Aeroflot · RUS:AFLT
Aeroflot — Investor Presentation (March 2018)
52 slides from Aeroflot's investor presentation, March 2018
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 March 2018
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 – #1 Russian Carrier with a Global Network
Aeroflot – #1 Russian Carrier with a Global Network 1 #1 airline in one of the world’s largest markets with leading positions on both domestic and international routes, one of Europe’s leading airlines 2 Global network with 153 unique destinations (300+ routes) in 51 countries serviced by one of the
Slide 4: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 4
Slide 5: 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 4.5% Russian airline industry still has International – (1.3)% | Domestic – 12.4% 20.3% promising growth prospects compared t
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 mln PAX, 12M 2017 Increase in PAX million inc. PAX of Russian and Foreign Carriers and int. transit PAX Domestic Routes +6.7 20.
Slide 7: 2017 Market Recovery
2017 Market Recovery Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in 2016/2017 PAX traffic y-o-y, % Change in 2016/2017 ASK y-o-y, % 18.6% 25.7% 20.5% 16.4% 21.0% 21.8 % 42.5 % 19.6% 36.1 % 17.2% 14.6 % 13.0 % 11.9% 25.3 % 20.7 % 13.4% 12.2% 12.7% 7
Slide 8: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 8
Slide 9: Aeroflot Group Multi-Brand Strategy
Aeroflot Group Multi-Brand Strategy POSITIONING PREMIUM PRODUCT MID-PRICE REGIONAL / CHARTER PRODUCT PRODUCT FOR FAR EAST LOW-COST PRODUCT Contribution to 32.8 65.5% 11.2 22.2% 1.5 3.1% 4.6 9.1% PAX, 12M 2017 +13.3% +26.7% +12.5% +6.9% 32.8 11.2 1.5 4.6 4.3 29.0 8.8 1.4 PAX growth, y-o-y 12M 2016 12
Slide 10: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (12M 2017, y-o-y) Murmansk Salekhard Arkhangelsk New Urengoy Russia 11.7 % Saint Petersburg Syktyvkar Surgut Khanty Mansiysk Nizhnevartovsk Yakutsk Nizhnekamsk Perm Magadan Nizhny Novgorod Tyumen Ekaterinburg Kemerovo MOSCOW
Slide 11: 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 16.0x 21.2x 1
Slide 12: Infrastructure Expansion to Support Future Growth
Infrastructure Expansion to Support Future Growth Sheremetyevo development program overview Key infrastructure objects to be launched in 2018 Sheremetyevo will strengthen its position as a key passenger and cargo hub and provide all necessary conditions for long-term cooperation with Aeroflot Fo
Slide 13: Pobeda Airline: Three Full Years of Successful Operations
Pobeda Airline: Three Full Years of Successful Operations Overview of Pobeda Pobeda’s Network (Winter 17/18) • Operating from Vnukovo airport (3rd Moscow airport by PAX) Network • Network comprising 47 routes (27 unique for the Group) Surgut • Additional expansion to international destinations (10 c
Slide 14: Aeroflot and FIFA World Cup 2018 in Russia
Aeroflot and FIFA World Cup 2018 in Russia Routes to World Cup Locations Aeroflot Efforts General preparation sourced by: 1 * Establishment of specially-dedicated working group to coordinate preparation process and day-to-day routes allocation for World Cup 2018 Saint Petersburg (4.5mm from Moscow)
Slide 15: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 15
Slide 16: Operating Data – 4Q & 12M 2017
Operating Data – 4Q & 12M 2017 Aeroflot airline Aeroflot Group Indicator Unit 4Q 4Q 12M 12M 4Q 4Q 12M 12M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2016 2017 2016 2017 2016 2017 2016 2017 Passenger Traffic th PAX 7,268 8,056 10.8% 28,978 32,845 13.3% 10,615 11,789 11.1% 43,440 50,129 15.4% International Routes th PAX
Slide 17: 12M 2017 Operating Data by Region
12M 2017 Operating Data by Region (Scheduled Routes) Americas Russia CIS 17.3 % 12.2 % 14.8 % 10.8 % 9.1 % 7.8 % 7.2 % 7.7 % 12.2 % 1.9 p.p. (2.3) p.p. (0.4) p.p. Passengers RPK ASK PLF Passengers RPK ASK PLF Passengers RPK ASK PLF carried carried carried Performance of North and Central American Ru
Slide 18: 4Q 2017 Operating Data by Region
4Q 2017 Operating Data by Region (Scheduled Routes) Americas Russia CIS 18.5 % 13.2 % 13.8 % 9.9 % 11.9 % 8.8 % 7.9 % 5.6 % 3.2 % 3.6 p.p. 3.2 p.p. (4.8) p.p. Passengers RPK ASK PLF Passengers RPK ASK PLF Passengers RPK ASK PLF carried carried carried Performance of North and Central American Russia
Slide 19: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 19
Slide 20: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mln)1 12M 2017 12M 2017, % of 4Q 2016 4Q 2017 Y-o-Y Region 12M 2016 12M 2017 Y-o-Y sch. revenue Sheduled Passenger Flights 90.0% 34,422 38,767 12.6% Russia 166,227 176,141 6.0% 41.2% Charter Passenger F
Slide 21: Aeroflot Airline Yield Dynamics (Monthly)
Aeroflot Airline Yield Dynamics (Monthly) Aeroflot Airline Blended Total Yield Aeroflot Airline International Yield RUB/RPK, Change 2017/2016 in % 0.0% RUB/RPK, Change 2017/2016 in % (2.6)% (1.8)% (1.3)% (4.2)% (4.2)% (2.3)%(2.4)% (7.3)% (9.5)% (10.6)% (11.4)% (12.8)% (11.9)% (4.8)% (14.4)% (15.8)%
Slide 22: Scheduled Flights Revenue Units
Scheduled Flights Revenue Units 4Q Yield (PAX Revenue / RPK) 4Q RASK (PAX Revenue / ASK) RUB RUB (1.2)% (1.3)% 1.0% 2.8% 3.79 3.74 2.93 2.90 4.4% 9.1% 3.48 3.51 2.79 2.71 3.21 2.64 3.07 2.42 Domestic International Total Domestic International Total 12M Yield (PAX Revenue / RPK) 12M RASK (PAX Revenue
Slide 23: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 23
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 4.1 Hainan Airlines 4.8 Shandong Airlines 4.9 8.8 Spirit Airlines 5.2 7.7 Xiamen Airlines 5.2 7.0 6.4 6.5 6.2 Sichuan Airlines 5.3 China Eastern Airlines 5.4 325 Emirates Airline 5.4 28
Slide 25: Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Breakdown Operated by Lease type3 Total as of Total as of Change vs. Aircraft Type Owned Aeroflot Subsidiaries Finance Operating 31-Dec-17 31-Dec-16 31-Dec-16 Wide-body 38 14 18 34 - 52 50 2 Airbus A330 22 - 8 14 - 22 22 - Boeing 777 16 5 10 11 - 21 21 - Boeing 747 - 9 - 9 - 9 7
Slide 26: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule Aeroflot Group Fleet as at Year-end4 2017 (Actual) 2018 Number of aircraft Type of Current (1) Delivery Phase out fleet Delivery Phase out 409 aircraft Wide-body (long-haul) 3 (1) 52 6 - A-330 - - 22 - - B-777 1 (1) 21 6 - 331 B-747 2 - 9 - - A-35
Slide 27: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 27
Slide 28: Financial Highlights: 12M and 4Q 2017
Financial Highlights: 12M and 4Q 2017 4Q 2016 4Q 2017 Change RUB mn 12M 2016 12M 2017 Change (where applicable) 10,615 11,789 11.1% Passenger Traffic (mn PAX) 43,440 50,129 15.4% 114,574 128,161 11.9% Revenue 495,880 532,934 7.5% 95,054 107,888 13.5% Traffic Revenue 421,378 458,389 8.8% 17,227 20,79
Slide 29: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mln RUB mln 7.5% 7.5% 13.5% + (7.8)% + 1.6% + 0.2% 4.8% + 2.7% + 0.8% + (0.8)% 67,036 (38,815) 532,934 3,938 (3,895) 532,934 23,769 13,243 7,744 1,090 495,880 495,880 Appreciation Up by 2.0 mln Cargo Other of RUB in
Slide 30: Operating Costs
Operating Costs Operating Expense Change Change Change Change % of Total OpEx 4Q 2016 4Q 2017 (RUB mln If not stated 12M 2016 12M 2017 y-o-y ex. FX & NRE y-o-y ex. FX & NRE (12M 2017) otherwise) 27,665 32,741 18.3% 19.8% Fuel 101,582 122,685 20.8% 31.8% 24.9% 90,581 96,871 6.9% 12.9% Opex (ex. Fuel)
Slide 31: Group Unit Costs
Group Unit Costs 4Q 2016 4Q 2017 Change Operating Expense per ASK (CASK), RUB 12M 2016 12M 2017 Change 0.78 0.85 9.0% Fuel 0.74 0.78 5.8% 2.56 2.52 (1.5)% Opex (ex. Fuel): 2.40 2.35 (2.2)% 0.63 0.56 (10.9)% Aircraft, Traffic and Passenger Servicing 0.63 0.61 (3.2)% 0.47 0.58 23.9% Staff 0.47 0.53 12
Slide 32: Fuel Cost Management
Fuel Cost Management Flight Hours Fuel Consumption per ASK Fuel Consumption per RTK (thousand hours) (gr/ASK) (gr/RTK) 10.7% (0.6)% (3.5)% 1,009 286.4 22.9 22.8 276.4 912 12M 2016 12M 2017 12M 2016 12M 2017 12M 2016 12M 2017 Aeroflot Airline Jet Fuel Price Comments (RUB per tonne of jet fuel) 40,000
Slide 33: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline personnel Flight crew 31-Dec-2016 31-Dec-2017 Y-o-Y 12.1% 9.9% Cabin crew 10,263 11,259 9.7% Other airline Airport services 6,554 7,034 7.3% personnel 14.0% Technical maintenance and repair 4,396 4,702 7.0% Cabin crew 29.0% Fl
Slide 34: EBITDA Evolution
EBITDA Evolution (RUB mln) Total effect on revenue Total effect on costs ∑=37,054 RUB mln ∑=(59,044) RUB mln Net volume and price effect Net FX effect Net volume and price effect ∑=75,870 RUB mln ∑=(5,492) RUB mln ∑=(92,367) RUB mln 7,744 (38,815) 67,036 33,324 (32,336) 1,090 (18,380) (13,868) (14,8
Slide 35: Reported and Adjusted Operating and Net Income Analysis
Reported and Adjusted Operating and Net Income Analysis 12M Adjusted Operating Income Build-Up (RUB mln) 2,961 (2,478) 3,011 40,411 43,905 Reported Operating Income 12M Release of legal reserve Increase of reserve for social Vacation accrual* Adjusted Operating Income 12M 2017 payments 2017 12M Adju
Slide 36: Pobeda Financial Results
Pobeda Financial Results Increasing PAX Traffic RASK dynamics Growing Revenues of LCC Segment Million passengers RUB 4.6 Change 4.3 2.52 2.45 RUB mn 2015 2016 2017 (FY17/16) 3.1 1.96 Revenue 11,248 19,131 20,633 7.9% 2015 2016 2017 2015 2016 2017 EBITDAR1 2,587 8,122 6,727 (17.2)% PAX up by 6.9% in
Slide 37: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 37
Slide 38: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / LTM EBITDA2 1.4 RUB mln 31-Dec-2016 31-Dec-2017 Change 0.9 0.9 Borrowings 20,367 3,181 (84.4)% 0.7 Finance Lease Liabilities 122,736 100,689 (18.0)% Pension Liabilities 805 922 14.5% Total Debt 143,908 104,792 (27.2)% 31-Dec-2016 30-Jun-2017 30-Sep-201
Slide 39: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mln) 12M 2017 Other adjustments before working capital changes, incl. 11,750 Effect from revenue hedging (finance lease hedge accounting) 5,613 Loss on fixed assets disposal 852 (26.4)% >2.7x Change in provisions1 10,852 Interest income (4,718) Other (849) 11,750 (
Slide 40: 2018 Guidance
2018 Guidance Market Indicator 2017 Targets Checklist 2018 Targets Total Market Double digit growth +20.3% Double digit growth (10-14%) (PAX) International Double digit growth +31.7% Key driver Segment (PAX) Domestic Single digit growth +10.9% Secondary driver Segment (PAX) Aeroflot Group Passenger
Slide 41: Aeroflot Airline Network – Plans for 2018
Aeroflot Airline Network – Plans for 2018 Increased Frequencies (per Week) on the Following Routes: Operating Growth by Region PAX growth, y-o-y – for Aeroflot airline Russia Europe CIS 20.6% Khanty-Mansiisk+7 Athens +7 Kaliningrad +4 Barcelona +7 Astana+3 Krasnoyarsk+7 Budapest +7 11.1% Tenerife +1
Slide 42: Agenda
1. Market Update 2. Monthly Traffic Statistics 3. Operating Performance 4. Revenue and Yield Management 5. Fleet Overview 6. Financial Performance 7. Capital Structure and Liquidity 8. Appendix 42
Slide 43: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Airline Pobeda Airline Aurora Airline Indicator Unit 2017 Y-o-Y 2017 Y-o-Y 2017 Y-o-Y Passenger Traffic th PAX 11,153 26.7% 4,583 6.9% 1,548 12.5% International Routes th PAX 4,136 57.4% 875 84.8% 385 22.3% Domestic Routes th PAX 7,017 13.7% 3,708 (2
Slide 44: Blended Flights Revenue Units
Blended Flights Revenue Units 4Q Yield (Scheduled + Charter PAX Revenue / RPK) 4Q RASK (Scheduled + Charter PAX Revenue / ASK) RUB RUB 0.6% 0.8% 2.6% 4.5% 10.5% 5.7% 3.63 3.65 2.86 2.88 3.50 2.81 3.41 2.68 2.68 3.26 3.09 2.43 Domestic International Total Domestic International Total 12M Yield (Sched
Slide 45: Passenger Yields: Rossiya Airline
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 46: Net Income Evolution
Net Income Evolution (RUB mln) 40,949 (3,895) Incl. VladAvia (59,889) write-off (5.1 bn Realised loss on RUB) and MASH Incl. FX on PDP hedging deriv. impairment (2.8 refund received in Instruments + bn RUB) 12M 2016 (12.7 Effect of revenue bn RUB) Incl. savings on hedging with interest in 12M liabil
Slide 47: Statement of Comprehensive Income
Statement of Comprehensive Income RUB mn, unless otherwise stated 2013 2014 2015 2016 2017 Traffic revenue 257,546 277,354 359,205 433,966 474,916 Other revenue 33,410 42,417 55,968 61,914 58,018 Revenue 290,956 319,771 415,173 495,880 532,934 Operating costs (271,161) (308,503) (371,066) (432,626)
Slide 48: Condensed Statement of Financial Position
Condensed Statement of Financial Position Assets (RUB mn) 2013 2014 2015 2016 2017 Cash and cash equivalents 18,660 26,547 30,693 31,476 45,978 Short-term financial investments 272 961 5,917 6,319 8,931 Accounts receivable and prepayments 55,691 56,769 76,317 78,172 92,932 Expendable spare parts and
Slide 49: Statement of Cash Flows
Statement of Cash Flows RUB mn, unless otherwise stated 2013 2014 2015 2016 2017 Operating cash flows before working capital changes 32,944 31,603 64,269 81,994 65,330 Change in accounts receivable and prepayments (3,014) 4,658 (2,251) (6,191) (27,816) Change in expendable spare parts and inventorie
Slide 50: 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) Mikhail Poluboyarinov Chairman of the Board of Directors Vitaly Saveliev Personnel and Remuneration Lars
Slide 51: 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 52: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 52