Grupo Aeromexico, S.a.b. De C.v. · BMV:AERO
Grupo Aeromexico, S.a.b. De C.v — Bancomer Conference October 2013
21 slides from Grupo Aeromexico, S.a.b. De C.v's conference presentation, October 2013
Slide 1: Enhancing Value
ENHANCING VALUE Ricardo Sánchez Baker, CFO 1 1
Slide 2: Table of Contents
TABLE OF CONTENTS AEROMEXICO AT GLANCE ECONOMIC ENVIRONMENT RECOVERING POSITIVE MOMENTUM BUILDING FOR THE FUTURE: ENHACING VALUE
Slide 3: Aeromexico: Mexico's Premium Revenue Carrier
AEROMEXICO: MEXICO’S PREMIUM REVENUE CARRIER Leading airline in Mexico Presence on three continents and 18 countries More than 15.3 million passengers transported in 2013 Only Latin American carrier with flights to Asia Strong slot position at Mexico City Airport Enhanced alliance +3.5 million frequ
Slide 4: Challenging Economic Environment Starting 4Q 2012
CHALLENGING ECONOMIC ENVIRONMENT STARTING 4Q 2012 2013 GDP Growth Forecast (1) Global Index of Economic Activity (2) Monthly YoY (%) Monthly YoY (%) 4.5 4.0 3.5 3.0 Mean 2.5 Median 2.0 Interquartile range 1.5 J F M A M J J A S O N D J F M A M J J A 2012 2013 2010 2011 2012 2013 (1) BANXICO , Private
Slide 5: Recovering Positive Momentum Through Operational Excellence
RECOVERING POSITIVE MOMENTUM THROUGH OPERATIONAL EXCELLENCE Strengthening Key Passenger-Oriented Operational Drivers On time performance 15 min (%) Mishandled Baggage Complaints Completion Factor 92.4% 90.6% 85.2% 81.4% 79.2% 2012 2013 2012 74.1% 2013 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 2012 2013 2012 201
Slide 6: Recovering Positive Momentum Through Traffic and Load Factor
RECOVERING POSITIVE MOMENTUM THROUGH TRAFFIC AND LOAD FACTOR Passenger Traffic Monthly YoY Load Factor (%) Monthly YoY 2012 2013 6
Slide 7: Recovering Positive Momentum Through Strict Cost Control
RECOVERING POSITIVE MOMENTUM THROUGH STRICT COST CONTROL CASK Ex Fuel (mxn) (1) CASK Ex Fuel (mxn) -14.1% -2.8% Source: Aeromexico Quarterly Financial Statements 7 (1) 2009 CASK expressed in 1H13 pesos
Slide 8: Recovering Positive Momentum: Margin Expansion
RECOVERING POSITIVE MOMENTUM: MARGIN EXPANSION EBITDAR Margin Operating Margin +1.4pp +1.3pp 14 consecutive quarters with positive operating results Source: Aeromexico Quarterly Financial Statements 8 2Q12 (Proforma) and 2Q13 as presented retroactively under equity accounting method for the aircraft
Slide 9: Recovering Positive Momentum: Strong Balance Sheet
RECOVERING POSITIVE MOMENTUM: STRONG BALANCE SHEET Net Adj Financial Debt / EBITDAR Debt Composition 2008 2013 9% 40% 91% 60% 91% Working Aircraft Capital Acquisition 9
Slide 10: Building for the Future with Our Flight Plan
BUILDING FOR THE FUTURE WITH OUR FLIGHT PLAN OPERATIONS AND PRODUCT COMMERCIAL NETWORK • Connectivity and Alliances • IT Investments & Infrastructure • Revenue Management and • NPS – Enhancing Customer Ancillaries Loyalty • Wide Body Strategy • AM Contigo PRODUCTIVITY & RISK MGMT STRATEGIC PARTNERSH
Slide 11: Building for the Future: Commercial Strategy
BUILDING FOR THE FUTURE: COMMERCIAL STRATEGY Revenue Management and Connectivity AM Contigo Ancillaries Increase Connectivity Focus on PRASK Increase presence in Leverage Growth in Mexico Promote AM.com domestic and VFR City Hub Increase ancillaries share markets Partnership with Delta
Slide 12: Building for the Future: Operations & Product
BUILDING FOR THE FUTURE: OPERATIONS & PRODUCT Service Excellence Operational Excellence Best practices, Continuous benchmarking, process re-engineering Generating customer preference Maintain momentum in ops Customer feedback used for performance continuous improvement Enhanced coordination,
Slide 13: Building for the Future: Productivity
BUILDING FOR THE FUTURE: PRODUCTIVITY Strong pipeline of cost reduction initiatives Operational & Labor Costs Fleet Strategy Administrative Processes • CCO Restructuring and • New contracts with • Fleet Renewal Integration and AM/AM pilots, flight attendants • Balance between Connect Engineering and
Slide 14: Future Value Through Cost Savings: Fleet Strategy
FUTURE VALUE THROUGH COST SAVINGS: FLEET STRATEGY Renewal Efforts will ensure CASK reductions Reduced Ownership Cost Annual Cost of Financing Estimated CASK 10%-12% Reduction (1) 4% to 6% E170 & 6% ERJ145 B737-7 B737-8 B767 B787 E190 Fleet Value Owned: (27%) USD 689M Leased: Fleet Value: USD 104- 15
Slide 15: Future Value Through Cost Savings: Fleet Strategy
FUTURE VALUE THROUGH COST SAVINGS: FLEET STRATEGY More Efficient aircraft mix Today 2018 Fleet plan flexibility E-145 E-170/190 E-170 / 175190 737’s 737’s NG/MAX 767’s 787’s 787’s New technology: Additional efficiencies in fuel 777’s consumption and CASK of 12%- 20% vs current aircraft fleet 15
Slide 16: Comprehensive Risk Management
COMPREHENSIVE RISK MANAGEMENT Fuel Hedging Strategy Interest Rate • Over 50% of expected fuel consumption for the next 12 months is hedged 39% 39% 61% @ Fixed Rate 61% • Fuel surcharges 61% complement Grupo Aeromexico’s hedging strategy 39% Variable Fixed Rate Fixed rate 61% @rate FX Staggered lease
Slide 17: Enhancing Value Through Our Strategic Partnerships
ENHANCING VALUE THROUGH OUR STRATEGIC PARTNERSHIPS Loyalty Program • Strategic Partnership with • Owns 4.2% of Aeromexico’s AIMIA outstanding shares • AIMIA has a 49% investment in • Joint efforts in sales, marketing PLM and customer experience • Value of PLM in 2013 US$518 • Transborder upgrades Mi
Slide 18: Enhancing Value: An Ongoing Priority for Aeromexico
ENHANCING VALUE: AN ONGOING PRIORITY FOR AEROMEXICO Aeromexico is #5 airline ranked by ROIC – WACC positive spread of 34 publicly-traded airlines. Only two Latin American airline companies achieved positive spread 18 Source: Company filings and Deutsche Bank Airline Research
Slide 19: Positioned to Capitalize on Future Growth
POSITIONED TO CAPITALIZE ON FUTURE GROWTH Low Penetration of Air Transportation Strengthening Mexican Economy Strength Flights per capita (1) Mexican GDP Growth and Estimated RANK Impact of Reforms (3) Canada 3.7 14 6.0% 18 5.0% +0.8%-1.7% United States 3.1 GDP growth 4.0% Chile 50 0.7 3.0% Brazil 6
Slide 20: Unique Position to Enhance Value and Sustainable Growth
UNIQUE POSITION TO ENHANCE VALUE AND SUSTAINABLE GROWTH PROFITABLE AND PROFITABLE AND SUSTAINABLE GROWTH SUSTAINABLE GROWTH STRONG NETWORK AND BALANCED MEXICO REVENUE MANAGEMENT MOMENTUM STRATEGY OPERATIONAL EXCELLENCE STRATEGIC PARTNERSHIPS ENHANCED CASK PRODUCT AND REDUCTION SERVICE Aeromexico Mom
Slide 21: Disclaimer
DISCLAIMER This presentation is neither an offer for sale nor a request to buy any securities. Such offer or request may only be made through an offering memorandum containing the description of the terms and conditions of such offer and shall include detailed information of the company and its mana