Aeroflot · RUS:AFLT
Aeroflot — 9M 2014 Earnings Presentation
43 slides from Aeroflot's earnings presentation, Dec 1, 2014
Slide 1: Aeroflot Group 9 Months 2014 Financial Results
Aeroflot Group 9 Months 2014 Financial Results Shamil Kurmashov Deputy CEO for Finance, Network and Revenue Management Giorgio Callegari Deputy CEO for Strategy and Alliances Moscow, Russian Federation December 1, 2014 1
Slide 2: Disclaimer
Disclaimer This document has been prepared by JSC “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 in
Slide 3: Agenda
1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 3
Slide 4: Key Highlights
Key Highlights 1• Aeroflot Group passenger traffic grew by 10.5% in 9M 2014 year-on-year, above market average growth rate of 9.6%, solidifying its leading position 2• Double digit passenger traffic growth of 25.4% on domestic routes leading to increased market share 3• Revenue growth of 6.5% in 9M
Slide 5: Market Update
1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 5
Slide 6: Russian Air Transportation Market
Russian Air Transportation Market 2009 – 2013 Q3 2014/2013 9M 2014/2013 International Routes 9.6% Domestic Routes 103.7 91.6 CAGR 87.7 80.1 2008-13 2014-17F 80.0 Russian Total 70.5 9.9% Passenger 56.7 56.2 64.4 12.8% 6.6% 4.0% Traffic 47.3 52.3 41.2 37.5 50.3 34.1 32.8 (m PAX)1,2 8.4% 5.3% 22.3 3.2%
Slide 7: Aeroflot Group Market Position
Aeroflot Group Market Position Passenger Traffic (9M 2014, m PAX) Russian Passenger Traffic1 30.2%1 36.3%2 26.5 19.0% 20.0% 19.0% 20.0% 19.0% 18.0% 16.9% 18.9%1 16.9%1 22.8%2 18.0% 18.9% 18.0% n/a 28.0% 24.0% 25.0% 22.0% 16.6 11.9%1 14.9 14.3%2 8.8%1 8.6%1 10.5 10.6%2 10.4%2 7.7 7.6 4.6%1 63.0% 64.0
Slide 8: Multi-brand Offering of Aeroflot Group
Multi-brand Offering of Aeroflot Group Brand Business model Focus Airport PAX Contribution 1 • Flagship carrier • Moscow (Sheremetyevo) Network/ • Premium product 67.2% Scheduled • High income, middle class, leisure segment 15.0% • Focus on direct and transit routes via • Saint-Petersburg St. Peters
Slide 9: Aeroflot's New Low Cost Carrier - Pobeda
Aeroflot’s New Low Cost Carrier ‒ Pobeda Overview of Pobeda LCC Penetration Comparison by PAX (%) 38% • Oct. 2013: launched under Dobrolet name – 67.8 ths PAX carried by August 2014 30% – Flights suspended in August 2014 due to EU sanctions 27% after 55 days of operations • Sep. 2014: new legal enti
Slide 10: Operating Performance
1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 10
Slide 11: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network – Summer 2014 Schedule (9M 2014 / 9M 2013) Murmansk Russia 18.6% Arkhangelsk Novy Urengoy Yakutsk Syktyvkar Surgut Chelyabinsk Nizhnevartovsk Magadan Saint-Petersburg Ekaterinburg Novokuznetsk Tumen Tomsk Europe 5.8% Kalinin
Slide 12: 9M 2014 Traffic and Capacity Evolution
9M 2014 Traffic and Capacity Evolution Monthly Passenger Traffic (m PAX) Monthly Passenger Turnover (bn pkm) September 2014: +9.2% Y-o-Y September 2014: +6.7% Y-o-Y 9M 2014: +10.5% Y-o-Y 9M 2014: +5.7% Y-o-Y 11.9% 9.2% 9.6% 7.6% 9.4% 9.2% 6.7% 6.3% 3.8 3.8 9.5% 5.9% 3.5 3.4 3.4 10.7% 10.2% 3.3 9.8 9
Slide 13: 9M 2014 Traffic and Capacity Dynamics (Y-o-Y)
9M 2014 Traffic and Capacity Dynamics (Y-o-Y) North and Central America Russia CIS 4.5% 0.1% 3.8% 25.3% 3.4% 18.6% 14.1% 3.1% (0.3%) Passengers RPK ASK SLF (8.8%) (8.6%) (8.7%) Passengers RPK ASK SLF carried Passengers RPK ASK SLF carried carried Europe Middle East Asia 7.4% 7.2% 10.4% 5.9% 6.3% 8.1
Slide 14: 3Q 2014 trading results benchmarking
3Q 2014 trading results benchmarking PAX growth (y-o-y) ASK growth (y-o-y) Load factor RPK growth (y-o-y) Company 3Q14 9M14 3Q14 9M14 3Q13 3Q14 9M13 9M14 3Q14 9M14 10.1% 10.5% 6.9% 5.7% 83.9% 84.8% 79.1% 79.2% 8.0% 5.7% N/A N/A (4.1%) (0.7%) 86.9% 87.8% 84.2% 85.2% (3.2%) 0.4% 9.9% 16.8% 9.0% 10.5%
Slide 15: Revenue Breakdown
Revenue Breakdown Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUBm)1 9M 2014 Charter Passenger Q3 2013 Q3 2014 Y-o-Y 9M 2013 9M 2014 Y-o-Y Flights 6% Cargo 3% Russia 31,888 35,798 12.3% 69,238 78,764 13.8% Scheduled Passenger Flights Europe 20,709 20,246 -2.2% 49,124 51,101
Slide 16: Revenue Units For Scheduled Flights
Revenue Units For Scheduled Flights Traffic Yield: PAX Revenue / RPK (RUB / RPK) Traffic RASK: PAX Revenue / ASK (RUB / ASK) Q3 2014 9M 2014 Q3 2014 9M 2014 (8.3%) (6.7%) (2.5)% (3.3%) 3.35 2.79 3.07 3.09 2.99 2.60 2.42 2.36 Q3 2013 Q3 2014 9M 2013 9M 2014 Q3 2013 Q3 2014 9M 2013 9M 2014 Yield PAX R
Slide 17: Fleet Overview
1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 17
Slide 18: Aeroflot Group Fleet Overview
Aeroflot Group Fleet Overwiew Aeroflot Group Fleet in operation 1 JSC Aeroflot Operates the Youngest Fleet in the Industry 4.0 Fleet Average Age Etihad Airways 5.4 10.4 Qatar Airways 5.4 8.8 easyJet 5.7 7.7 China Eastern Airlines 5.9 7.2 Air China 5.9 222 232 239 China Southern Airlines 6.0 209 Ryan
Slide 19: Aeroflot Group Fleet
Aeroflot Group Fleet Financial Operating Total as of Total as of Change vs. Type1 Aeroflot Subsidiaries Owned Lease Lease 30-Sep-2014 31-Dec-2013 31-Dec-2013 Boeing 767 - 3 - - 3 3 8 (5) Airbus A330 22 - - 8 14 22 22 - Long-haul Tu-204-300 - - - - - - 6 (6) Boeing 777 10 3 - 10 3 13 7 6 Il-96-3002 5
Slide 20: Aeroflot Group Fleet Order and Phase-Out Schedule
Aeroflot Group Fleet Order and Phase-Out Schedule Total Aircraft Delivery Schedule in Accordance with Existing Contracts Type of Aircraft Delivered during 9M 2014 Q4 2014 2015 2016 2017 Long-haul 6 - 3 5 9 A330 - - - - - B767 - - - - - B777 6 - 3 3 - B787 - - - 2 9 Medium-haul 32 4 12 31 26 A319 5 -
Slide 21: Financial Performance
1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 21
Slide 22: Revenue Analysis
Revenue Analysis 6.5% 14,514 17,879 (15,229) (2,819) * Net negative impact of RUB715m RUBbn 236,698 222,353 9M 2013 Volume Currency Pricing Other 9M 2014 • Positive contribution of volume growth and Rouble devaluation to revenue growth was offset by softer tariff policy in the volatile macro environ
Slide 23: Cost Analysis
Cost Analysis Y-o-Y change, net Y-o-Y Change, Y-o-Y of FX effect and Operating Expense Y-o-y net of FX effect Q3 2013 Q3 2014 Change NRE (RUBm If not stated otherwise) 9M 2013 9M 2014 Change and NRE 22,418 24,502 9.3% 6.7% Fuel 59,360 64,738 9.1% 6.4% 50,065 56,869 13.6% 11,9% Opex (ex. Fuel) 136,12
Slide 24: Group Unit Costs
Group Unit Costs Cost per ASK (RUB) Q3 2013 Q3 2014 Y-o-y Operating Expense 9M 2013 9M 2014 Y-o-y 0.72 0.74 2.3% Fuel 0.72 0.74 3.2% 1.61 1.71 6.3% Opex (ex. Fuel) 1.65 1.81 10.0% 0.49 0.53 7.5% Aircraft, Traffic and Passenger Servicing 0.48 0.52 8.4% 0.33 0.42 25.5% Staff 0.38 0.44 14.0% 0.16 0.15
Slide 25: Managing Fuel Costs
Managing Fuel Costs Flight hours (th hours) Fuel Consumption per ASK (gr/ASK) Fuel Consumption per ATK (gr/ATK) 8.8% (6.3%) (6.8%) (5.1%) (5.9%) 413 380 288 270 278 7.8% 25 25 259 23 24 136 147 Q3 2013 Q3 2014 9M 2013 9M 2014 Q3 2013 Q3 2014 9M 2013 9M 2014 Q3 2013 Q3 2014 9M 2013 9M 2014 Average Mo
Slide 26: Headcount Overview and Labour Productivity
Headcount Overview and Labour Productivity Headcount 30-Sep-2013 31-Dec-2013 30-Sep-2014 Y-o-Y YTD Change Aeroflot JSC 17,678 17,891 18,854 6.7 % 5.4 % Aeromar 2,966 2,949 3,516 18.5 % 19.2 % Subsidiary Airlines 9,432 9,366 9,495 0.7 % 1.4 % Other 252 263 246 (2.4%) (6.5%) Total 30,328 30,469 32,111
Slide 27: Operating Income Evolution
Operating Income Evolution (RUBm) 17,879 14,514 (2,819) (7,080) (5,067) (15,229) (6,483 ) (4,150 ) (1,221 ) 1,654 (1,003) (891 ) 26,870 (161) (1,498 Total revenue change 15,316 13,662 of 14,345m Total recurring expenses change of 27,552m Operating Leases* Pricing NRE*** Volume Other D&A and CD** FX
Slide 28: Adjusted Operating and Net Income Analysis
Adjusted Operating and Net Income Analysis 9M Adjusted Operating Income Build-Up (RUBm) 885 164 2,132 (1,527) 15,316 13,662 Operating Income 9M 2014 Provision on accounts Provision for pre-term return Aircraft return reserves Gain on pre-term return of Adjusted Operating Income receivable in relatio
Slide 29: Group Net Income
Group Net Income (RUBm) 16,470 12,907 17,237 (153) (975) 233 (73) (3,563) 504 247 239 (27) (3,558) Aeroflot JSC Rossiya Vladivostok Donavia Orenair Aurora Sherotel Aeromar Others (incl. Group Net NRE* and Adjusted Group Net Airlines Air minority) Income 9m Forex Group Net Income 9m 2014 Income 9m 20
Slide 30: Financial Highlights
Financial Highlights RUBm (where applicable) Q3 2013 Q3 2014 Y-o-Y 9M 2013 9M 2014 Y-o-Y Revenue 94,172 96,417 2.4% 222,353 236,698 6.5% EBITDAR1 29,842 23,523 (21.2%) 49,810 40,180 (19.3%) EBITDAR1 margin 31.7% 24.4% (7.3)p.p. 22.4% 17.0% (5.4)p.p. EBITDA 24,849 18,528 (25.4%) 35,764 23,559 (34.1%)
Slide 31: Capital Structure and Liquidity
1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 31
Slide 32: Leverage and Liquidity
Leverage and Liquidity Debt profile Net Debt / LTM EBITDA¹ RUBm 31-Dec-2013 30-Sep-2014 Change 4.7x Borrowings 13,405 12,892 (3.8%) Finance Lease Liabilities 72,036 108,655 50.8% Pension Liabilities 707 715 1.1% 2.1x Customs Duties 436 235 (53.9%) 1.7x Total Debt 86,584 122,497 41.5% Cash and Short
Slide 33: 9M 2014 Operating Free Cash Flow
9M 2014 Operating Free Cash Flow 4.5% 8,140 1,210 (4,716) 16,249 (345) 34,479 29,418 28,146 26,339 3,360 8,761 (3,241) Profit Before D&A Interest Unrealized Net Other Adj. Cash Flows Working Net Cash Net Capital Net Pre- Free Cash Free Cash Income Tax Expense FX Loss Before From Capital Flows From E
Slide 34: Appendix
1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 34
Slide 35: Operating Data - Q3 & 9M 2014
Operating Data – Q3 & 9M 2014 JSC Aeroflot Aeroflot Group 9M 9M 9M 9M 3Q 2013 3Q 2014 Y-o-Y Y-o-Y 3Q 2013 3Q 2014 Y-o-Y Y-o-Y Indicator Unit 2013 2014 2013 2014 Passenger Turnover m pkm 17,588 19,557 11.2% 45,362 50,728 11.8% 26,091 28,181 8.0% 65,363 69,109 5.7% International Routes 11,677 11,982 2
Slide 36: Operating Data - October & 10M 2014
Operating Data – October & 10M 2014 JSC Aeroflot Aeroflot Group October October 10M 10M October October 10M 10M Y-o-Y Y-o-Y Y-o-Y Y-o-Y Indicator Unit 2013 2014 2013 2014 2013 2014 2013 2014 Passenger Turnover m pkm 5,426 5,913 9.0% 50,788 56,641 11.5% 7,295 7,605 4.2% 72,658 76,713 5.6% Internation
Slide 37: Key Financial Data for Aeroflot Group
Key Financial Data for Aeroflot Group RUBm, Unless Otherwise Stated Q3 2013 Q3 2014 Y-o-Y 9M 2013 9M 2014 Y-o-Y Revenue 94,172 96,417 2.4% 222,353 236,698 6.5% RPK1 (m pkm) 26,091 28,181 8.0% 65,363 69,109 5.7% Yield2 (RUB/pkm) 3.15 2.99 (5.0%) 2.92 2.93 0.3% EBITDAR3 29,842 23,523 (21.2%) 49,810 40
Slide 38: Key Financial Data for JSC Aeroflot
Key Financial Data for JSC Aeroflot RUBm, Unless Otherwise Stated Q3 2013 Q3 2014 Y-o-Y 9M 2013 9M 2014 Y-o-Y Revenue 70,249 75,505 7.5% 167,637 189,295 12,9% RPK1 (m pkm) 17,588 19,557 11.2% 45,362 50,728 11,8% Yield2 (RUB/pkm) 3.3 3.2 (3.7%) 3.0 3.1 0.8% EBITDAR3 24,406 18,841 (22.8%) 39,783 33,86
Slide 39: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Vladivostok Donavia Orenair Aurora Dobrolet Total Airlines Air Passenger Traffic 9M 2014 1,361 3,970 2,500 5 795 68 8,698 (‘000 PAX) 9M 2013 1,004 3,589 2,547 930 204 8,275 Change, % 35.5% 10.6% (1.8%) (99.5%) 289.6% 5.1% Passenger Turnover 9M 2014 1
Slide 40: Summary Financial Tables: Income Statement
Summary Financial Tables: Income Statement Q3 2013 Q3 2014 Y-o-Y 9M 2013 9M 2014 Y-o-Y Traffic Revenue 84,222 86,346 2.5% 197,890 208,142 5.2% Other Revenue 9,950 10,071 1.2% 24,463 28,556 16.7% Revenue 94,172 96,417 2.4% 222,353 236,698 6.5% Operating Costs (58,473) (65,717) 12.4% (155,072) (174,72
Slide 41: Summary Financial Tables: Condensed Balance Sheet
Summary Financial Tables: Condensed Balance Sheet 31-Dec-13 30-Sep-14 Change,% Assets Current Assets Cash and Cash Equivalents 18,660 29,307 57.1% Accounts Receivable and Prepayments 55,690 48,463 (13.0%) Other Current Assets 7,115 9,290 30.6% Total Current Assets 81,465 87,060 6.9% Non-current Asse
Slide 42: Summary Financial Tables: Condensed Cash Flow Statement
Summary Financial Tables: Condensed Cash Flow Statement 3Q 2013 3Q 2014 Y-o-Y 9M 2013 9M 2014 Y-o-Y Operating Cash Flow before 25,106 19,309 (23.1%) 35,264 26,339 (25.3%) Working Capital Changes Net Cash Flows from Operating 7,401 7,776 5.1% 28,574 34,479 20.7% Activities Net Cash Flows Used in Inve
Slide 43: Investor Relations Contacts
Investor Relations Contacts Address: 119002 Russia, Moscow, Arbat St. 10 Telephone: +7 (495) 258-06-86 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 43