Aeroflot · RUS:AFLT
Aeroflot — 6M 2015 Earnings Presentation
45 slides from Aeroflot's earnings presentation, Sep 1, 2015
Slide 1: Aeroflot Group 6 Months 2015 Financial Results
Aeroflot Group 6 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 1 September 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: 6M 2015 Highlights
6M 2015 Highlights Aeroflot Group • Aeroflot Group carried 2.2 million more passengers in 6M 2015 compared to 6M 2014 (+14.0% passenger traffic; stable seat load factor of 75.7%). • Expansion in the number of customers resulted in market share increase by 5.8 p.p. from 31.2% in 6M 2014 to 37.0% in 6
Slide 4: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 4
Slide 5: Russian Air Transportation Market
Russian Air Transportation Market 2010 – 2014 6M 2015/2014 International Routes 7.8% 150.0 Domestic Routes 130.0 111.8 103.7 Growth 110.0 Russian Total 91.6 Growth CAGR (3.9%) 80.1 FY13-14 FY09-14 6M 14-15 Passenger 90.0 70.5 65.5 Traffic 70.0 56.2 64.4 1.8% 14.9% 50.2 48.2 50.0 41.2 47.3 (15.6)% (m
Slide 6: Aeroflot Group Market Position
Aeroflot Group Market Position Increase in Aeroflot Group Passenger Number Faster Growth vs. Russian Market1 (PAX) m PAX, 6M 2015 Y-o-y 17.8%2 17.7% 13.5% 14.3% 15.1% 14.0% 14.1% +2.2 10.6% 17.9 0.3 % (3.9)% (4.6)% (3.2)% (8.1)% (7.5)% (3.9)% (5.5)% (8.8)% (12.2)% (13.8)% (14.1)% (19.0)% (18.3)% Jan
Slide 7: Capacity Optimization by Russian and Foreign Airlines
Capacity Optimization by Russian and Foreign Airlines Domestic Carriers Cutting Capacity1 (ASK) Russian Peers Capacity Optimization (ASK phase out) Y-o-y 6M 2015 vs. 6M 2014 13.0% 10.3% 9.3% 8.7% 8.3% 6.4% 6.1% 23.8% Transaero (3.1)% (3.0)% (0.9)% (4.6)% (9.1)% (10.9)% UTAir (4.9)% 11,949 mln (5.1)%
Slide 8: Growth Potential of Russian Air Transportation Market
Growth Potential of Russian Air Transportation Market Russian Market Remains Significantly Underpenetrated Domestic Passenger Traffic (Russian Civil Aviation) Airline PAX per capita per year1 m PAX 0.3 Domestic PAX per capita 17.9% 3.4 10.8% 8.1% 2.7 12.0% 46.3 22.6% 39.2 35.4 13.5% 32.7 2.1 1.6 29.
Slide 9: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 9
Slide 10: Successful Multi-branding Strategy
Successful Multi-branding Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth • Flagship carrier • Moscow 6M 2015 6M 2015 (Sheremetyevo) y-o-y 9.3% Network/ • Premium product 12.0 67.1% Scheduled • High income, middle class, leisure segment • Focus on direct and transit routes v
Slide 11: Low Cost Carrier ‒ Pobeda
Low Cost Carrier ‒ Pobeda Overview of Pobeda Pobeda’s Network 35 Arkhangelsk • Operating from Vnukovo airport Surgut Surgut Khanty-Mansiysk • Regional network comprising 4 60 40 Description – 15 regular destinations Moscow Kirov Nizhnevartovsk – 37 routes in the summer schedule (including seasonal)
Slide 12: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network – Summer 2015 Schedule (6M 2015/2014) Murmansk Arkhangelsk Novy Urengoy Russia 21.4 % St. Petersburg Syktyvkar Surgut Nizhnevartovsk Yakutsk Stockholm Magadan Ekaterinburg Tomsk Kaliningrad MOSCOW Tyumen Krasnoyarsk Hamburg
Slide 13: Aeroflot is Uniquely Positioned to Capture Growing Transit Passenger Flows
Aeroflot is Uniquely Positioned to Capture Growing Transit Passenger Flows Increasing Frequency of Flights1 Improves …and Supports Aeroflot’s Transit Traffic Growth in Connectivity… Sheremetyevo Share of Transit of Aeroflot airline in Sheremetyevo Connectivity ratio 11.0x 12.7x 13.5x 13.9x CAGR 2012
Slide 14: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 14
Slide 15: Aeroflot Airline and Aeroflot Group Operating Results
Aeroflot Airline and Aeroflot Group Operating Results Aeroflot airline Aeroflot Group Indicator 6M 6M 6M 6M Unit Change Change 2014 2015 2014 2015 Passenger Traffic th PAX 10,962 11,981 9.3% 15,666 17,855 14.0% International Routes th PAX 5,918 6,356 7.4% 7,948 7,558 (4.9%) Domestic Routes th PAX 5,
Slide 16: 6M 2015 Traffic and Capacity Dynamics (Y-o-Y)
6M 2015 Traffic and Capacity Dynamics (Y-o-Y) Americas Russia CIS 2.9 p.p. 33.9% 32.7% 2.5 p.p. 28.8% 1.9 % 2.1 % (6.5)% (6.6)% (10.0)% Passengers RPK ASK SLF (2.2) p.p. carried (1.3)% Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried Europe Middle East Asia 4.9 % 19.9 % 21.0 % 3.6 % 8.6
Slide 17: Revenue Analysis
Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUBm)1 6M 2015 6M 2014 6M 2015 Change Sheduled Passenger Charter Flights Passenger 95.7% Flights Russia 42,965 57,422 33.6% 1.4% Cargo Europe 30,855 36,794 19.2% 2.9% Asia 15,378 24,381 58.5% Scheduled Traffic Reve
Slide 18: Scheduled Flights Revenue Units
Scheduled Flights Revenue Units Traffic Yield: PAX Revenue / RPK (RUB / RPK) Traffic RASK: PAX Revenue / ASK (RUB / ASK) 6M 2015 6M 2015 12.0% 13.8% 12.4% 13.9% 3.29 3.34 2.93 2.48 2.52 2.21 6M 2014 6M 2015 6M 2015 6M 2014 6M 2015 6M 2015 (Excluding (excluding Pobeda) (excluding Pobeda) (Excluding Y
Slide 19: Opportune Time for Aeroflot
Opportune Time for Aeroflot Competitive Strengths Description 6M’15 Results Checklist • Diversified network balanced between the regions with different demand drivers Improved network convenience 1 Balanced global network • The only Russian airline to capture selected profitable transit flows on k
Slide 20: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 20
Slide 21: Aeroflot Group Fleet Overview
Aeroflot Group Fleet Overview Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 3 Aircraft Average Age Azul 4.1 10.4 4.3 8.8 Hainan Airlines 4.4 7.7 Lion Air 4.5 7.0 6.5 Garuda Indonesia 4.8 Sichuan Airlines 5.2 232 251 258 209 222 China Eastern Airlines 5.5 Qatar Airways 5.5 Republic A
Slide 22: Aeroflot Group Fleet Structure
Aeroflot Group Fleet Structure Financial Operating Total as of Total as of Change vs. Type Aeroflot Subsidiaries Lease Lease 30-Jun-2015 31-Dec-2014 31-Dec-2014 Boeing 767 - 3 - 3 3 3 - Long-haul Airbus A330 22 - 8 14 22 22 - Boeing 777 13 3 10 6 16 13 3 Total 35 6 18 23 41 38 3 Airbus A319 7 33 13
Slide 23: 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 6M 2015 H2 2015 2016 2017 2018 2019 - 2024 Long-haul 3 - 2 1 5 17 B777 3 - 2 1 - - A350 - - - - 5 17 Medium-haul 9 5 24 32 23 - A319 1 - - - - -
Slide 24: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 24
Slide 25: Financial Highlights
Financial Highlights RUBm 6M 2014 6M 2015 Change (where applicable) Revenue 140,281 176,467 25.8 % EBITDAR1 16,656 33,252 99.6 % EBITDAR1 margin 11.9 % 18.8 % 6.9p.p. EBITDA 5,029 13,311 >2x EBITDA margin 3.6 % 7.5 % 3.9p.p. Operating profit/(loss) (1,384) 5,866 n/a Operating margin neg. margin 3.3%
Slide 26: Revenue Analysis
Revenue Analysis 25.8% 30,904 (4,436) 9,718 Net positive impact of RUB 26,468m RUBm 176,467 140,281 6M 2014 Volume Currency Pricing* 6M 2015 • Positive contribution of volume and RUB devaluation to revenue growth was partially offset by softer fare policy in hard currency terms in the volatile macro
Slide 27: Cost Analysis
Cost Analysis % in Total Operating Operating Expense Change Expense (RUB million If not stated otherwise) 6M 2014 6M 2015 Change ex. FX & NRE 26.2% Fuel 40,236 44,714 11.1 % (19.7)% Opex (ex. Fuel) 101,429 125,887 24.1 % 5.3 % 20.2% Aircraft, Traffic and Passenger Servicing 27,714 34,516 24.5 % 8.0
Slide 28: Group Unit Costs
Group Unit Costs Cost per ASK (RUB) Operating Expense 6M 2014 6M 2015 Change Fuel 0.74 0.76 2.2 % Opex (ex. Fuel): 1.88 2.14 14.1 % Aircraft, Traffic and Passenger Servicing 0.51 0.59 14.5 % Staff 0.45 0.46 3.1 % Operating Lease 0.22 0.34 57.7 % Maintenance 0.17 0.22 30.0 % SG&A 0.17 0.20 17.6 % D&A
Slide 29: Effective Cost Management and Productivity Gains
Effective Cost Management and Productivity Gains Flight Hours Fuel Consumption per ASK Fuel Consumption per TKM (th hours) (gr/ASK) (gr/TKM) (2.7%) 7.4% (2.0 %) 412 197.8 23.7 23.2 192.4 383 6M 2014 6M 2015 6M 2014 6M 2015 6M 2014 6M 2015 PAX Traffic Revenue / Avg. Airlines Headcount PAX Traffic / A
Slide 30: EBITDA Evolution
EBITDA Evolution (RUBm) Net FX ∑=(544) RUBm 30,904 (31,448) Net volume and price ∑=5,282 RUBm Net effect ∑=0 7,907 9,718 (4,436) 2,206 3,547 (2,405) (2,208) (1,729) (1,569) 13,311 15,517 5,029 NRE*** EBITDA 6M 2014 FX benefit Staff** EBITDA 6M 2015 FX drag Fuel** Other OPEX** Volume Pricing* Admin &
Slide 31: Operating Income Evolution
Operating Income Evolution (RUBm) Net FX ∑=(544) RUBm 30,904 (31,448) Net volume and price ∑=5,282 RUBm Net effect ∑=(1,035) RUBm 7,907 9,718 (4,436) 2,206 (2,405) 3,547 (2,208) 8,072 (1,729) 5,866 (1,031) (1,569) (1,384) Fuel** Staff** FX benefit Operating Income 6M 2014 Operating Income 6M 2015 FX
Slide 32: Adjusted Operating and Net Income Analysis
Adjusted Operating and Net Income Analysis 6M Adjusted Operating Income Build-Up (RUBm) 567 1,639 8,072 5,866 Operating Income 6M 2015 Pre-term return of aircraft at Orenair and FA write off at Vladavia ** Adjusted Operating Income 6M 2015 Rossiya Airlines * 6M Adjusted Net Income Build-Up (RUBm) 56
Slide 33: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 33
Slide 34: Leverage and Liquidity
Leverage and Liquidity Debt Profile Net Debt / LTM EBITDA¹ RUBm 31-Dec-2014 30-Jun-2015 Change 5.9 Borrowings 24,203 31,190 28.9% 4.7 3.6 Finance Lease Liabilities 149,278 137,817 (7.7)% 2.9 Pension Liabilities 659 709 7.7% Customs Duties 169 - n/a Total Debt 174,309 169,716 (2.6)% 30-Jun-2014 30-Se
Slide 35: 6M 2015 Operating Free Cash Flow
6M 2015 Operating Free Cash Flow (RUBm) 26,639 (6,247) 36.8% (405) 42,736 14,668 36,084 26,379 3,419 (5,404) 16,097 6,710 (3,296) Profit Before D&A Interest Unrealized Other Adj. Cash Flows Working Net Cash Net Capital Net Pre- Free Cash Free Cash Income Tax Expense Net FX Loss Before From Capital F
Slide 36: Agenda
1. Market Update 2. Monthly Traffic Statistics 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 36
Slide 37: Aeroflot Group YTD Monthly Operating Results
Aeroflot Group YTD Monthly Operating Results Monthly Passenger Traffic (m PAX) Monthly Passenger Turnover (bn pkm) 6M 2015: +14.0% Y-o-Y 6M 2015: +8.7% Y-o-Y June 2015: +10.6% Y-o-Y June 2015: +6.3% Y-o-Y 10.6% 6.3% 14.1% 7.9% 17.7% 15.1% 3.7 8.3% 9.2 13.5% 14.3% 10.5% 9.6% 3.3 3.4 10.6% 8.6 7.9 2.8
Slide 38: Operating Data – July & 7M 2015
Operating Data – July & 7M 2015 Aeroflot airline Aeroflot Group July July 7M 7M July July 7M 7M 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 2,352 2,641 12.3% 13,314 14,622 9.8% 3,797 4,199 10.6% 19,463 22,054 13.3% International Routes th P
Slide 39: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Vladivostok Rossiya Orenair Donavia Aurora Pobeda Total Air Passenger Traffic, 6M 2015 2,348 1,191 728 506 - 1,102 5,874 ‘000 PAX 6M 2014 2,177 1,244 794 466 4.6 19 4,704 Y-o-Y 7.8% (4.2%) (8.3%) 8.7% - - 24.9% Passenger Turnover, 6M 2015 4,391 2,431 967 836
Slide 40: Key Financial Data for Aeroflot Group
Key Financial Data for Aeroflot Group RUBm, Unless 6M 2014 6M 2015 Y-o-Y Otherwise Stated Revenue 140,281 176,467 25.8 % RPK1 (m pkm) 40,927 44,479 8.7 % Yield2 (RUB/pkm) 2.88 3.29 14.0 % EBITDAR3 16,656 33,252 99.6 % Margin (%) 11.9% 18.8% 6.9p.p. EBITDA4 5,029 13,311 >2x Margin (%) 3.6% 7.5% 3.9p.
Slide 41: Summary Financial Tables: Income Statement and Statement of Comprehensive Income
Summary Financial Tables: Income Statement and Statement of Comprehensive Income RUBm, Unless 6M 2014 6M 2015 Change Otherwise Stated Traffic revenue 121,796 150,604 23.7% Other revenue 18,485 25,863 39.9% Revenue 140,281 176,467 25.8% Operating costs, excluding staff costs and depreciation and amor
Slide 42: Summary Financial Tables: Condensed Balance Sheet
Summary Financial Tables: Condensed Balance Sheet RUBm, Unless 31-Dec-14 30-Jun-15 Change Otherwise Stated ASSETS Current assets Cash and cash equivalents 26,547 47,932 80.6% Accounts receivable and prepayments 56,769 63,289 11.5% Other current assets 8,897 13,227 48.7% Total current assets 92,213 1
Slide 43: Summary Financial Tables: Condensed Cash Flow Statement
Summary Financial Tables: Condensed Cash Flow Statement RUBm, Unless 6M 2014 6M 2015 Change Otherwise Stated Operating cash flows before working capital changes 7,030 16,097 129.0% Increase in accounts receivable and prepayments (520) (3,442) 561.9% Increase in expendable spare parts and inventories
Slide 44: Derivatives and Hedging Result Effect on Statement of Profit or Loss
Derivatives and Hedging Result Effect on Statement of Profit or Loss and Statement of Comprehensive Income P/L Other RUBm 6M 2015 Change in Ineffective Actual Comprehensive Instrument Fair Value Portion Cost Profit Statement of Profit or Loss Currency (962) - - - options Financial income 7,183 Fuel
Slide 45: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 Telephone: +7 (495) 258-06-86 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 45