Aeroflot · RUS:AFLT
Aeroflot — 9M 2019 Earnings Presentation
40 slides from Aeroflot's earnings presentation, Nov 29, 2019
Slide 1: Aeroflot Group Q3 and 9M 2019 IFRS Results
AEROFLOT GROUP Q 3 AN D 9 M 2 0 1 9 I F R S R E S U LT S 29 November 2019 Speakers: Andrey Chikhanchin – Deputy CEO for Commerce and Finance Andrey Panov – Deputy CEO for Strategy, Service and Marketing Ivan Batanov – Head of Revenue Management
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 Group 9M 2019 Highlights
Aeroflot Group 9M 2019 Highlights + 10.6 % + 12.4 % + 1.6 % + 12.4 % 3.84 524 bn 3.78 466 bn 46.7 mln 145.4 bn 42.2 mln 129.4 bn PAX ASK Blended Yield (RUB) Revenue (RUB) 9M 2018 9M 2019 • In 9M 2019 Aeroflot Group has continued operational development via expanding capacity on the back of opportuni
Slide 4: Agenda
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 4
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 2019 Change in PAX million incl. PAX of Russian and Foreign Carriers and intl. transit PAX International Routes Domestic Routes 7.6% +4.5
Slide 6: Aeroflot Group Multi-Brand Strategy
Aeroflot Group Multi-Brand Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth • 9M 2019 • Flagship carrier Moscow (Sheremetyevo) +6.2% • Premium product (4 Stars) 28.4 Premium • High income and middle class 60.8% 26.8 28.4 • Hub and spoke model 9M 2018 9M 2019 • Scheduled netwo
Slide 7: Pobeda Airline: Acceleration of Growth
Pobeda Airline: Acceleration of Growth Overview of Pobeda Pobeda’s Network • Operating from Vnukovo airport (3rd Moscow airport by PAX) Petrozavodsk Network Surgut • Network comprising 108 routes (62 unique for the Group) Helsinki 14 Saint Petersburg Kirov Perm Moscow Kazan Ekaterinburg Tomsk Krasno
Slide 8: 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 19.1x 21.2x 2
Slide 9: Agenda
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 9
Slide 10: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (9M 2019, y-o-y) Murmansk Salekhard Russia 5.2 % Arkhangelsk Syktyvkar New Urengoy Khanty Mansiysk Saint Petersburg Surgut Yakutsk Nizhnekamsk Nizhnevartovsk Perm Magadan Nizhny Novgorod Tyumen Ekaterinburg Kemerovo MOSCOW S
Slide 11: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units Q3 Yield (PAX Revenue / RPK) Q3 RASK (PAX Revenue / ASK) RUB RUB (5.3)% (3.9)% (1.1)% 0.7% 4.4% 6.6% 3.86 4.47 3.64 3.65 3.69 3.65 4.30 4.17 3.49 4.02 4.14 3.77 Domestic International Total Domestic International Total 9M Yield (PAX Revenue / RPK) 9M RA
Slide 12: Aeroflot Airline Yield Dynamics (Monthly)
Aeroflot Airline Yield Dynamics (Monthly) Aeroflot Airline Total Yield, 2018 Aeroflot Airline Total Yield, 2019 RUB/RPK, Change y-o-y in % RUB/RPK, Change y-o-y in % 17.2% 9.3% 7.9% 6.4% 5.8% 5.2% 4.3% 3.7% 8.2% Jun Jul 7.7% 7.5% Jan Feb Mar Apr May Aug Sep (0.6)% 6.2% 5.1% 4.6% 4.4% 0.4% (6.6)% Jan
Slide 13: Agenda
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 13
Slide 14: Fleet Plan
Fleet Plan Delivery/Phase-out Schedule1 Type of 9M 2019 Fleet as at Q4 2019E 1 aircraft 30.09.2019 Delivery Phase out Delivery Phase out Wide-body (long-haul) 2 - 60 - (3) A-330 - - 22 - (3)3 B-777 2 - 29 - - B-747 - - 9 - - Narrow-body (medium-haul) 7 (9) 242 - (6) A-319 - (4) 31 - (1) A-320 1 (2)
Slide 15: Agenda
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 15
Slide 16: Financial Highlights: 9M 2019
Financial Highlights: 9M 2019 Q3 2018 RUB mln 9M 2018 Q3 2019 Change 9M 2019 Change restated1 (where applicable) restated1 17,393 18,533 6.6% Passenger Traffic (mln PAX) 42,249 46,728 10.6% 200,523 212,543 6.0% Revenue 466,345 523,983 12.4% 177,622 190,323 7.2% PAX Traffic Revenue 409,974 462,034 12
Slide 17: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mln RUB mln 12.4% 12.4% 8.4% + 2.0% + 1.7% + 0.2% 11.1% + 0.1% + 0.2% + 1.0% 8,025 1,099 523,983 51,773 287 774 4,804 523,983 39,231 9,283 466,345 466,345 Depreciation of Domestic yield up by Currency effect on RUB
Slide 18: Operating Costs
Operating Costs Operating Expense Q3 2018 Change Change 9M 2018 Change Change % of Total OpEx Q3 2019 (RUB mln If not stated 9M 2019 restated1 y-o-y ex. FX otherwise) restated1 y-o-y ex. FX (9M 2019) 54,080 52,861 (2.3)% (1.7)% Fuel 131,965 145,569 10.3% 8.4% 31.5% 96,929 112,605 16.2% 16.5% Opex (e
Slide 19: Group Unit Costs
Group Unit Costs Q3 2018 9M 2018 Q3 2019 Change Operating Expense per ASK (CASK), RUB 9M 2019 Change restated1 restated1 1.09 0.99 (9.7)% Fuel 1.02 1.00 (1.8)% 1.96 2.10 7.3% Opex (ex. Fuel): 2.07 2.18 5.4% 0.64 0.67 4.3% Aircraft and Passenger Servicing 0.62 0.67 7.4% 0.49 0.49 0.3% D&A and Customs
Slide 20: EBITDA Evolution
EBITDA Evolution (RUB mln) Total effect on revenue Total effect on costs ∑=57,638 RUB mln ∑=(48,704) RUB mln Net volume and price effect Net FX effect Net volume and price effect ∑=48,355 RUB mln ∑=3,148 RUB mln ∑=(42,569) RUB mln 9,283 (6,135) (11,057) 8,025 1,099 39,231 (5,945) (16,249) (1,225) (6
Slide 21: Pobeda Financial Results
Pobeda Financial Results 1 Increasing PAX Traffic RASK dynamics Pobeda Statement of Profit and Loss (IFRS, standalone) Million passengers RUB 2.80 Q3 2018 9M 2018 7.6 2.66 Q3 20192 Change RUB mln 9M 20192 Change restated2 restated2 5.2 12,747 19,320 51.6% Revenue 26,483 40,779 54.0% Operating 9M 201
Slide 22: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / EBITDA (management accounting) 2 RUB mln 31-Dec-2018 30-Sep-2019 Change 5.1 4.5 3.8 3.7 Borrowings 3,486 3,327 (4.6)% Lease Liabilities 655,931 593,447 (9.5)% 31-Dec-2018 31-Mar-2019 30-Jun-2019 30-Sep-2019 Source: management accounting. Q1, Q2 and Q3
Slide 23: Agenda
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 23
Slide 24: 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 5.2% Russian airline industry still has International – 1.0% | Domestic – 10.4% 10.7% promising growth prospects 3.73 137.0 C
Slide 25: Market Return to Growth
Market Return to Growth Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in PAX traffic y-o-y, % Change in ASK y-o-y, % 8.5% 10.7% 10.0% 8.2% 5.9% 18.6 % 10.9 % 10.5% 10.6 % 13.8% 14.4% 9.4% 11.9% 11.9% 9.1% 9.1 % 11.0 % 7.9 % 7.5% 7.2% 6.9 % 0.6 % 5.0%
Slide 26: Operating Data – Q3 & 9M 2019
Operating Data – Q3 & 9M 2019 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 2018 2019 2018 2019 2018 2019 2018 2019 Passenger Traffic th PAX 10,547 10,638 0.9% 26,770 28,433 6.2% 17,393 18,533 6.6% 42,249 46,728 10.6% International Routes th PAX 5,336
Slide 27: Key Operating Data of Subsidiary Airlines – 9M 2019
Key Operating Data of Subsidiary Airlines – 9M 2019 Rossiya Airline Pobeda Airline Aurora Airline Indicator Unit 9M 2019 Y-o-Y 9M 2019 Y-o-Y 9M 2019 Y-o-Y Passenger Traffic th PAX 9,434 4.3% 7,582 46.4% 1,280 1.9% International Routes th PAX 3,967 11.3% 1,742 45.9% 341 8.7% Domestic Routes th PAX 5,
Slide 28: 9M 2019 Operating Data by Region (Scheduled Routes)
9M 2019 Operating Data by Region (Scheduled Routes) Americas Russia CIS 11.1 % 11.0 % 9.6 % 9.5 % 4.6 % 8.8 % 3.5 p.p. (1.7) p.p. (4.1)% (4.0)% (8.0)% (1.3) p.p. Passengers RPK ASK PLF Passengers RPK ASK PLF Passengers RPK ASK PLF carried carried carried Performance of North and Central American Cap
Slide 29: Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Breakdown Aeroflot Group Fleet Overview Breakdown by Aircraft Operated by Total as of Total as of Change vs. Aircraft Type Aeroflot Subsidiaries 30-Sept-19 31-Dec-18 31-Dec-18 Wide-body 16% Wide-body 41 19 60 58 2 Airbus A330 22 - 22 22 - Narrow- Boeing 777 19 10 29 27 2 body (r
Slide 30: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation Average Age of the Fleet 1 Aircraft Average Age 4.8 Hainan Airlines 5.4 7.0 6,7 Wizz Air 5.4 6.4 6.5 6.2 6.2 IndiGo 5.6 366 364 Etihad Airways 5.7 325 289 Sichuan Airlines 5.8 251 247 Qatar Airways 6.0 Spirit Airlines 6.1 Ethiopian Air
Slide 31: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mln)1 9M 2019 9M 2019, % of Q3 2018 Q3 2019 Y-o-Y Region 9M 20189M 2019 Y-o-Y Sheduled sch. revenue Passenger Flights 90.7% 71,101 79,918 12.4% Russia 155,892 182,340 17.0% 42.3% 45,267 45,907 1.4% Euro
Slide 32: 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 / RPK) RUB RUB (4.9)% (3.6)% 4.4% (1.0)% 0.6% 6.5% 4.19 3.63 3.69 3.59 3.99 4.04 4.00 4.02 3.47 3.51 3.56 3.75 Domestic International Total Domestic International To
Slide 33: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline 30-Sep-2018 30-Sep-2019 % personnel Flight crew 11.0% 14.0% Cabin crew 11,947 12,700 6.3 % Airport services 7,117 5,374 (24.5)% Other airline Technical maintenance and repair 5,196 5,421 4.3 % personnel 13.1% Flight crew 4,042
Slide 34: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mln) Million RUB 9M 2019 Million RUB 9M 2019 Other adjustments before working capital changes, incl. Working capital changes and income tax, incl. Change in provisions (2,272) Change in accounts receivable and prepayments (7,607) Effect from revenue hedging (financ
Slide 35: Net Income Evolution
Net Income Evolution (RUB mln) 4,804 (62,910) 52,834 2,623 361 (5,734) 45,400 46 20,305 (17,382) 263 Restated Net Traffic Revenue Other Revenue Operating Finance Income Finance Costs Hedging Result Revaluation of Taxation Other Net Income 9M Income 9M 2018 Expenses Equity 2019 Investments and other
Slide 36: Introduction of IFRS 16
Introduction of IFRS 16 Significant changes are expected in Operating lease and Maintenance lines of PnL PnL statement 2018 2019 Explanation Operating lease expenses $$$ $$$ • Redistribution of Lease and Maintenance expenses to D&A and Finance costs due to reflecting aircraft and other leased assets
Slide 37: Adoption of IFRS 16 – Lease Liabilities Revaluation
Adoption of IFRS 16 – Lease Liabilities Revaluation Effect on Profit & Loss Exchange rate dynamics RUB/USD 9M 2018 9M 2018 71 +13.9% (31-Dec-17 – 30-Sep-18) million RUB Difference reported1 restated2 69 67 EBITDA 47,191 132,741 + 85,550 65 63 61 D&A and Customs Duties 10,342 65,774 + 55,432 59 57 55
Slide 38: 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) Evgeny Ditrich Chairman Mikhail Poluboyarinov Deputy Chairman Personnel and Remuneration Board of Direct
Slide 39: Aeroflot Group Structure
Aeroflot Group Structure PJSC Aeroflot Airlines Ancillary Companies JSC Rossiya Airlines 75%-1 sh. CJSC Aeromar 51% On-board sales/catering LLC Aeroflot-Finance LLC Pobeda Airlines 100% 100% Financial services JSC Sherotel JSC Aurora Airlines 51% 100% Hotel services Aeroflot Aviation School 100% Edu
Slide 40: Investor Relations Contacts
Investor Relations Contacts Address: 119019, Russia, Moscow, Arbat St. 1 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru