – Yekaterinburg Route Yekaterinburg - largest city in the Urals - 2 hours East from Moscow by plane Pobeda launched service in December 2014 Aeroflot and Pobeda have 66 and 16 flights per week, respectively Aeroflot and Pobeda networks focus on different market segments due to
Slide 13: Case Study 2: Moscow – Milano Route
3 Case Study 2: Moscow – Milano Route Italy, and Milano in particular, is a sizable international market from Russia Pobeda launched service in December 2015 to secondary airport (Bergamo) Aeroflot operates 35 flights per week to Malpensa a/p, Pobeda - 10 to Bergamo a/p … providing for no cannibaliz
Slide 14: Aeroflot
AEROFLOT* —se Rus Se
Slide 15: Key Strategic Goals for 2023
Key Strategic Goals for 2023 1 Carry 90-100 mn passengers 2 Increase international transit traffic to 10-15 mn 3 Launch 3 new regional bases and 1 international hub 4 Enhance digitalisation of the Group 15
Slide 16: Strategic Goal: 90-100 mn PAX in 2023
1 Strategic Goal: “90-100 mn PAX in 2023” 90–100 mn passengers in 2023 mn PAX mn PAX 52 36 mn PAX mn PAX 3 2023 25-30 1.6 2018 ~4.0x 2023 2018 11.1 10-15 7.2 2023 2-3X International transit will increase 2-3x to 2018 10-15 mn PAX 2023 2018 • Pobeda to benefit from large underpenetrated Key PAX drive
Slide 17: Strategic Goal 90-100 mn PAX: Execution
1 Strategic Goal “90-100 mn PAX”: Execution Increase in Aeroflot Group passenger traffic… … with the highest growth rates posted by Pobeda LCC mn PAX mn PAX + ~9-10% +11.1% + ~40% +10.6% +46.4% ~61 +56.8% ~10 55.7 50.1 46.7 7.6 42.2 7.2 5.2 4.6 2017 2018 2019E 9M 2018 9M 2019 2017 2018 2019E 9M 2018
Slide 18: Strategic Goal International Transfer (1/2)
2 Strategic Goal “International Transfer” (1/2) Aeroflot has a successful track records of international … and maintains leading positions on sizable O&D routes transfer development… between Europe and Asia 2.0х – 3.1x Shanghai 1 Istanbul 2.6х 4.8 10-15 Shanghai 1 Amsterdam 1.9 mn mn mn Beijing 1 Pr
Slide 19: Strategic Goal International Transfer (2/2)
2 Strategic Goal “International Transfer” (2/2) SVO location on great-circle path between key Asian and … provides for a time saving when flying with Aeroflot European cities… via Moscow… From/To Via Paris Rome London Vienna Stockholm London - Bangkok Madrid - Shanghai SVO 14:22 14:17 14:34 13:13 12
Slide 20: Strategic Goal International Transfer: Execution
2 Strategic Goal “International Transfer”: Execution Increasing scale of …backed by improving quality of … and expansion of international transfer… our SVO hub… international network Number of international transfer PAX, mn Average number of connecting flights per unique Number of routes (Aeroflot +
Slide 21: Strategic Goal Regional Development
3 Strategic Goal “Regional Development” Increase in regional traffic ~2x1 St Petersburg 2х 2023 mn 2018 mn 19 passengers Moscow 9 passengers Sochi Ekaterinburg Novosibirsk Krasnoyarsk New bases and hubs Khabarovsk 2х Bases – aircraft overnighting bases Hubs – wave transit schedule 2х Increase in pas
Slide 22: Strategic Goal Regional Development: Execution
3 Strategic Goal “Regional Development”: Execution 1 2 The project launched to develop an international hub in Aeroflot Group is actively expanding routes from Russian Krasnoyarsk regions 13 new regional destinations in 2019 (incl. 7 destinations from Sochi) Working Group set up Sales started Cooper
Slide 23: Strategic Goal Digital Transformation
4 Strategic Goal “Digital Transformation” 1 Industry trends 2 Technology trends 3 Managerial trends Personalization (offering, passenger experience) Increasing importance of mobile devices Data management IFE (In-Flight Entertainment) Cloud technologies Cyber security New technologies in the airport
Slide 24: Strategic Goal Digital Transformation: Execution
4 Strategic Goal “Digital Transformation”: Execution Higher online sales Higher sales Continued roll-out of IT projects and on Aeroflot website via mobile apps implementation of new technologies Share in money terms, % Share in money terms in overall online sales, % New functions of mobile applicati
Slide 25: Developments and Development Plans
ENTS AND DEVELOPMENT PLANS ¢ AEROFLOT* —se Rus Se
Slide 26: Aeroflot Group: Key Developments 2019-2020
Aeroflot Group: Key Developments 2019-2020 Ongoing infrastructure upgrade in SVO: separate operations from South and North Terminal B: Domestic flights 3rd runway: Opened Terminal C: Expected opening Operational development of the airlines KJA hub Network Development Airlines transformation Enhancin
Slide 27: Aeroflot's Growth Supported by Development of SVO
A Aeroflot’s Growth Supported by Development of SVO Runway-3 Terminal C Terminal B 3rd runway increased operational capacity Terminal C-2 Cargo Terminals from 60-65 to 90 aircraft movements Overall capacity to exceed 80 mn by 2026 Runway-1 Runway-2 Service improvement Recent additions Future plans T
Slide 28: Krasnoyarsk: New Home for Aeroflot
B Krasnoyarsk: New Home for Aeroflot 1 Where is Krasnoyarsk? 2 Why Aeroflot selected Krasnoyarsk City population Region GRP Krasnoyarsk Frankfurt Moscow 1.1 mn 1.8 trn RUB Vladivostok Bejing NO base airline 3 Is sufficient infrastructure in place? 4 Is there a development plan? KRASNOYARSK 2020 2023
Slide 29: Krasnoyarsk: Located at the Very Heart of Russia
C Krasnoyarsk: Located at the Very Heart of Russia 3,350 km Krasnoyarsk 3,150 km Moscow Vladivostok Helsinki Stockholm Krasnoyarsk London Amsterdam Petersburg Berlin Moscow Irkutsk Warsaw Frankfurt Prague Paris Munich Harbin Vladivostok Rome Beijing Seoul Tokyo Chengdu Shanghai Hong Kong Range Hanoi
Slide 30: Krasnoyarsk: Well-developed Infrastructure
C Krasnoyarsk: Well-developed Infrastructure 3,700 x 60 12 New Experienced 1980 2017 meters operations taxiway operator Year of New terminal Runway Current runways Infrastructure construction opened parameters capacity per hour development to double runway capacity Airport has brand new facilities a
Slide 31: Krasnoyarsk: Network
C Krasnoyarsk: Network New destinations to be launched in the first year will compliment existing flights of Aeroflot, Rossiya and Aurora Network: 2023 vision Existing network Domestic point-to-point and Frequency transfer flows Airline 28 flights from St. Petersburg Yekaterinburg Tyumen Moscow Toms
Slide 32: SVO: Performance of Routes Launched in 2018/2019
D SVO: Performance of Routes Launched in 2018/2019 Russia Europe Mid-Haul CIS Mid-Haul World Long-Haul 7 routes lunched 5 routes launched in 2 routes launched 2 routes launched in Winter 2018/19 Winter 2018/19 and Summer in Winter 2018/2019 In Winter 2018/19 Network contribution Further ramp-up poss
Slide 33: New Route Launch: Moscow – Ljubljana Case
D New Route Launch: Moscow – Ljubljana Case Analysis of the Market and Modeling Seasonality Analysis Ranking of key markets with connection Market MOW–LJU, average PDEW per month to Moscow by PDEW over 12 months 64 PAX PDEW 65 64 PAX (57 PAX P-t-P + 7 PAX with 2 stops) Jan 16 Apr 16 Jul 16 Oct 16 Ja
Slide 34: New Services to be Launched in 2020
D New Services to be Launched in 2020 Mumbai Osaka Chengdu Goa Singapore Traffic rights Flight Launch Network expansion in 2020 will be concentrated in the long-haul segment with a number of milestone destinations in Asia that will feed our European network 34
Slide 35: Rossiya Airlines: Yesterday, Today and Tomorrow
E Rossiya Airlines: Yesterday, Today and Tomorrow Before 2016 2016 - 2018 2019 and onwards Operational entities and brands 01 Presence in LED, VKO, DME, LED: Scheduled regional LED: Scheduled regional regional airports product product 02 Mid-price product and VKO: Scheduled operations Business segme
Slide 36: Introduction of Airbus A350-900 in 2020
F Introduction of Airbus A350-900 in 2020 Airbus 330 Airbus 350 Range up to 12,000 km Range up to 15,000 km 300-350 seats 250-290 seats MTOW 280 t MTOW 242 t Lower fuel consumption and CO2 emission per seat In 2020 Aeroflot will introduce a brand new Airbus A350XWB aircraft which will gradually repl
Slide 37: A350/A330 Phase-in/Phase-out Plan
F A350/A330 Phase-in/Phase-out Plan Aeroflot Airline Wide-body Fleet Vision Comments A350-900 will replace A330 fleet in the 300 Potential WB aircraft growth in wide- seater capacity segment body segment 22 11 22 A350-900 will provide New wide- next stage of passenger 22 А350-900 body aircraft type
Slide 38: A350-900 Configuration
F А350-900 Configuration 28 24 264 316 business + comfort + economy = seats The configuration of A350 will further improve a long-haul proposition allowing our passengers to enjoy superior product in all classes 38
Slide 39: Increasing Capital Efficiency
G Increasing Capital Efficiency Aeroflot’s Boeing 777-300 Reconfiguration to Improve Value Intergroup redistribution of Rossiya’s B737 fleet to back continued Proposition and Create Unified Long-Haul Product Pobeda’s growth B777-300 aircraft fleet to be reconfigured in 2020-2022 4 Seats: 189 Full Ec
Slide 40: Introduction of Lite Fares
H Introduction of “Lite” Fares Lite fare introduction rationale Certain passengers do not Business trips Short tourist trips Family holidays need baggage allowance Moscow Frankfurt Moscow Geneva RUB Customer Minimum RUB Customer Minimum For these groups airlines choice Lite fare fare (with baggage)
Slide 41: Low Cost Carrier - Pobeda
Low Cost Carrier - Pobeda
Slide 42: Pobeda's 5 Years in the Sky: Key Milestones
Pobeda’s 5 Years in the Sky: Key Milestones First flight from Moscow Development of international Cumulative number of customers since the launch close to 20 mln to Volgograd on network and intra-regional flights Pobeda accelerates growth: delivery of 8 Boeing 737NG December 1 Pobeda enter
Slide 43: Pobeda's Way of Doing Business
Pobeda’s Way of Doing Business 01 02 03 04 https:// Young and efficient fleet Steadily expanding route Low-cost online distribution Sustainably low of Boeing 737-800 NG network via pobeda.aero operating costs 08 07 06 05 Industry–leading aircraft High seat density Growing ancillary Outsourced utiliz
Slide 44: Route Network
Route Network Route network for summer 2019 Network highlights Russia Pobeda’s network for summer 2019 comprises 108 routes, double Ulan-Ude compared to summer 2018 Mongolia Petrozavodsk Surgut – 67 domestic routes Saint Petersburg Kirov Perm Tomsk Riga Cheboksary Tyumen Moscow Kemerovo Ekaterinburg
Slide 45: Key Operational Highlights
Key Operational Highlights Customers (thousand) Highlights In 5 years Pobeda became Top-5 airline in Russia Pobeda is #4 airline in Russia by number 46.4% In 2018, Pobeda’s passenger traffic increased by 56.8% year-on-year of carried to 7.2customers million passengers and continues to 32% CAGR f
Slide 46: Key Financial Highlights
Key Financial Highlights Revenue (RUB mln) IFRS Net income1 (RUB mln) 55.0% 40,779 CAGR for 45% 2015-2018 34,373 26,483 3,747 3,664 20,633 2,834 19,131 1,763 11,248 – – (80) 2014 2015 2016 2017 2018 9M 2018 9M 2019 2014 2015 2016 2017 2018 9M 2019 Since its inception, Pobeda was growing at 45% annua
Slide 47: Market Stimulation Case Study: Nizhnekamsk Airport
Market Stimulation Case Study: Nizhnekamsk Airport Passenger traffic in Nizhnekamsk airport evolution Nizhnekamsk airport PAX, thousand X% Pobeda’s share in total seats offered 6% 17% 21% 25% from the airport Sochi-Nizhnekamsk route moved to all year-round service in May 2019 Launched service from S
Slide 48: Aeroflot Russian Airlines
¥ AEROFLOT 2” ssi = Russian Airlines ——
Slide 49: 9M and Q3 2019 Results at a Glance
9М and Q3 2019 Results at a Glance 1 2 3 Operating Expansion and Active …Backed by Strict Cost Control and …Translated into Improved 9M and Q3 Revenue Management… Macro Environment… Financial Results RPK, bn CASK, RUB EBITDA, bn RUB +10.9% +3.0% +1.2% +6.7% -0.5% +6.5% 3.09 3.18 3.06 3.09 73.7 73.4
Slide 50: 9M 2019 Results in Historical Context
9M 2019 Results in Historical Context Continued Operational … Backed by Yield Management Has Driven … and Created Opportunities to Development… Top-line Growth … Sustain Absolute Profitability RPK, bn Traffic Revenue, bn RUB EBITDA (RUB bn) and Margin +9.9% +16.6% +10.9% +12.7% 28.5% 27.0% 143.2 534
Slide 51: Revenue Management Delivered Positive Results
Revenue Management Delivered Positive Results Competition and FX factors impacted yield … However Recent RASK Trend Confirms Demand dynamics… … and All Together Created Pressure on PLF… Resilience Yield for scheduled flights (RUB/RPK) PLF (% and y-o-y p.p. change) RASK for scheduled flights (RUB/ASK
Slide 52: Long Term Focus on Efficiency
Long Term Focus on Efficiency Controlled CASK Inflation Cost Advantage vs. Foreign Peers RUB/ASK US$ cents/ASK 8.5 +9.2% Lufthansa Air France-KLM +3.0% 7.5 (Eurowings) (network airlines) 3.42 6.5 CASK ex.-fuel, USD cents / ASK 3.13 3.09 3.18 Qantas easyJet Air Canada 5.5 Turkish Airlines LATAM 4.5 (
Slide 53: Long Term Focus on Efficiency: Fuel
Long Term Focus on Efficiency: Fuel Jet Fuel Price As a Key Headwind to Results in 2017-2018 Our Approach to Fuel Management Thousand RUB per tonne of jet fuel 2019 2018 2017 2016 Strategy based on young and modern fleet 50.0 Efficient procurement and contractual terms 40.0 Economy of scale and inte
Slide 54: Contact details
Address: 119002, sia, Moscow, Arbat St. yg E-mail: ir@aeroflot.ru AEROFLOTL&” Website: ir.aeroflot.ru ssi = Russian Airlines ——