Virgin Australia Holdings Limited · ASX:VGN
Virgin Australia — H1 FY15 Earnings Presentation
27 slides from Virgin Australia's earnings presentation, Feb 19, 2015
Slide 1: HY15 results presentation - VAH
HY15 results presentation - VAH 19 February 2015
Slide 2: Year in review to date
Year in review to date • FY14 – one of the most difficult operating environments in the history of Australian aviation • H1 FY15 – Ongoing weak consumer sentiment – total domestic passengers decline of 0.7%1 – Moderation in industry domestic capacity growth – Decline in fuel price • Significant impr
Slide 3: VAH Group – H1 FY15 financial summary
VAH Group – H1 FY15 financial summary • Underlying Profit Before Tax1 of $10.2m – improvement on loss of $45.4m • Positive Group Yield2 and Domestic Yield growth • Underlying Group CASK3 reduction of 3.2%, including fuel and foreign exchange – CASK reduction of 3.6%, excluding Tigerair and fuel • Be
Slide 4: Effective hedging policy – benefits of fuel price decrease to impact H2 FY15 performance
Effective hedging policy – benefits of fuel price decrease to impact H2 FY15 performance Effective fuel rate vs physical cost • Policy provides a degree of certainty (H1 FY14 – H1 FY15) and risk protection against market Index1 volatility 105 • Fuel unit cost broadly in line with 100 market rates Be
Slide 5: Virgin Vision – on track to achieve all targets
Virgin Vision – on track to achieve all targets • Continued increase in Corporate and Government share of domestic revenue • Completed Tigerair Australia acquisition • Continued growth in Charter revenue • Growing Velocity Frequent Flyer – membership now 4.8m • Achieved $312.6m in cumulative cost re
Slide 6: Investing to deliver a superior customer experience
Investing to deliver a superior customer experience • New A330 Business class suites from mid-2015 • New B777 Business class suites and Premium Economy cabin by end of 2015 • Introduction of Business class on Trans Tasman and Pacific Island services – from February 2015 • New Perth terminal, with di
Slide 7: Successful initiatives to drive OTP
Successful initiatives to drive OTP1 On time performance1 by airline group2 On time performance1 – VA brand vs QF brand3 (Jul 14 – Dec 14) (Jul 14 – Dec 14) Percent Percent 90 90 85 85 80 80 75 75 Sep-14 Sep-14 Jul-14 Jul-14 Aug-14 Nov-14 Aug-14 Nov-14 Dec-14 Dec-14 Oct-14 Oct-14 VA Group QF Group V
Slide 8: Velocity delivering value to members
Velocity delivering value to members Velocity metrics • Increasing earn options (H1 FY11 – H1 FY15) – First loyalty program to launch Index (100 at H1 FY11) partnerships with Australia Post and 350 Aussie Home Loans 300 – New BP partnership announced 250 • Improving redemption opportunities 200 – Ne
Slide 9: Charter and cargo on track to achieve strategic outcomes
Charter and cargo on track to achieve strategic outcomes Charter • Won 3 new clients from competitors – services into the Pilbara and Kalgoorlie • Acquisition of aircraft to support committed contracted growth under existing contracts • Establishing F50 charter base in Queensland from March 2015 to
Slide 10: Tigerair – positive momentum to achieve sustainable profitability
Tigerair – positive momentum to achieve sustainable profitability • Significant progress in driving revenue growth • Maintaining low cost base • Delivering cost synergies • Improving aircraft utilization • Restructured network footprint 10
Slide 11: On target with $1b cost reduction program – $312.6m savings achieved to date
On target with $1b cost reduction program – $312.6m savings achieved to date CASK growth (FY10 to FY14 & H1 FY15) Percent Component Examples 4.0 Fleet • Retirement of older 2.6 2 x A330 aircraft 2.0 0.0 Operations • Fuel efficiency initiatives (2.0) Commercial • Optimised sales (4.0) (3.2) (3.6) dis
Slide 12: Ongoing improvements in balance sheet position
Ongoing improvements in balance sheet position • Maintained strong total cash position – now $1.1b, up from $783.8m at 30 June 2014 • Unrestricted cash position of $838.8m, up from $541.0m at 30 June 2014 • Diversifying sources of funding – maiden issue in unsecured debt capital market • Higher leve
Slide 13: Virgin Vision 2017 scorecard
Virgin Vision 2017 scorecard Strategic Priorities 2017 Progress Drive yield enhancement ~30% of VA domestic revenue from corp. & gov. Velocity 7 million+ members Capitalise on Charter $200m+ revenue growth business opportunities Cargo $150-$200m revenue Tigerair Australia Profitable Cost reduction p
Slide 14: Virgin Australia: delivering on a long term strategy
Virgin Australia: delivering on a long term strategy Strong execution of • Proven record in delivery of a consistent strategy – strategy meeting targets ahead of schedule • Delivering a new standard in customer experience and Customer focussed service excellence with the best people in the industry
Slide 15: Guidance
Guidance “Expect an improved performance in the second half of the 2015 financial year compared to the second half of the 2014 financial year. However, due to current market conditions, we are not able to provide more specific guidance” 15
Slide 16: Financial results – H1 FY15
Financial results – H1 FY15
Slide 17: Pathway to growth and value creation
Pathway to growth and value creation Transition from Game • Early completion of Game Change goals 2014 Change to Virgin • Launch of next phase of strategic vision Vision Building momentum • Improving financial performance: yield1 growth, 2015 of success towards CASK2 decline, and improving profitabi
Slide 18: Group financial summary
Group financial summary Restated H1 FY15 H1 FY141 $m $m Revenue and income 2,377.5 2,242.1 Statutory loss after tax (47.8) (74.3) Addback Income tax benefit (13.7) (30.2) Statutory loss before tax (61.5) (104.5) Addback Restructuring and transaction costs2 42.9 58.3 Share of equity accounted losses3
Slide 19: Segment revenue and EBIT summary
Segment revenue and EBIT summary Domestic International Restated Restated H1 FY15 H1 FY141 H1 FY15 H1 FY141 $m $m $m $m Segment revenue2 1,832.6 1,694.1 596.0 589.7 Segment EBIT 2,3 103.8 25.9 (49.5) (31.9) ASKs (m) (excludes charter)2 14,594 13,568 8,187 7,972 Load factor2 78.2% 78.4% 82.0% 80.2% N
Slide 20: Treatment of Tiger Airways Australia Pty Limited
Treatment of Tiger Airways Australia Pty Limited1 Equity Accounted Consolidated Tiger Results Results Results 1- Jul-14 to 17-Oct-14 to H1 16-Oct-14 31-Dec-14 FY15 $m $m $m Earned revenue 130.0 75.5 205.5 Statutory (loss)/profit before tax (26.3) 1.5 (24.8) VAH Share of Tigerair Australia Equity Acc
Slide 21: Balance sheet summary
Balance sheet summary Restated 31-Dec-14 30-Jun-141 $m $m Cash and cash equivalents 1,099.7 783.8 Property, plant and equipment and intangible assets 3,450.5 3,064.7 Other assets 953.4 830.8 Total assets 5,503.6 4,679.3 Interest bearing liabilities 2,522.4 1,950.7 Unearned revenue 786.9 807.7 Other
Slide 22: Cash flow summary
Cash flow summary Restated H1 FY15 H1 FY141 $m $m Cash flow from operations (excluding business and capital restructure and transaction costs and net finance costs) 133.5 124.7 Restructure and transaction costs (35.2) (36.4) Net finance costs (33.5) (24.7) Net cash flow from operating activities 64.
Slide 23: Hedging policy
Hedging policy Hedging summary – fuel Brent Remainder of FY151 Operating requirements hedged 81% Participation in favourable price movements 25% Worst case hedged rate (inclusive of option premium) AUD 110.34/ bbl2 Hedging summary – forex Non-fuel currency Remainder of FY151 Operating requirements h
Slide 24: Virgin Australia Group fleet
Virgin Australia Group fleet Actual Actual 30 Jun 2014 31 Dec 2014 B737-700/800 74 76 E190 18 18 A330 7 6 B777 5 5 ATR72-500/600 13 14 Mainline fleet 117 119 F50 8 8 F100 10 12 A320 (VARA and Tigerair) 15 15 Total Virgin Australia Group fleet 150 154 24
Slide 25: Slide 25
Slide 26: Disclaimer, definitions and ASIC guidance
Disclaimer, definitions and ASIC guidance Disclaimer The following non-IFRS information has not been audited or reviewed by KPMG: Restructuring and transaction Costs, Underlying profit/(loss) before tax excluding one-off items, equity accounted losses and hedging and financial instruments (Underlyin
Slide 27: Disclaimer, definitions and ASIC guidance (continued)
Disclaimer, definitions and ASIC guidance (continued) Definitions (continued) Yield: is a non-statutory measure of revenue divided by Revenue Passenger Kilometres. Revenue excludes charter, freight and loyalty related revenue. Underlying CASK (CASK): is a non-statutory measure derived from consolida
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