Aeroflot · RUS:AFLT
Aeroflot — Investor Presentation (May 2017)
48 slides from Aeroflot's investor presentation, May 2017
Slide 1: Aeroflot Group Investor Presentation
AEROFLOT GROUP I N V E S T O R P R E S E N TAT I O N May 2017
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: 12M 2016 Highlights
12M 2016 Highlights Aeroflot Group • Aeroflot Group carried 43.4 mln passengers in 2016 compared to 2015 (up by 4.0 mln or +10.3%) • Passenger load factor increased 3.2 p.p. to 81.5% • Strong 2016 financials results: - Total revenue of 495.9 bn RUB (up 19.4% y-o-y) - EBITDAR and EBITDA margins of 27
Slide 4: Market Update
MARKET UPDATE AEROFLOT~ :3 ~=2 Russian Airlines
Slide 5: Air Transportation Market in 2014-2016: Adapting to a New Normal
Air Transportation Market in 2014-2016: Adapting to a New Normal Total Market Domestic International 7.8% 18.0% 13.6% 1.8% (4.1)% (4.1)% 7.3% (16.6)% (15.1)% 111.8 107.2 102.8 PAX 56.4 65.5 46.3 52.6 54.7 46.4 evolution 2014 2015 2016 2014 2015 2016 2014 2015 2016 PAX (mn) growth/(decline) PAX (mn)
Slide 6: Competitive Dynamics
Competitive Dynamics Passenger Traffic: Market vs Aeroflot Group Change in Airlines’ Passenger Numbers Russian Air Transportation Market (million PAX) International Routes mn PAX, 12M 2016 Increase/decrease in PAX million inc. PAX of Russian and Foreign Carriers and int. transit PAX Domestic Routes
Slide 7: 4Q 2016: First Signs of Market Revival
4Q 2016: First Signs of Market Revival Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in 2016 PAX traffic y-o-y, % Change in 2016 ASK y-o-y, % (3.9)% (11.6)% (7.2)% 10.6% 9.3 % 12.5 % 13.6 % 7.4 % 4.3 % 2.9 % (1.5)% (4.5)% (4.8)% (16.8)% (10.0)% (10.0
Slide 8: Aeroflot Group Overview
AEROFLOT GROUP OVERVIEW AEROFLOT~ :3 ~=2 Russian Airlines
Slide 9: Updated Multi-Brand Strategy
Updated Multi-Brand Strategy 2015 OFFERING: POSITIONING PREMIUM PRODUCT MID-PRICE REGIONAL PRODUCT CHARTER PRODUCT PRODUCT FOR FAR EAST Regional product for LOW-COST Far East PRODUCT 2016 OFFERING: POSITIONING PREMIUM PRODUCT MID-PRICE REGIONAL / CHARTER PRODUCT PRODUCT FOR FAR EAST LOW-COST PRODUCT
Slide 10: Pobeda Airline: Group's Low Cost Carrier
Pobeda Airline: Group’s Low Cost Carrier Overview of Pobeda Pobeda’s Network • Operating from Vnukovo airport (3rd Moscow airport by PAX) Network • Network comprising 36 routes (22 unique for the Group) Surgut • Additional expansion to international destinations (8 countries) Saint Petersburg Yarosl
Slide 11: Balancing Act: Aeroflot Group Network Strategy
Balancing Act: Aeroflot Group Network Strategy Moderate Growth in the Number of … due to Focus on Network Quality … Results in Low-Risk Growth Destinations… and Frequency… Profile. # of destinations1 Average scheduled flight frequency2 Distribution of ASK added, % 2,5% 153 CAGR: 5.7% 9,2% 14,4% 144
Slide 12: 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 CAGR 12,7x 16,0x 201
Slide 13: Operations Development in Sheremetyevo Hub
Addressing Infrastructure Constraints: Aeroflot Operations Development in Sheremetyevo Hub Aeroflot Operations in SVO Aeroflot Schedule in SVO and Mid-Term Development Potential CAGR Summer: 9.0% Winter: 6.3% 613 585 582 Inbound 561 flights 516 515 00:00 01:00 02:00 03:00 04:00 05:00 06:00 07:00 08:
Slide 14: Customers' Feedback: Crucial Component of Our Strategy
Customers’ Feedback: Crucial Component of Our Strategy Recognition for Outstanding Service Strong and Recognized Brand Growing Customer Loyalty Brand Brand Change Airline rating value y-o-y 72% 72% 1 AAA #26 67% America AAA #1 Delta AAA #2 Airport Service United AAA- #3 Emirates AAA #4 2014 2015 201
Slide 15: Operating Performance
OPERATING PERFORMANCE AEROFLOT~ :3 ~=2 Russian Airlines
Slide 16: Aeroflot Group Monthly Operating Results
Aeroflot Group Monthly Operating Results Passenger Traffic Dynamics PAX Load Factor Change (PLFM 2016 – PLFM 2015 for respective month) 6.4% 9.1 5.4% 11.6% 8.1 5.8% 11.5% 7.4 8.8% 12.4% 13.2% 16.6% 8.8% 11.6% 17.1% 14.4% 26.8% 6.0 8.5% 23.7% 5.4 5.5 12.2% 5.2 5.1 5.0 5.1 19.7% 29.7% 9.2% 4.3 4.1 4.2
Slide 17: Operating Data – 4Q & 12M 2016
Operating Data – 4Q & 12M 2016 Aeroflot airline Aeroflot Group 4Q 4Q 12M 12M 4Q 4Q 12M 12M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2015 2016 2015 2016 2015 2016 2015 2016 Indicator Unit Passenger Traffic th PAX 6,443 7,268 12.8% 26,112 28,978 11.0% 9,340 10,614 13.6% 39,393 43,440 10.3% International Routes th PAX
Slide 18: Operating Data – March and 1Q 2017
Operating Data – March and 1Q 2017 Aeroflot airline Aeroflot Group Mar Mar 1Q 1Q Mar Mar 1Q 1Q Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2016 2017 2016 2017 2016 2017 2016 2017 Indicator Unit Passenger Traffic th PAX 2,242 2,506 11.8% 6,229 7,015 12.6% 3,188 3,651 14.5% 9,021 10,302 14.2% International Routes th PAX
Slide 19: Revenue and Yield Management
REVENUE AND YIELD MANAGEMENT
Slide 20: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mn)1 12M 2016 12M 2016, % of total 4Q 2015 4Q 2016 Y-o-Y Region 12M 201512M 2016 Y-o-Y Sheduled Passenger scheduled Flights 93,0% revenue Charter Passenger… 34,888 34,429 (1.3)% Russia 145,378 166,227 1
Slide 21: Scheduled Flights Revenue Units
Scheduled Flights Revenue Units 12M 2016 Yield (PAX Revenue / RPK) 12M 2016 RASK (PAX Revenue / ASK) RUB 6.3% RUB 6.6% 11.7% 8.9% 10.3% 6.5% 4.11 3.25 3.86 3.82 2.98 3.09 3.58 2.89 2.80 3.47 2.59 3.26 Domestic International Total Domestic International Total 4Q 2016 Yield (PAX Revenue / RPK) 4Q 2016
Slide 22: Passenger Yields: Rossiya Airline Operations
Passenger Yields: Rossiya Airline 1 As Higher Stage Length and Share of Long Haul 2 … Increased Focus on Long-Haul Segment due to Operations Usually Implies Lower Yield… Arrival of Wide-bodies to Rossiya Airline’s fleet… Average stage length (thd km) and yield – Aeroflot airline example Stage length
Slide 23: Fleet Overview
FLEET OVERVIEW AEROFLOT~ :3 ~=2 Russian Airlines
Slide 24: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 Aircraft Average Age 4,2 Azul 4,7 8,8 Shandong Airlines 4,8 7,7 Hainan Airlines 7,0 6,4 6,5 4,9 Sichuan Airlines 4,9 289 Garuda Indonesia 5,1 232 251 247 IndiGo 5,2 222 China Eastern Airlines 5,3 Emirates A
Slide 25: 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 31 Dec 2016 31 Dec 2015 31 Dec 2015 Wide-body 37 13 18 32 0 50 39 11 Boeing 767 0 0 0 0 0 0 1 (1) Airbus A330 22 0 8 14 0 22 22 0 Boeing 777 15 6 10 11
Slide 26: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule in Accordance with Existing Contracts Type of 2016 (Actual) 2017 2018 2019 2020 2021 and beyond Current (1) Phase fleet Phase Phase Phase Phase Phase aircraft Delivery Delivery Delivery Delivery Delivery Delivery out out out out out out Wide-body
Slide 27: Financial Performance
FINANCIAL PERFORMANCE AEROFLOT~ :3 ~=2 Russian Airlines
Slide 28: Financial Highlights
Financial Highlights 4Q 2015 4Q 2016 Change RUB mn 12M 2015 12M 2016 Change (where applicable) 105,663 114,574 8.4 % Revenue 415,173 495,880 19.4 % 23,932 17,237 (28.0)% EBITDAR1 103,118 137,567 33.4 % 22.6 % 15.0 % (7.6) p.p. EBITDAR1 margin 24.8 % 27.7 % 2.9 p.p. 10,857 844 (92.2)% EBITDA 58,703 7
Slide 29: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mn RUB mn 19.4% 19.4% 11.4% + 7.8% + (0.2)% + 0.5% 14.5% + 2.8% + 0.7% + 1.4% 11,471 2,958 5,946 60,332 495,880 32,330 (739) 1,942 495,880 47,174 415,173 415,173 Up by 476 Cargo Other Driven by revenue other minor t
Slide 30: Operating Costs
Operating Costs % of Total Change Operating Expense Change Change Change Operating 4Q 2015 4Q 2016 ex. FX & (RUB mn If not stated 12M 2015 12M 2016 ex. FX & y-o-y y-o-y Expense NRE otherwise) NRE (12M) 23,381 27,665 18.3 % 20.6 % Fuel 94,382 101,582 7.6 % 1.1 % 23.5% 74,984 90,581 20.8 % 23.8 % Opex
Slide 31: Group Unit Costs
Group Unit Costs 4Q 2015 4Q 2016 Change Operating Expense per ASK (CASK), RUB 12M 2015 12M 2016 Change 0.76 0.78 2.9 % Fuel 0.76 0.74 (2.5)% 2.43 2.56 5.1 % Opex (ex. Fuel): 2.22 2.41 8.4 % 0.61 0.63 3.6 % Aircraft, Traffic and Passenger Servicing 0.60 0.63 5.1 % 0.49 0.47 (3.8)% Staff 0.45 0.47 5.4
Slide 32: Fuel Cost Management
Fuel Cost Management Flight Hours Fuel Consumption per ASK Fuel Consumption per ATK (thousand hours) (gr/ASK) (gr/ATK) 6.1% (0.7)% (1.4)% 912 190,9 188,2 23,1 22,9 860 12M 2015 12M 2016 12M 2015 12M 2016 12M 2015 12M 2016 Aeroflot Airline Jet Fuel Price Comments (RUB per tonne of jet fuel) 2015 2016
Slide 33: Headcount Overview
Headcount Overview Other non-airline Aeroflot Group Headcount by Category personnel Flight crew 12,0% 10,2% 31-Dec-2015 31-Dec-2016 Y-o-Y Flight crew 3,524 3,741 6.2% Other airline Cabin crew 9,758 10,263 5.2% personnel 14,8% Cabin crew Technical maintenance and repair 3,871 4,396 13.6% 28,1% Ticket
Slide 34: EBITDA Evolution
EBITDA Evolution (RUB mn) Total effect on revenue Total effect on costs ∑=80,707 RUB mn ∑=(61,406) RUB mn Net volume and price effect 32,330 (17,895) Net volume and price effect ∑=(43,511) RUB mn ∑=48,377 RUB mn (1,007) (8,817) (10,215) 1,942 (739) 47,174 (10,741) (4,367) (2,924) (5,439) (832) Net F
Slide 35: Net Income Evolution
Net Income Evolution (RUB mn) 5,946 (70,212) 74,761 21,338 (2,037) (9,521) 17,792 15,286 (8,033) 38,826 (6,494) Reported Net Traffic Revenue Other Revenue Operating Financial Subs Reserve on Settlement of Finance Lease Taxation Reported Net Income 12M 2015 Expenses* Income/Expense** Reorganization T
Slide 36: Reported and Adjusted Operating and Net Income Analysis
Reported and Adjusted Operating and Net Income Analysis 12M Adjusted Operating Income Build-Up (RUB mn) 1,182 770 (2,784) 63,254 62,422 Reported Operating Income 12M Pre-term return of aircraft* BSP and other agents bad debt, Sale of aircraft in finance lease Adjusted Operating Income 12M 2016 fines
Slide 37: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / LTM EBITDA2 RUB mn 31-Dec-2015 31-Dec-2016 Change 3.4 Borrowings 68,460 20,367 (70.2)% Finance Lease Liabilities 164,524 122,736 (25.4)% 1.6 1.2 1.4 Pension Liabilities 745 805 8.0 % Total Debt 233,729 143,908 (38.4)% Cash and Short Term 31-Dec-2015 30
Slide 38: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mn) 12M 2016 Other Adj. Before Working Capital Changes*, incl. 25.8 Effect from revenue hedging (finance lease hedge accounting) 8.3 Realized loss on currency swap closed in 1Q 2016 4.0 Disposal of Vladavia and Cargo and accrual of provision for impairment of inv.
Slide 39: Appendix
APPENDIX AEROFLOT~ :3 ~=2 Russian Airlines
Slide 40: Russian Air Transportation Market: Room for Growth
Russian Air Transportation Market: Room for Growth Russian Total Passenger Traffic Growth, mn PAX(1) Trips per Capita (2) Despite fast growth of the recent years, Total CAGR 2.9% Russian airline industry still has 3,54 ,0 International – (4.7)% | Domestic – 12.3% (4.1)% promising growth prospects co
Slide 41: Transformation of the Company
Transformation of the Company Aeroflot in 20091 Aeroflot Now Change6 Not-integrated Subsidiaries2 Multi-brand Product Offering Business From multiple Middle-price Regional model disintegrated Premium regional / charter3 Low-cost (Far East) subsidiaries to product-focused business model Aeroflo
Slide 42: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (12M 2016, y-o-y) Murmansk Russia 1,5 % Arkhangelsk Syktyvkar Novy Urengoy Saint Petersburg Surgut Yakutsk Nizhnekamsk Nizhnevartovsk Kemerovo Perm Magadan Nizhny Novgorod Ekaterinburg Tomsk MOSCOW Samara Novosibirsk Krasnoy
Slide 43: 12M 2016 Operating Data by Region (Scheduled Routes)
12M 2016 Operating Data by Region (Scheduled Routes) Americas Russia CIS 15,7 % 16,0 % 8,5 % 14,6 % 12,7 % 7,2 % 8,3 % 4.5 p.p. 3,4 % 4.0 p.p. 2.4 p.p. (4,4)% Passengers RPK ASK SLF Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried carried Higher demand on the flights to the region on th
Slide 44: Integration Update
Integration Update 1 2 3 New … require additional fleet to … and provide with ability to hire routes… service enlarged network… more employees B777 B747 4.3k 36 employees routes B737 А321 Initial Plans Initial Plans Initial Plans • New slots and designations for 56 routes • Aeroflot Group planned to
Slide 45: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Orenair Donavia Aurora Pobeda Total Passenger Traffic, 12M 2016 8,099 491 209 1,376 4,286 14,462 thousand PAX 12M 2015 4,752 2,840 1,475 1,125 3,090 13,282 Y-o-Y 70.5% (82.7)% (85.8)% 22.4% 38.7% 8.9% Passenger Turnover, 12M 2016 18,720 1,494 268 2,2
Slide 46: 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 (4 members) Kirill Androsov Chairman of the Board of Directors Vitaly Saveliev Personnel and Remuneration Board of D
Slide 47: Aeroflot Group Structure
Aeroflot Group Structure PJSC Aeroflot(1) Airlines Ancillary Companies JSC Rossiya Airlines 75%-1 sh. CJSC Aeromar 51% In-flight 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 Aviation
Slide 48: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 48