Aeroflot · RUS:AFLT
Aeroflot — Investor Presentation (December 2018)
49 slides from Aeroflot's investor presentation, December 2018
Slide 1: Aeroflot Group Investor Presentation
Aeroflot Group Investor Presentation December 2018
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 – One of the Largest Airline Groups in the World
Aeroflot – One of the Largest Airline Groups in the World 1 Top-20 airline group globally, one of Europe’s leading airlines, #1 airline in Russia with leading positions on both domestic and international routes 2 Global network with 169 unique destinations (300+ routes) in 53 countries serviced by o
Slide 4: Market Update
In the 1960s, flight attendant uniforms were styled in warm gray shades and the jacket was fastened with three shiny half-round buttons. The flight attendant uniform in the 1970s consisted of a jacket with white trim and buttons with the Aeroflot logo. Market Update 01
Slide 5: Competitive Dynamics
Competitive Dynamics Passenger Traffic: Market vs Aeroflot Group Change in Airlines’ Passenger Numbers Russian Air Transportation Market (million PAX) mln PAX, 9M 2018 International Routes Increase in PAX million inc. PAX of Russian and Foreign Carriers and int. transit PAX Domestic Routes 10.8% +3.
Slide 6: Continuing Market Recovery
Continuing Market Recovery Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in PAX traffic y-o-y, % Change in ASK y-o-y, % 20.5% 16.4% 12.9% 12.2% 8.5% 30.2 % 36.1 % 21.8 % 18.6 % 17.2% 16.9 % 20.7 % 14.6 % 15.3 % 11.9% 14.4 % 10.6% 12.7% 10.8% 9.0% 9.9
Slide 7: Aeroflot Group Overview
A dark blue uniform was used in winter in the 1970s. It had a collarless jacket with five contrasting buttons and a white turtleneck-style blouse. An elegant summer dress was designed in the 1970s for flights to hot countries. Aeroflot Group Overview 02
Slide 8: Aeroflot Group Multi-Brand Strategy
Aeroflot Group Multi-Brand Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth • 9M 2018 +8.0% • Flagship carrier Moscow • Premium product (4 Stars) (Sheremetyevo) 26.8 • High income and middle class 24.8 Premium 26.8 63.4% • Hub and spoke model 9M 2017 9M 2018 • Regional and le
Slide 9: Pobeda Airline: Acceleration of Growth
Pobeda Airline: Acceleration of Growth Overview of Pobeda Pobeda’s Network (Winter 2018/2019) • Operating from Vnukovo airport (3rd Moscow airport by PAX) Petrozavodsk Network • Network comprising 84 routes (44 unique for the Group) Surgut Helsinki • Additional expansion to international destination
Slide 10: "100 By 100" Growth Strategy
“100 By 100” Growth Strategy: strategic targets to be achieved by 100th anniversary of Aeroflot 90-100 mln in 2023 Passenger traffic accelerated expansion of (25-30 mln by 2023) International transit 5 mln - 2017 traffic ≈10-15 mln - 2023 3 bases opening by 2023: Sochi, Ekaterinburg, Novosibirsk; Re
Slide 11: Network Strategy
Passengers were especially delighted by the uniform of the 1970s, which consisted of a deep red French style suit, Russian shirt, felt hat and gloves. A new summer uniform was introduced in the late 1980s – a light blue dress with a white collar symbolizing summer and the light blue sky. Network Str
Slide 12: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (9M 2018, y-o-y) Murmansk Salekhard Arkhangelsk New Urengoy Khanty Mansiysk Russia 5.1 % Saint Petersburg Nizhnekamsk Syktyvkar Nizhny Novgorod Tyumen Surgut Ekaterinburg Nizhnevartovsk Kemerovo Perm Yakutsk Magadan MOSCOW S
Slide 13: Network Expansion – Summer 2018 and Winter 2018/2019
Network Expansion – Summer 2018 and Winter 2018/2019 Increased frequencies in New destinations New destinations launched in Summer 2018 (examples) launched in Summer 2018 Winter 2018/2019 season Bukhara 56 7 Cairo (Egypt) Nalchik (Russia) 8 Yekaterinburg 1 1 (Uzbekistan) 3 flights per week 7 flights
Slide 14: Aeroflot Airline Domestic and International Transit
Aeroflot Airline Domestic and International Transit Growing Connectivity of Aeroflot Airline’s Flights1 ... … Results into a Flexible Approach to Transit Flows Average weekly frequency per route – Aeroflot airline Considerable share of transit of Aeroflot airline in Sheremetyevo Growth 16.0x 19.1x 2
Slide 15: Operating Results and Yields
A uniform consisting of a dark blue plaid skirt and vest captured the spirit of the 1980s. In 1994, the renowned fashion designer Valentin Yudashkin created a new uniform: a black suit with a red vest, white shirt and bow tie. Operating Results and Yields 04
Slide 16: Operating Data – Q3 & 9M 2018
Operating Data – Q3 & 9M 2018 Aeroflot airline Aeroflot Group Indicator Unit Q3 Q3 9M 9M Q3 Q3 9M 9M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2017 2018 2017 2018 2017 2018 2017 2018 Passenger Traffic th PAX 9,544 10,547 10.5% 24,789 26,770 8.0% 15,378 17,393 13.1% 38,340 42,249 10.2% International Routes th PAX 4,95
Slide 17: Operating Data – October & 10M 2018
Operating Data – October & 10M 2018 Aeroflot airline Aeroflot Group Indicator Unit October October 10M 10M October October 10M 10M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2017 2018 2017 2018 2017 2018 2017 2018 Passenger Traffic th PAX 2,913 3,145 8.0% 27,702 29,915 8.0% 4,301 4,792 11.4% 42,641 47,041 10.3% Intern
Slide 18: 9M 2018 Operating Data by Region
9M 2018 Operating Data by Region (Scheduled Routes) Americas Russia CIS 12.4 % 12.9 % 9.9 % 9.7 % 6.6 % 6.0 % 4.1 % 2.4 p.p. 0.7 % 0.5 % 0.2 p.p. Passengers RPK ASK PLF Passengers RPK ASK PLF (3.0) p.p. carried carried Passengers RPK ASK PLF carried Performance of North and Central American Russian
Slide 19: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units Q3 Yield (PAX Revenue / RPK) Q3 RASK (PAX Revenue / ASK) RUB RUB 9.3% 9.6% 4.2% 5.9% 1.5% 3.86 (1.5)% 4.47 3.69 4.09 4.14 3.44 3.49 3.52 3.48 3.97 3.82 3.77 Domestic International Total Domestic International Total 9M Yield (PAX Revenue / RPK) 9M RASK (
Slide 20: Aeroflot Airline Yield Dynamics (Monthly)
Aeroflot Airline Yield Dynamics (Monthly) Aeroflot Airline Total Yield Aeroflot Airline International Yield RUB/RPK, Change y-o-y in % 17.5% RUB/RPK, Change y-o-y in % 23.1% 12.6% 9.7% 8.8% 9.8% 6.2% 5.8% 4.5% (0.1)% (2.6)% (1.8)% (4.2)% 8.2% Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 7.8% 7.9%
Slide 21: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mln)1 9M 2018 9M 2018, % of Sheduled Q3 2017 Q3 2018 Y-o-Y Region 9M 2017 9M 2018 Y-o-Y sch. revenue Passenger Flights 89.7% 62,086 71,101 14.5% Russia 137,374 155,892 13.5% 41.1% 37,319 45,267 21.3% Eu
Slide 22: Aircraft Fleet
The summer uniform of the 1980s took on the typical look of this time – a short-sleeve cropped jacket with bold shoulders. At that time, Aeroflot was transporting more than 120 million passengers per year. This achievement was entered in the Guinness Book of Records. The scarlet uniform returned in
Slide 23: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 Aircraft Average Age 4.1 Hainan Airlines 4.8 7.7 Shandong Airlines 5.1 7.0 Xiamen Airlines 5.3 6.4 6.5 6.2 6,2 China Eastern Airlines 5.6 361 Shanghai Airlines 5.6 325 Sichuan Airlines 5.6 289 232 251 247 S
Slide 24: Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Breakdown Operated by Lease type Total as of Total as of Change vs. Aircraft Type Owned Aeroflot Subsidiaries Finance Operating 30-Sept-18 31-Dec-17 31-Dec-17 Wide-body 39 18 18 39 - 57 52 5 Airbus A330 22 - 8 14 - 22 22 - Boeing 777 17 9 10 16 - 26 21 5 Boeing 747 - 9 - 9 - 9 9
Slide 25: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule1 Aeroflot Group Fleet as at Year-end2 Number of aircraft Type of Q1-Q3 2018 (Actual) Q4 2018 (Plan) Current Delivery Phase out fleet(1) Delivery Phase ~520 aircraft out Wide-body (long-haul) 5 - 57 1 - A-330 - - 22 - - B-777 5 - 26 1 - B-747 - - 9
Slide 26: Financial Results
The renowned Russian fashion designer, Victoria Andreyanova, created a dark blue uniform in 2004. A dark blue uniform for flights in autumn and winter was introduced in 2010 and ranked first in international ratings for being the most stylish and elegant flight attendant uniform. Financial Results 0
Slide 27: Financial Highlights: Q3 and 9M 2018
Financial Highlights: Q3 and 9M 2018 RUB mln Q3 2017 Q3 2018 Change 9M 2017 9M 2018 Change (where applicable) 15,378 17,393 13.1% Passenger Traffic (mln PAX) 38,340 42,249 10.2% 169,915 200,523 18.0% Revenue 404,773 466,345 15.2% 149,702 177,622 18.7% Traffic Revenue 350,502 409,974 17.0% 54,958 64,
Slide 28: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mln RUB mln 15.2% 15.2% 8.8% + 4.7% + 0.9% + 0.9% 12.8% + 1.9% + 0.4% + 0.1% 3,595 466,345 466,345 19,056 3,450 7,790 1,539 561 51,682 35,472 404,773 More traffic Domestic 404,773 served under Depreciation of yield
Slide 29: Operating Costs
Operating Costs Change Change Change Operating Expense Change % of Total OpEx Q3 2017 Q3 2018 ex. FX 9M 2017 9M 2018 ex. FX y-o-y (RUB mln If not stated otherwise) y-o-y (9M 2018) & NRE & NRE 33,727 54,080 60.3% 49.9% Fuel 89,944 131,965 46.7% 41.3% 30.7% 102,024 109,318 7.1% 2.5% Opex (ex. Fuel) 27
Slide 30: Group Unit Costs
Group Unit Costs Q3 2017 Q3 2018 Change Operating Expense per ASK (CASK), RUB 9M 2017 9M 2018 Change 0.75 1.09 46.1% Fuel 0.76 1.02 34.7% 2.27 2.21 (2.3)% Opex (ex. Fuel): 2.30 2.30 0.0% 0.64 0.64 0.3% Aircraft, Traffic and Passenger Servicing 0.63 0.62 (1.4)% 0.49 0.40 (19.2)% Staff 0.51 0.47 (7.0)
Slide 31: Fuel Cost Management
Fuel Cost Management Flight Hours Fuel Consumption per ASK Fuel Consumption per RTK (thousand hours) (gr/ASK) (gr/RTK) 10.2% (1.2)% (1.2)% 834 275.4 272.1 22.8 22.5 756 9M 2017 9M 2018 9M 2017 9M 2018 9M 2017 9M 2018 Aeroflot Airline Jet Fuel Price Comments (RUB per tonne of jet fuel) • Efficient fu
Slide 32: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline personnel Flight crew 31-Dec-2017 30-Sep-2018 % 9.9% 12.2% Cabin crew 11,259 11,947 6.1 % Other airline Airport services 7,034 7,117 1.2 % personnel Technical maintenance and repair 4,702 5,196 10.5 % 13.7% Cabin crew Flight c
Slide 33: EBITDA Evolution
EBITDA Evolution (RUB mln) Total effect on revenue Total effect on costs ∑=61,572 RUB mln ∑=(67,687) RUB mln Net volume and price effect Net FX effect Net volume and price effect ∑=42,516 RUB mln ∑=4,802 RUB mln ∑=(53,434) RUB mln 19,056 (14,253) (37,107) 3,595 Volume effect 3,450 35,472 (8,441) RUB
Slide 34: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mln) Billion RUB 9M 2018 Billion RUB 9M 2018 Other adjustments before working capital changes, incl. 10.2 Working capital changes and income tax, incl. (18.8) Effect from revenue hedging (finance lease hedge accounting) 4.9 Change in accounts receivable and prepaym
Slide 35: Pobeda Financial Results
Pobeda Financial Results 1 Increasing PAX Traffic RASK dynamics Growing Revenues of LCC Segment Million passengers RUB 5.2 Q3 2017 Q3 2018 Change RUB mln 9M 2017 9M 2018 Change 2.64 2.66 3.3 7,733 12,747 64.8% Revenue 16,002 26,483 65.5% 4,660 5,464 17.3% EBITDAR1 6,703 8,093 20.7% 9M 2017 9M 2018 9
Slide 36: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / LTM EBITDA2 0.9 0.9 RUB mln 31-Dec-2017 30-Sep-2018 Change 0.7 Borrowings 3,181 3,502 10.1% 0.6 Finance Lease Liabilities 100,689 92,449 (8.2)% Pension Liabilities 922 920 (0.2)% n/m Total Debt 104,792 96,871 (7.6)% 30-Sep-2017 31-Dec-2017 31-Mar-2018
Slide 37: Appendix
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Slide 38: Russian Air Transportation Market: Room for Growth
Russian Air Transportation Market: Room for Growth Russian Total Passenger Traffic Growth, mln PAX(1) Trips per Capita (2) Despite fast growth of the recent years, Total CAGR 4.5% Russian airline industry still has International – (1.3)% | Domestic – 12.4% 20.3% promising growth prospects compared t
Slide 39: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Airline Pobeda Airline Aurora Airline Indicator Unit 9M 2018 Y-o-Y 9M 2018 Y-o-Y 9M 2018 Y-o-Y Passenger Traffic th PAX 9,046 0.3% 5,178 55.3% 1,255 5.2% International Routes th PAX 3,563 6.6% 1,195 92.3% 314 4.4% Domestic Routes th PAX 5,483 (3.5)%
Slide 40: Infrastructure Expansion to Support Future Growth
Infrastructure Expansion to Support Future Growth New Terminal B Highlights New infrastructure objects launched in 2018 Capacity – 20 mln PAX (4,200 PAX per hour) Size – 110 thd sqm New technologies implemented in the new terminal Connected to terminal E via interteminal tunnels Terminal B Interterm
Slide 41: Fleet Expansion Commitments
Fleet Expansion Commitments Delivery/Phase-out Schedule in Accordance with Existing Contracts 9M 2018 (Actual) 4Q 2018 (Plan) 2019 (Plan) 2020 (Plan) 2021 (Plan) Current Type of aircraft Phase 1 Phase Phase Phase Phase fleet Delivery Delivery Delivery Delivery Delivery out out out out out Wide-body
Slide 42: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units 9M Yield (PAX Revenue / RPK) 9M RASK (PAX Revenue / ASK) RUB RUB 9.8% 7.8% 5.6% 5.9% 4.18 3.5% 0.5% 3.36 3.81 3.88 3.21 3.67 3.12 3.50 3.52 3.01 3.03 2.91 Domestic International Total Domestic International Total 9M Yield ex. Pobeda (PAX Revenue / RPK)
Slide 43: Aeroflot Group Blended Flights Revenue Units
Aeroflot Group Blended Flights Revenue Units Q3 Yield (Scheduled + Charter PAX Revenue / RPK) Q3 RASK (Scheduled + Charter PAX Revenue / ASK) RUB RUB 12.0% 6.8% 12.1% 8.1% 0.2% 3.0% 4.19 3.69 4.00 3.59 3.74 3.75 3.75 3.74 3.37 3.47 3.29 3.32 Domestic International Total Domestic International Total
Slide 44: Net Income Evolution
Net Income Evolution (RUB mln) 61,011 561 (66,588) (3,038) 966 (699) 105 2,984 39 27,149 22,490 Reported Net Traffic Revenue Other Revenue Operating Finance Income Finance Costs Hedging Result Revaluation of Taxation Other Reported Net Income 9M 2017 Expenses Equity Income 9M 2018 Investments and ot
Slide 45: Reported and Adjusted Net Income Analysis
Reported and Adjusted Net Income Analysis 9M Adjusted Net Income Build-Up (RUB mln) 196 (144) (1,327) (561) (2,222) 22,492 18,434 Reported Net Income Discounting of receipt Change in the fair FOREX on PDP Insurance refund Recovery of part of Adjusted Net Income 9M 2018 of lease deposits value of inv
Slide 46: IFRS 16 (accounting of leases)
IFRS 16 (accounting of leases) • IFRS 16 will replace IAS 17 and is mandatory • Operating lease charges will be divided between depreciation and interest, implying increase in EBITDA applicable starting January 2019 • Adoption of the standard may increase volatility of companies’ PL • Almost all lea
Slide 47: Board of Directors
Board of Directors Corporate Governance Board of Directors Personnel and Audit Strategy Name Remuneration Committee Committee Committee General Meeting of Audit Committee Shareholders (3 members) Mikhail Poluboyarinov Evgeny Ditrich Personnel and Remuneration Board of Directors Vitaly Saveliev Commi
Slide 48: Aeroflot Group Structure
Aeroflot Group Structure PJSC Aeroflot(1) Airlines Ancillary Companies JSC Rossiya Airlines 75%-1 sh. CJSC Aeromar 51% On-board sales/catering JSC Donavia (2) 100% LLC Aeroflot-Finance 100% Financial services JSC Orenair (2) 100% JSC Sherotel 100% Hotel services JSC Aurora Airlines 51% Aeroflot Avia
Slide 49: Contact details
Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru
Aeroflot Group — Investor Presentation (December 2018) on 6ix