Capital A Berhad · MYX:CAPITALA
Capital A Berhad — AirAsia Berhad — Q4 2007 Earnings Presentation
41 slides from Capital A Berhad's earnings presentation, Aug 30, 2007
Slide 1: Fourth Quarter 2007 Results
Fourth Quarter 2007 Results 30 August 2007
Slide 2: Disclaimer
Disclaimer Information contained in our presentation is intended solely for your reference and is strictly confidential. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the Company. Neither we nor our adv
Slide 3: Five Years of Discipline and Focus
Five Years of Discipline and Focus The only LCC in Asia that is making money Disciplined to the pure LCC model – short haul only (AirAsia X is a separate company) – no frills (it does not work) Five years of Building a Solid Foundation – lowest cost airline in the world – growth pipeline secur
Slide 4: Focused & Disciplined – Clear Strategy for the Last 5 years…..Reaping the Rewards
Focused & Disciplined – Clear Strategy for the Last 5 years…..Reaping the Rewards R e v e n u e (R M m i l l i on ) PROFIT MARGINS 38% 432 EBITDAR 38.1% 314 23.3% Q4 06 Q4 07 EBIT Q4-06 Q4-07 28.6% Pr e t a x Pr ofi t (R M m i l l i on ) 11.5% 130 838% Q4 06 Q4 07 Pretax Profit 30.2% 14 4.4% Q4-06 Q
Slide 5: Record Full Year Results
Record Full Year Results R e v e n u e (R M m i l l i on ) PROFIT MARGINS 1603 52% EBITDAR 30.6% 24.0% 1058 2006 2007 EBIT FY2006 FY2007 17.5% Pr e t a x Pr ofi t 11.1% (R M m i l l i on ) 278 223% 2006 2007 Pretax Profit 86 17.3% 8.1% FY 2006 FY 2007 3 2006 2007
Slide 6: Key Highlights for Fourth Quarter
Key Highlights for Fourth Quarter 22 quarters of consistent profitability Profit before tax of RM130 million – pretax profit margin of 30% – lowest cost airline in the world 3.24 US¢ / ASK Robust disciplined growth – fleet size rose from 52 to 54 (end of fourth quarter) – capacity growth of 42
Slide 7: Key Highlights for Fourth Quarter
Key Highlights for Fourth Quarter Thailand updates – 17% passenger growth YoY – lower achieved average fare and load factor due to challenging environment – Management completed buyout for 50% of Thai AirAsia for THB 1 billion – General election is announced for 23 December 2007 Indonesia update
Slide 8: Consistent Passenger Growth
Consistent Passenger Growth Passengers Flown by AirAsia Group (‘000) 13,992 YoY wt h gro 50% 9,312 ) 88% 1 7: 200 6,289 ( 200 GR CA 3,622 3,463 3,738 3,169 2,839 1,481 291 611 M a r- J un- J un- J un- J un- J un- Q1 Q2 Q3 Q4 J un- 2001 2002 2003 2004 2005 2006 2007 6
Slide 9: Fleet Status
Fleet Status Net Fleet Size Current Fleet Composition 72 Malaysia Thailand Indonesia Airbus A320 14 58 Boeing 737 54 9 8 17 14 12 25 33 41 34 35 Q4-FY2007 NOW FY2008 Upgrading Fleet with new Airbus A320 – induct 23 Airbus A320 aircraft in the year – retiring 5 Boeing 737-300, net addition of 18 ai
Slide 10: Unmatched Route Network
Unmatched Route Network Period # Routes Served Jan 2002 6 Jun 2003 11 Jun 2004 26 Jun 2005 52 Jun 2006 65 Jun 2007 75 NOW 78 Latest Routes KL – Krabi Johor Bahru – Macau Upcoming Routes KL – Vientiane KL – Banda Aceh 8
Slide 11: Results Commentary
Results Commentary airasia.com
Slide 12: Growth through Aggressive Pricing
Growth through Aggressive Pricing Average Fare (RM) Load Factor % 2007 FY2007 =RM171 2006 FY2006 =RM174 190 83% 183 184 82% 168 171 170 80% 79% 8 1% 158 156 77% 76% FY2007 = 79.6% FY2006 = 77.5% 70% Quar t er 1 Quar t er 2 Quar t er 3 Quar t er 4 Q 1- Q2- Q3- Q4- Q 1- Q2- Q3- Q4- 06 06 06 06 07 07 0
Slide 13: Profitability (4th Quarter and Full Year)
Profitability (4th Quarter and Full Year) Fourth Quarter Full Year Rev / ASK (US ¢) Rev / ASK (US ¢) 3% 3.70 11% 3.64 3.60 3.29 Q4-06 Q4-07 2006 2007 Cost / ASK (US ¢) Cost / ASK (US ¢) 1% 3.24 7% 3.16 3.22 2.95 Q4-06 Q4-07 2006 2007 Pretax Profit (RM million) Pretax Profit (RM million) 130.4 278 83
Slide 14: Cost / ASK – year on year Comparison
Cost / ASK – year on year Comparison Cost Breakdown (US cents / ASK) FY2007 FY2006 ∆ (%) Reason Staff Costs 0.33 0.35 -4% Productivity & Efficiency gains Fuel and Oil 1.59 1.32 21% Higher fuel price User & Station Charges 0.22 0.16 40% More international route Maintenance and Overhaul 0.28 0.34 -17%
Slide 15: Year on Year Comparison (Malaysia)
Year on Year Comparison (Malaysia) Operating Expenses FY2006 % Revenue FY2007 (RM ‘000) (restated) FY2007 FY2006 Revenue 1,603,261 1,058,108 − Staff Cost (147,456) (111,848) (9.2%) (10.6%) − Fuel and Oil (699,640) (422,810) (43.6%) (40.0%) − User & Station Charges (99,079) (51,730) (5.8%) (4.9%) − M
Slide 16: Outlook on Cost Reduction
Outlook on Cost Reduction Airport charges – new airport structure will be announced by Government soon Airbus A320 aircraft – lower fuel consumption – lower maintenance cost – superior reliability Low cost terminals (Kuala Lumpur & Kota Kinabalu) – cost efficient terminals – full year accounte
Slide 17: Genuinely the Lowest Cost Airline
Genuinely the Lowest Cost Airline MAS Î Genuinely the lowest cost airline in the world – not aided by longer stage length – not aided by round the clock operations 16
Slide 18: Driving Growth from Ancillary Income
Driving Growth from Ancillary Income Fourth Quarter Full Year Ancillary % Revenue Ancillary % Revenue 2.4 ppt 7.3% 1 ppt 6.8% 4.8% 5.8% Q4-06 Q4-07 2006 2007 Pax Spend (RM/pax) Pax Spend (RM/pax) 12.5 43% 13.3 16% 9.3 10.8 Q4-06 Q4-07 2006 2007 Ancillary Income (RM million) Ancillary Income (RM mill
Slide 19: Ancillary Income Composition
Ancillary Income Composition FY2007 Ancillary Income = RM 109 million Others (advertisements, credit 8% card, admin charges, etc) 4% AirAsia Academy 6% Go-Holiday 13 % Insurance 17 % In-flight Sales 20% Cargo Excess Baggage 32% 18
Slide 20: Robust Cash Generation
Robust Cash Generation Cash from Operations (RM millions) Net Cash Increase (RM millions) 602 2 5 4 IPO 16 1 268 10 0 26 29 2004 2005 2006 2007 2004 2005 2006 2007 19
Slide 21: Very Liquid Balance Sheet
Very Liquid Balance Sheet Total Assets RM 4,779 million Cash & Deposits Cash & Deposits of RM913 million 9 13 – 19% of total assets – war chest to fend off competition 4 18 Others and times of crisis 488 Working Capital – able to acquire opportunities fast – able to finance business for 8 months w
Slide 22: Borrowings and Gearing
Borrowings and Gearing Net Debt (RM million) Net Gearing (Net Debt / Equity) 1,959 1.18 1.05 1.03 1,541 0.99 1,396 0.77 1,077 787 2006 Q1-07 Q2-07 Q3-07 2007 2006 Q1-07 Q2-07 Q3-07 2007 22
Slide 23: Group Consolidated (Proforma)
Group Consolidated (Proforma) 100% Malaysia + 49% Thailand and 49% Indonesia 23
Slide 24: Recent Developments
Recent Developments airasia.com
Slide 25: Lower Passenger Service Charges (PSC) at Kuala Lumpur & Kota Kinabalu LCCT
Lower Passenger Service Charges (PSC) at Kuala Lumpur & Kota Kinabalu LCCT Major impetus for growth – lower PSC charges commensurate with basic facilities at LCCT – significant discount relative to ticket price (up to 12% discounts received) – opportunity to yield manage positively 25
Slide 26: Latest Product Development
Latest Product Development Xpress Boarding – RM1.5 million sales since launch (15 May 2007) – zero cost, straight to the bottom line – take-up rate of 3%, potential to triple during festive & holiday season Overbooking – RM750k sales generated since launch (22 May 2007) – still in observation ph
Slide 27: We’re Coming to Get You
7 : “ee. at >. * = Pe as aes ¢ © QT Luong / terragalleria.com airasia.com =) Oo > — o Oo Oo — 5) ‘= = je) O cc) _ => We’
Slide 28: Kuala Lumpur to Shenzhen
Kuala Lumpur to Shenzhen 12000 100% 98% 10000 95% 95% 8000 6000 90% 10,549 4000 5,988 85% 2000 0 80% Started 16 July August Passengers carried Load Factor Î Overwhelming support – everyone wants to go to Shenzhen with our low fares – higher yields and load factors than Macau – second frequency to be
Slide 29: More Routes to China Coming Soon
More Routes to China Coming Soon Guilin Xiamen Shenzhen Macau Hong Kong Kuala Lumpur Haikou – Hong Kong – Haikou – Guilin Bangkok Bangkok – Hong Kong – Haikou – Guilin Kota Kinabalu Kota Kinabalu Kuala Lumpur – Shenzhen – Xiamen Johor Bahru – Guilin New Routes New Cross Connectivity 29
Slide 30: We Need More Aircraft
We Need More Aircraft (current purchase order: 150 firm + 50 options) The 150 Aircraft will be Used For Frequency Replacement Addition 27 Potential New 73 Joint Venture/s 50 New Routes Return of Boeing 737-300 Capacity to expand existing routes Capacity to open new routes Potential new joint
Slide 31: Building a Global Brand: The Official Partner of Premier League Match Officials
Building a Global Brand: The Official Partner of Premier League Match Officials Taking a step further in building ‘AirAsia’ brand in football AirAsia brand on match officials (referees, linesmen, fourth official) – all matches on the English Premier League – all matches on the Football League cl
Slide 32: The most recognizable ASEAN airline
The most recognizable ASEAN airline Football Covered Motor Racing Special events too 32
Slide 33: Outlook
Outlook airasia.com
Slide 34: Fleet Plan for FY2008
Fleet Plan for FY2008 Aircraft Deployment Schedule Quarter 1 Quarter 2 Quarter 3 Quarter 4 Malaysia 37 38 38 41 Thailand 14 15 16 17 Indonesia 9 12 13 14 Total Airbus A320 27 33 39 44 Total Boeing 737-300 33 32 31 28 Total Aircraft 60 65 70 72 Note: Current management plan. Subject to change dependi
Slide 35: Management Guidance FY2008
Management Guidance FY2008 Management Guidance for FY2008 Notes Passenger carried 11 million − Frequency addition and new routes Passenger carried 7 million − Frequency addition and new routes by associates Rev / ASK Increase 2% to 5% − Higher ticket price − New routes will stabilise − Some routes w
Slide 36: Sensitivity Analysis – FY2008
Sensitivity Analysis – FY2008 Sensitivity Analysis (RM million) (Impact on Profit before Tax) +/- 1% in Load Factor 21 +/- RM1 in Average Fare 11 +/- USD1/bbl in Fuel 10 +/- 1% in MYR:USD 13 35
Slide 37: Appendix
Appendix airasia.com
Slide 38: Base Network as of August 2007
Base Network as of August 2007 Bangkok 20 Routes 4 14 Kota Kinabalu 11 Routes 4 3 Kuala Lumpur 35 Routes 4 27 Johor Bahru Kuching 12 Routes 4 3 8 Routes 4 2 6 hubs 2 78 routes Jakarta 4 58 aircraft 10 Routes 4 9 Existing Bases 37
Slide 39: Night Operations
Superior Utilization Rate Block Hours per Day (1) 14 13 Average Night Operations 12 Back of Clock 11 10 9 Average Sector per Day (2) 6.5 4.1 6.0 6.4 5.6 9.0 6.8 5.3 (1) Latest available fiscal year (2) Annual departures per average aircraft per day 38
Slide 40: “How is your Cost / ASK so low?”
“How is your Cost / ASK so low?” Operating Expenses Cost/ASK Reason (US cents) Others* Staff cost 0.33 1.18 Superior productivity & low cost region Fuel and Oil 1.59 1.78 New fuel efficient Airbus A320 in fleet Maintenance & Overhaul 0. 28 0.34 New aircraft requires less maintenance Sales & Marketin
Slide 41: High Profitability and Returns
High Profitability and Returns Company EBITDAR EBIT Net Income ROE (2) Adjusted ROIC (3) Ryanair 35% 25% 20% 15% 7.9% EasyJet 17% 7% 6% 10% 3.9% Air Berlin 16% 4% 3% 11% 4.7% VirginBlue 26% 15% 10% 29% 8.5% JetBlue 16% 5% 0% 0% 0% SouthWest 18% 10% 6% 8% 5.4% AirTran 16% 2% 1% 4% 0.6% GOL 28% 18% 15