Capital A Berhad · MYX:CAPITALA
Capital A Berhad — AirAsia Berhad — Q1 2006 Earnings Presentation
32 slides from Capital A Berhad's earnings presentation, Nov 29, 2005
Slide 1: First Quarter 2006 Results
“Now Everyone Can Fly” First Quarter 2006 Results 29th th November 2005
Slide 2: Disclaimer
Disclaimer Now Everyone Can Fly Information contained in our presentation is intended solely for your personal 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 c
Slide 3: Agenda
Agenda Now Everyone Can Fly 1. Highlight & Events 2. Results Commentary 3. Cost Management 4. Outlook Supplementary Information 2
Slide 4: 1. Highlight & Events
CONFIDENTIAL Now Everyone Can Fly 1. Highlight & Events
Slide 5: Key Highlights
Key Highlights Now Everyone Can Fly Net Income of RM11.8 million – growth of 13% YoY on the back of 50% revenue growth – EBITDAR growth superior to most other listed Asia-Pacific carriers Strong growth profile maintained – passenger numbers grew 21% YoY – average fare increased by 18% YoY Enco
Slide 6: Other Developments
Other Developments Now Everyone Can Fly Fuel fully hedged for FY2006 requirements – hedge crude component, WTI quoted – refining margin (crack) exposed spot markets Ministry of Finance granted Investment Income Allowance – scope for minimal tax payments for the foreseeable future Acquired full
Slide 7: Highly Efficient Route Network
Highly Efficient Route Network Now Everyone Can Fly Over 14 million passengers carried to date Maximize load factor thru flight connections and network efficiency – 25 minute turnaround – high aircraft utilization, c13 block hours / day – most diversified network in South East Asia Recent Routes
Slide 8: Consistent passenger growth
Consistent passenger growth Now Everyone Can Fly Passengers Flown by AirAsia Group (‘000) 6,289 2,839 YoY wt h g ro 34% 1,811 1,481 1,354 611 291 M ar-2001 Jun-2002 Jun-2003 Jun-2004 Jun-05 Q12005 Q12006 Î There is no stopping the LCC phenomenon 7
Slide 9: 2. Results Commentary
CONFIDENTIAL Now Everyone Can Fly 2. Results Commentary
Slide 10: Operational Statistics
Operational Statistics Now Everyone Can Fly Strong passenger growth – 21% growth Effective capacity growth – 47% growth Superior cost control – 2.41/ASK US cents, 16% rise YoY – primarily due to fuel price hike – 1.24/ASK US cents excluding fuel, 5% improvement YoY Improving fares and yield
Slide 11: Operational Statistics
Operational Statistics Now Everyone Can Fly Operational Statistics Q1 2006 Q1 2005 ∆ (%) Average Load factor 70% 77% # Passengers 1,192,692 984,621 21% Average fare (RM) 144 122 18% RPK (mn) 1358 1017 34% ASK (mn) 1953 1326 47% Rev/RPK (US cents) 3.61 3.27 10% Cost/ASK (US cents) 2.41 2.08 16% # air
Slide 12: Thailand coming along nicely
Thailand coming along nicely Now Everyone Can Fly Thailand Statistics Q1 2006 Q1 2005 ∆ (%) FY2005 Average Load factor 76% 84% 73% # Passengers 445,505 369,340 21% 1,603,594 Average fare (THB) 1231 992 24% 1194 RPK (mn) 437 314 39% 1452 ASK (mn) 574 371 55% 1982 Rev / RPK (US cents) 3.16 2.89 9% 3.3
Slide 13: Profitability
Profitability Now Everyone Can Fly Margins (%) (RM ‘000) Q1 2006 Q1 2005 ∆ (%) Q1 2006 Q1 2005 Revenue 186,277 124,198 50% EBITDAR 34,324 32,786 5% 18.4% 26.4% EBIT 7,460 15,509 (52%) 4.0% 12.5% Net Income 11,789 10,478 13% 6.3% 8.4% Profit growth achieved – despite sharp rises in operational cost
Slide 14: Ancillary Income Progress
Ancillary Income Progress Now Everyone Can Fly A nc illa ry Inc o m e a s % R e v e nue 8 .0 7.0 6 .0 5.0 4 .0 Q1- 0 5 Q2 - 0 5 Q3 - 0 5 Q4 - 0 5 Q1- 0 6 Positive developments from new ancillary sources – Go Car, in-flight advertising Ancillary income will continue to grow going forward – Crunch
Slide 15: Continuously Strengthening our Books
Continuously Strengthening our Books Now Everyone Can Fly Balance Sheet (RM millions) Cash from Operations (RM millions) Shareholder Equity Cash from Operations (Normalized) Net Cash Cash from Operations 953 965 107 113 337 265 150 46 49 29 -46 -29 15 0 2003 2004 2005 Q106 2003 2004 2005 Q106 Î Lowe
Slide 16: 3. Cost Management
CONFIDENTIAL Now Everyone Can Fly 3. Cost Management
Slide 17: Cost Management
Cost Management Now Everyone Can Fly Cost / ASK (US cents) Cost / ASK 3 .4 0 Non Fuel Cost 2 .9 0 2 .4 7 2 .4 1 2 .3 5 2 .19 2 .0 8 5% 1.9 6 improvement 1.7 2 ex-fuel 1.2 4 1.3 0 1.11 2002 2003 2004 2005 Q12006 Q12005 Malaysian Operations Superior cost containment despite fuel price impact 16
Slide 18: Operating Expenses
Operating Expenses Now Everyone Can Fly Operating Expenses % Revenue (RM ‘000) Q12006 Q12005 Q12006 Q12005 Revenue 186,277 124,198 − Staff Cost (28,996) (15,936) 15.6% 12.8% − Fuel and Oil (87,114) (44,283) 46.8% 35.7% − User & Station Charges (11,949) (6,117) 6.4% 4.9% − Maintenance & Overhaul (18,
Slide 19: Cost / ASK – what changed from last year to this year?
Cost / ASK – what changed from last year to this year? Now Everyone Can Fly 2.41 (2006) vs. 2.08 (2005) {16% cost rise} (US cents) Cost per Change Reasons ASK (%) Maintenance & Overhaul 0.25 -34.1 Fewer heavy checks Good Cost of aircraft 0.19 -22.5 High utilization & longer stage Other costs 0.07 -4
Slide 20: Investment Allowance Incentive
Investment Allowance Incentive Now Everyone Can Fly Ministry of Finance approved an “Investment Allowance Incentive” to AirAsia on 14 October 2005 Income tax exemption for capital expenditure – 60% exemption on ‘qualifying capex’ during the period 1 July 2004 to 30 June 2009 – this is in addition
Slide 21: Fuel – actively managing the price hike
Fuel – actively managing the price hike Now Everyone Can Fly WTI Crude Oil Capped Swap for FY2006 – discount of US$ 12 / bbl for WTI above US$ 54 /bbl – FY2006 requirement fully covered – Insurance cover in place at US$70/bbl for WTI (AirAsia never pays >US$58/bbl) Î Roughly US$12/bbl discount to
Slide 22: Track Record of Handling fuel Price Hike
Track Record of Handling fuel Price Hike Now Everyone Can Fly AirAsia effective fuel cost US$/barrel 75 Singapore Jet Kerosene US$/barrel 70 65 60 55 50 45 40 Fuel Surcharge implemented 14 July 35 Q1-2005 Q2-2005 Q3-2005 Q4-2005 Q1-2006 Î Fuel surcharge is necessary to mitigate the fuel price hikes
Slide 23: 6. Outlook
CONFIDENTIAL Now Everyone Can Fly 6. Outlook
Slide 24: Fleet Plan to Facilitate Profitable Growth
Fleet Plan to Facilitate Profitable Growth Now Everyone Can Fly 60 44 40 8 = 96% 33 A GR C 27 4 11 2 7 17 6 20 4 25 22 19 3 13 7 0 2002A 2003A 2004A 2005A NOW 2006E Malaysia Thailand Indonesia Group Total 23
Slide 25: Substantial Expansion Opportunities
Substantial Expansion Opportunities Now Everyone Can Fly Kunming Nanning Increase frequencies Hanoi Macau – KL-Macau (2x daily) Haikou Vientiane – BKK – Macau (3x daily) – Jakarta-KL (4x daily) Chiang Mai Bangkok Clark Siem Reap Introduce cross connectivity – KL-Chiang Mai Ho Chi Minh Expand i
Slide 26: Malaysia – Going Strong
Malaysia – Going Strong Now Everyone Can Fly Strong Growth Profile Expected to Continue – # aircraft now = 22; expecting 23 by end FY2006 – budgeting ASK growth between 40 - 45% vs. FY2005 Waiting for Government’s directive to rationalize domestic route – potential for MAS to rationalize domesti
Slide 27: Thailand – turnaround achieved
Thailand – turnaround achieved Now Everyone Can Fly Strong Growth Profile Expected to Continue – # aircraft now = 7; expecting 11 by end FY2006 – budgeting ASK growth between 70-75% vs. FY2005 Competition is immobile – no growth at One-Two-Go – Nok Air only growing as it takes TG’s domestic “cas
Slide 28: Indonesia
Indonesia Now Everyone Can Fly Strong Growth Expected to Continue – # aircraft now = 4; expecting 8 by end FY2006 – budgeting capacity between 2000-2500 million ASK Encouraging support seen, depicted by high load factor (proof that the model has appeal in Indonesia) Fragmented and far flung ma
Slide 29: AirAsia - Concluding Remarks
AirAsia - Concluding Remarks Now Everyone Can Fly World’s lowest cost carrier Industry leading customer service and innovative delivery Disciplined and structured growth out to 2010 Airports and bases plentiful; no shortage of new markets 100 new aircraft facilitates growth to over 30m pax
Slide 30: Supplementary Information
CONFIDENTIAL Now Everyone Can Fly Supplementary Information
Slide 31: Working Example – Fuel Hedge FY2006
Working Example – Fuel Hedge FY2006 Now Everyone Can Fly WTI Crude Oil Capped Swap for FY2006 – discount of US$ 12 / bbl for WTI above US$ 54 /bbl – FY2006 requirement fully covered – refining margin (crack) is open to spot market Formula = Crude oil (with hedging mechanism) + crack Eg 1: WTI = $5
Slide 32: Working Example – Tax Allowance
Working Example – Tax Allowance Now Everyone Can Fly Accounting Criteria – capital allowance dispersed over four years; 20% initial allowance and 20% pa annual allowance – Investment allowance may be deducted up to 70% of statutory income *assume Capex 100 for this example Revenue 200 Expenses & t