Capital A Berhad · MYX:CAPITALA

Capital A Berhad — AirAsia — Q4 2006 Earnings Presentation

35 slides from Capital A Berhad's earnings presentation, Aug 25, 2006

  1. Slide 1: Now Everyone Can Fly – Fourth Quarter 2006 Results

    “Now Everyone Can Fly” Fourth Quarter 2006 Results 25 August 2006

  2. 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

  3. Slide 3: 1. Highlight & Events

    CONFIDENTIAL Now Everyone Can Fly 1. Highlight & Events

  4. Slide 4: Key Highlights

    Key Highlights Now Everyone Can Fly q 18 quarters of consistent profitability q Domestic Rationalization a reality, commence 1 August 2006 q Net Income of RM9 million – 143% growth YoY on the back of 21% revenue growth – 32% EBITDAR margin q Strong growth profile maintained – passenger numbers grew

  5. Slide 5: Domestic Rationalization Updates

    Domestic Rationalization Updates Now Everyone Can Fly q Slight adjustment to the original structure – trunk routes added 3 routes to a total of 22 – price floor for MAS is removed q AirAsia is not burdened with interlining requirements q AirAsia will be given equal status national carrier – AirAsia

  6. Slide 6: Our New CFO: Rozman Omar

    Our “New” CFO: Rozman Omar Now Everyone Can Fly q Over 22 years of business management experience q Extensive knowledge and experience in corporate finance q Formerly CFO for Indonesia AirAsia q ACCA holder 5

  7. Slide 7: Dominating ASEAN

    Dominating ASEAN Now Everyone Can Fly Period Destinations Served Jan 2002 6 Jun 2003 11 Jun 2004 26 Jun 2005 52 Jun 2006 65 NOW 70 Latest Routes Kuala Lumpur – Brunei Kota Kinabalu – Miri Kota Kinabalu – Tawau Kuching – Miri Kuching – Sibu Kuching – Bintulu Kuching – Kota Kinabalu Bangkok – Yangon 6

  8. Slide 8: Hub Network

    Hub Network Now Everyone Can Fly Bangkok 18 Routes Q 10 Penang / Alor Star Kota Kinabalu 7 Routes Q 1 Kuala Lumpur 30 Routes Q 24 Johor Bahru Kuching 9 Routes Q 2 6 Routes Q 1 - 6 hubs O 70 routes Q 44 aircrafts Jakarta Existing Hubs 8 Routes Q 6 Potential New Hub 7

  9. Slide 9: Fleet Plan to Facilitate Strong Profitable Growth and Fleet Rejuvenation

    Fleet Plan to Facilitate Strong Profitable Growth and Fleet Rejuvenation Now Everyone Can Fly 100 Airbus A320 (180 seats) Boeing 737­300 (148 seats) 80 CAGR 70% (2006 : 2002) 55 60 42 21 40 7 20 35 33 27 3 17 7 0 2002 2003 2004 2005 2006 2007E q Boeing 737­300 will be phased­out as leases expires q

  10. Slide 10: Consistent passenger growth

    Consistent passenger growth Now Everyone Can Fly Passengers Flown by AirAsia Group (‘ (‘000) 000) CAGR 78% . 20 05) 9,311 6 vs th (200 grow 48% 6,289 2,839 2,789 2,532 2,180 1,811 1,481 611 291 M ar­ Jun­ Jun­ Jun­ Jun­ Q1 Q2 Q3 Q4 Jun­ 2001 2002 2003 2004 2005 2006 9

  11. Slide 11: Load factor better than expected

    Load factor better than expected Now Everyone Can Fly ASK & RPK (million) and Load Factor (%) AirAsia Group 10000 ASK (Malaysia) 80% 9000 ASK (Associates) 78% 8000 Load Factor 76% 7000 74% Load Factor % ASK million 6000 72% 5000 70% 4000 68% 3000 66% 2000 64% 1000 62% 0 60% 2002 2003 2004 2005 2006

  12. Slide 12: 2. Results Commentary

    CONFIDENTIAL Now Everyone Can Fly 2. Results Commentary

  13. Slide 13: Operational Statistics

    Operational Statistics Now Everyone Can Fly q Strong passenger growth – 35% growth for Q42006 vs. Q42005 – 30% growth for FY2006 vs. FY2005 q Effective capacity growth – 25% growth for Q42006 vs. Q42005 – 32% growth for FY2006 vs. FY2005 q Superior cost control – 3% improvement yoy for Q4 US2.32/ASK

  14. Slide 14: Operational Statistics – Q4

    Operational Statistics – Q4 Now Everyone Can Fly Operational Statistics Q4 ­2006 Q4 ­2005 ∆ (%) Average Load factor 83% 76% 7 ppt # Passengers 1,623,130 1,203,456 35% Average fare (RM) 130 150 (13%) RPK (mn) 1979 1447 37% ASK (mn) 2388 1903 25% Rev/RPK (US cents) 3.35 3.63 (8%) Cost/ASK (US cents) 2

  15. Slide 15: Operational Statistics – FY2006

    Operational Statistics – FY2006 Now Everyone Can Fly Operational Statistics FY2006 FY2005 ∆ (%) Average Load factor 78% 75% 3 ppt # Passengers 5,719,411 4,414,069 30% Average fare (RM) 137 143 (4%) RPK (mn) 6702 4881 37% ASK (mn) 8646 6525 32% Rev/RPK (US cents) 3.44 3.59 (4%) Cost/ASK (US cents) 2.

  16. Slide 16: Operational Statistics – Thailand (Q4)

    Operational Statistics – Thailand (Q4) Now Everyone Can Fly Operational Statistics Q4­2006 Q4­2005 ∆ (%) Average Load factor 76% 68% 8 ppt # Passengers 733,025 389,384 88% Average fare (RM) 122 125 (2%) Average fare (THB) 1171 1318 (11%) RPK (mn) 682 378 80% ASK (mn) 891 560 59% Rev/RPK (US cents) 3

  17. Slide 17: Operational Statistics – Thailand (FY2006)

    Operational Statistics – Thailand (FY2006) Now Everyone Can Fly Operational Statistics 2006 2005 ∆ (%) Average Load factor 79% 73% 6 ppt # Passengers 2,391,717 1,603,594 49% Average fare (RM) 129 111 16% Average fare (THB) 1236 1194 4% RPK (mn) 2261 1452 56% ASK (mn) 2873 1982 45% Rev/RPK (US cents)

  18. Slide 18: Operational Statistics – Indonesia

    Operational Statistics – Indonesia Now Everyone Can Fly Operational Statistics Q4­2006 Q4­2005 ∆ (%) Average Load factor 74% 77% (3 ppt) # Passengers 432,521 151,506 185% Average fare (RM) 95 96 (1%) Average fare (IND) 236,469 242,482 (2%) RPK (mn) 438 182 140% ASK (mn) 594 234 154% Rev/RPK (US cent

  19. Slide 19: Profitability – Malaysia

    Profitability – Malaysia Now Everyone Can Fly Margins (%) (RM ‘000) Q4­2006 Q4­2005 ∆ (%) Q4­06 Q4­05 Revenue 241,783 199,508 EBITDAR 77,180 46,206 67% 31.9% 23.2% EBIT 40,024 25,566 57% 16.6% 12.8% Net Income 39,098 16,108 143% 16.2% 8.1% q Strong profit margins despite rising fuel price q Profit m

  20. Slide 20: Profitability – Thailand

    Profitability – Thailand Now Everyone Can Fly (THB ‘000) Q4­2006 Q4­2005 ∆ (%) Revenue 883,403 529,484 67% EBITDAR 125,905 (25,991) EBIT (5,496) (101,495) Net Income (35,632) (32,340) q Operationally profitable – 14% EBITDAR margins – forex losses contribute to the losses 19

  21. Slide 21: Robust cash generation

    Robust cash generation Now Everyone Can Fly Balance Sheet (RM millions) Cash from Operations (RM millions) Shareholder Equity Cash from Operations (Normalized) Net Debt Cash from Operations 1,090 953 627 269 113 2005 2006 0 ­329 2005 2006 è Debt levels reflect aircraft purchase 20

  22. Slide 22: Ancillary Income Progress

    Ancillary Income Progress Now Everyone Can Fly A i r A s i a A n c i l l a r y I n c o me % R e v e n u e 9 . 0 8 . 0 7 . 0 6 . 0 5 . 0 4 . 0 2 0 0 5 Q1­ 0 6 Q2 ­ 0 6 Q3 ­ 0 6 Q4 ­ 0 6 2 0 0 6 q Plenty of scope for growth ­ strong growth opportunities: car rentals, in­flight advertising ­ cargo cont

  23. Slide 23: 3. Cost Management

    CONFIDENTIAL Now Everyone Can Fly 3. Cost Management

  24. Slide 24: 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 .3 5 2 .3 3 2 .19 1.9 6 1.7 2 1.3 2 1.11 2002 2003 2004 2005 2006 Malaysian Operations 23

  25. Slide 25: Operating Expenses

    Operating Expenses Now Everyone Can Fly Operating Expenses % Revenue FY2006 FY2005 (RM ‘000) 2006 2005 Revenue 855,666 666,250 - Staff Cost (111,848) (78,960) 13.1 11.7 - Fuel and Oil (323,775) (266,610) 37.8 40.0 - User & Station Charges (51,730) (29,383) 6.0 4.4 - Maintenance & Overhaul (109,477)

  26. Slide 26: Cost / ASK – what changed from last year to this year?

    Cost / ASK – what changed from last year to this year? Now Everyone Can Fly 2.33 (2006) vs. 2.19 (2005) {6.4% cost increase} (US cents) Cost per Change Reasons ASK (%) Good Fuel and oil 1.01 (6%) Fuel surcharge recoveries Cost of aircraft 0.17 (20%) Fewer leased aircraft in fleet Staff cost 0.35 11%

  27. Slide 27: 4. Outlook

    CONFIDENTIAL Now Everyone Can Fly 4. Outlook

  28. Slide 28: Fleet Plan for FY2007

    Fleet Plan for FY2007 Now Everyone Can Fly 60 55 8 42 40 13 6 10 20 3 34 0 2006 2007F Malaysia Thailand Indonesia Group Total 27

  29. Slide 29: FY2007 Outlook

    FY2007 Outlook Now Everyone Can Fly q Traffic growth 40% to 8 million; associates will carry 6­7 million q Lower average fares – aggressive promotions to drive up load factors q Flat yields – lower stage length – some routes reaches maturity q Unit costs ex­fuel down 5­9% – lower aircraft operating

  30. Slide 30: Sensitivity Analysis – FY2007

    Sensitivity Analysis – FY2007 Now Everyone Can Fly Sensitivity Analysis Impact on PBT (figures in RM million) +/­ 1% in Load Factor 15 +/­ RM1 in Fare 8.0 +/­ USD1/bbl in Fuel 8.5 +/­ 10% in ancillary income 3.5 29

  31. Slide 31: AirAsia - Concluding Remarks

    AirAsia ­ Concluding Remarks Now Everyone Can Fly q World’s lowest cost carrier q Level playing field and equal status q LCC accepted – dedicated terminals, people, destinations q Airbus improves reliability and performance q Software dealt with – AirAsia Academy q Growth of other LCC muted 30

  32. Slide 32: 5. Peer Group Comparison

    CONFIDENTIAL Now Everyone Can Fly 5. Peer Group Comparison

  33. Slide 33: Superior Utilization Rate

    Superior Utilization Rate Now Everyone Can Fly Block Hours per Day (1) 14 13 Average 12 11 10 9 Average Sector per Day (2) 6.5 3.9 6.1 6.5 4.6 9.8 6.7 5.2 (1) Latest available fiscal year (2) Annual departures per average aircraft per day 32

  34. Slide 34: How is your Cost / ASK so low?

    “How is your Cost / ASK so low?” Now Everyone Can Fly Operating Expenses Cost/ASK Reason (US cents) Others* Staff cost 0.35 1.16 Superior productivity & low cost region Fuel and Oil 1.01 1.51 Fuel surcharge recoveries Maintenance & Overhaul 0.34 0.34 LT contracts at attractive levels Sales & Marketi

  35. Slide 35: One of the World's most Profitable Airlines

    One of the World’s most Profitable Airlines Now Everyone Can Fly Profitability AVERAGE Margin% EBITDAR 28% 35% 16% 25% 14% 19% 34% 20% 22.8% EBIT 12% 25% 4% 12% 3% 11% 23% 8% 10.9% Net Income 15% 20% 3% 8% ­1% 7% 19% 2% 8.1% Source: AirAsia; latest company reports Note: Latest available fiscal year

AirAsia — Q4 2006 Earnings Presentation on 6ix