World Air — Investor Presentation (April 2005)
33 slides from World Air's investor presentation, Apr 1, 2005
Slide 1: World Air Holdings, Inc. Investor Presentation March 2005
World Air Holdings, Inc. Investor Presentation March 2005 EXHIBIT 99.1
Slide 2: Safe Harbor Statement
World Air Holdings, Inc. ("World" or the "Company") desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. As such, this document and any discussion thereof may include forward looking statements that are subject to risks and uncertainties
Slide 3: Today's Objectives
Today's Objectives Overview Recent Results and Trends Going Forward
Slide 4: New Holding Company Structure
New Holding Company Structure Enhanced risk management programs Better loss control practices Increased flexibility to manage cost of risk exposures Shares of common stock converted to shares of World Air Holdings, Inc. Traded on NASDAQ with same WLDA symbol Current airline operation unchanged Struc
Slide 5: Investor Highlights
Investor Highlights Three consecutive years of profitability 2004 revenues over $500 million Operating income in 2004 grew 42% Net earnings increased 67% in 2004 Significant turnaround since 2001
Slide 6: Investor Highlights
Investor Highlights $40.5 million debentures converted to equity $30 million government loan facility Unrestricted cash of $50 million at year end Dramatic balance sheet improvement
Slide 7: Investor Highlights
Investor Highlights Reduced aircraft expenses by $8.2 million in 2004 Negotiated more favorable lease terms Increased use of power-by-the-hour leases Aircraft utilization increased 14% in 2004 (8 hours/day vs. 7 in 2003) Block hours increased 8.4% in 2004 Fourth quarter's aircraft utilization increa
Slide 8: Investor Highlights
Investor Highlights Four new commercial customers in 2004 EVA contract is largest in company history Early position in China All cargo aircraft sold for 2005 Successful revenue diversification
Slide 9: World Airways, Inc.
World Airways, Inc. 57 years of continuous service Worldwide passenger and cargo charter airline Fleet of 15 wide-body aircraft 2 DC-10-30F and 3 MD-11F 1 DC-10-30P and 9 MD-11P 1,300+ employees worldwide Largest commercial mover of U.S. military passengers
Slide 10: Key Executives
Key Executives Current Title Experience Gen. Ronald R. Fogleman Non-Executive Chairman Retired Four Star General, United States Air Force Chief of Staff, United States Air Force Commander, US Transportation Command Commander, US Air Mobility Command 300+ air missions in Vietnam Randy J. Martinez Pre
Slide 11: Key Employee Groups
Key Employee Groups Pilots (350) Represented by International Brotherhood of Teamsters Current contract became amendable 6/30/03 Contract currently in mediation Flight Attendants (550) Also represented by Teamsters Current contract amendable 12/31/06 Aircraft Dispatchers (10) Represented by Transpor
Slide 12: World's Products
World's Products ACMI Passenger Customer leases passenger aircraft. World provides aircraft (A), crew (C), maintenance (M) and insurance (I). ACMI Cargo Customer leases cargo aircraft on ACMI basis. Full Service Passenger Customer leases passenger aircraft. In addition to ACMI, World provides ground
Slide 13: Primary Customers
Primary Customers Customer Service Schedule Air Mobility Command (AMC) Full Service Passenger/Cargo MD-11/DC-10 Two scheduled (fixed) passenger segments (Pacific, Mediterranean) Extensive expansion flying worldwide Sonair ACMI Passenger 1 MD-11ER IAH-Luanda, Angola 3 times/week EVA ACMI Cargo 3 MD-1
Slide 14: Air Mobility Command (AMC)
Air Mobility Command (AMC) One of three service components comprising U.S. Transportation Command (USTRANSCOM) Provides global reach through strategic airlift Military fleet incapable of meeting requirements in peace and war Civil Reserve Air Fleet (CRAF) provides required lift Airlines, including m
Slide 15: World's Role in CRAF
World's Role in CRAF Have participated since inception Member of one of two competing teams Points assigned based on aircraft committed Awards granted to carriers/teams based on share of points World's team eligible for 55% of FY05 business World is one of only four operators of wide-body aircraft C
Slide 16: Revenue Mix
Revenue Mix Military ("AMC") Passenger (77%) Full service passenger operation Commercial Cargo (13%) Includes both full service and ACMI operations for commercial markets Commercial Passenger (9%) Includes both full service and ACMI operations for commercial markets AMC Cargo (1%) Full service cargo
Slide 17: Key Operating Expense Categories
Key Operating Expense Categories Flight (34%) Pilot, flight attendant, catering, ground handling, ATC, landing fees and passenger related expenses Aircraft (17%) Lease expense and hull insurance Maintenance (16%) Block hour and event driven Fuel (16%) Majority is passed to customer S, G & A / Other
Slide 18: Today's Objectives
Today's Objectives Overview Recent Results and Trends Going Forward
Slide 19: Financial Performance (2004 vs. 2003)
Financial Performance (2004 vs. 2003) 2004 2003 % Chg Operating Revenue $503.9 $474.9 6.1% Operating Expense $463.6 $446.6 3.8% Operating Income $40.3 $28.4 41.9% Net Income after Tax $25.6 $15.3 67.3% EBITDA $43.9 $32.2 36.3% Unrestricted Cash $50.0 $30.5 63.9% Block Hours 47,759 44,072 8.4% ($mil)
Slide 20: Balance Sheet Comparison (2004 vs. 2003)
Balance Sheet Comparison (2004 vs. 2003) 2004 2003 Chg Unrestricted Cash $50.0 $30.5 +$19.5 Working Capital $30.8 $6.8 +$24.0 Current Ratio 1.3 to 1 1.1 to 1 +.2 to 1 Long-term Debt $43.9 $58.5 -$14.6 Shareholder Equity $30.4 ($8.0) +$38.4 ($mil) Balance sheet is much stronger!
Slide 21: Operating Revenues
Operating Revenues 1998 1999 2000 2001 2002 2003 2004 Passenger 221.9 195.5 209.7 279.2 306.5 341.8 432.3 Cargo 47.7 67.6 54.2 37.3 76 127.6 67.7 millions Revenues have doubled since 2000
Slide 22: Military has Driven Growth
Military has Driven Growth 1998 1999 2000 2001 2002 2003 2004 Commercial 160.2 128.7 149.8 113.4 106.8 120.5 110.4 Military 110.9 135.3 114.1 203.8 277.6 354.7 389.7 millions Military represented 77% of total revenues in 2004
Slide 23: Net Income and Margin Increasing
Net Income and Margin Increasing 1998 1999 2000* 2001 2002 2003 2004 Net Income -11 -7.6 -3.2 -26 2 15.3 25.6 ($mil) *Excludes impact of accounting change (+$22.7 mil) Net Income in 2004 improved $52 million from 2001 Net Margin - -4.1% - -1.2% - -8.2% +.5% +3.2% - -2.9% +5.1%
Slide 24: Stockholder Equity is Now Positive
Stockholder Equity is Now Positive ($mil) Stockholders equity increased over $60 million from 2001 2001 2002 2003 2004 Stockholder Equity -31.1 -28.9 -8 30.4
Slide 25: Unit Revenue and Cost
Unit Revenue and Cost 2001 2002 2003 2004 Block Hours Passenger 25,505 24,279 27,458 31,799 Cargo 7,390 13,015 15,696 14,869 System 33,378 38,049 44,072 47,759 Unit Revenue (per block hour) Passenger $10,947 $12,624 $12,503 $13,597 Cargo 5,047 5,839 8,187 4,560 System $9,523 $10,105 $10,774 $10,551
Slide 26: Aircraft Costs Declining
Aircraft Costs Declining 2001 2002 2003 2004 Aircraft Costs 77.6 86.8 85.5 77.2 Cost/Block Hour 2325 2281 1940 1616 12.9 15.8 16.9 16.4 Average aircraft/day ($millions) Aircraft costs in 2004 declined $8.3 mil from 2003 and unit cost has decreased 30% since 2001
Slide 27: Today's Objectives
Today's Objectives Overview Recent Results and Trends Going Forward
Slide 28: Challenges
Challenges AMC requirements Revenue diversification Cost structure and aircraft size limits commercial passenger growth Availability of freighter aircraft
Slide 29: AMC Requirements
AMC Requirements Military has no long-range passenger aircraft Ongoing troop rotations for foreseeable future Focus on terrorism = military activity worldwide Reduced overseas presence in years ahead Potential for smaller passenger aircraft Long-term AMC requirements will remain relatively high
Slide 30: AMC Passenger Revenue and World's Share
World's Revenue Other Carriers' Revenue 1996 79 193 1997 77 202 1998 113 221 1999 135 191 2000 113 229 2001 201 158 2002 267 259 0 2003 281 456 436 2004 385 638 145 AMC Passenger Revenue Source: Air Mobility Command (FY) and World Airways (CY) internal data Annual Amounts (in millions) 272 279 334 3
Slide 31: Revenue Diversification
Revenue Diversification Freight opportunities growing with improving global economy New 2 aircraft, 2-year contract with EVA New 1 aircraft, 2-year contract Air Canada New 1 aircraft, 1-year contract with Thai One-year Menlo contract extension (2 DC-10F) All freighter aircraft sold through 2005 Wide
Slide 32: Addressing the Challenges
Addressing the Challenges Established Holding Company structure Focused on revenue diversification Increased liquidity to position for strategic options Created flexible fleet plan Identified and evaluating strategic growth opportunities
Slide 33: Well Positioned Going Forward
Well Positioned Going Forward Significant turnaround since 2001 Dramatic balance sheet improvement Major operational/cost improvements Successful revenue diversification
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