Aeroflot · RUS:AFLT
Aeroflot — Q3 2013 Earnings Presentation
37 slides from Aeroflot's earnings presentation, Dec 2, 2013
Slide 1: Aeroflot Group Q3 / 9 months 2013 Financial Results
Aeroflot Group Q3 / 9 months 2013 Financial Results Moscow December 2, 2013 Speakers: Shamil Kurmashov Chief Financial Officer, Head of Network and Revenue Management 1
Slide 2: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Financial Performance 5. Capital Structure and Liquidity 6. Fleet Dynamics 7. Appendix 2
Slide 3: Key Highlights
Key Highlights • Strong results in the 9 months 2013 – outperforming the same period last year and a successful first half 2013 • Profitable growth in passenger turnover in Russia and Europe, and continued expansion in North America • Successful integration and turnaround of subsidiaries airlines •
Slide 4: Key Financial Data for Aeroflot Group
Key Financial Data for Aeroflot Group $m, Unless Otherwise Q3 2012 Q3 2013 Change 9m 2012 9m 2013 Change Stated Revenue 2,406 2,900 21% 6,021 7,033 17% RPK1 (m pkm) 23,547 26,091 11% 56,229 65,363 16% Yield2 ($ cents/pkm) 8.7 9.7 11% 9.0 9.2 3% EBITDAR3 553 932 69% 1,069 1,575 47% Margin (%) 23% 32%
Slide 5: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Financial Performance 5. Capital Structure and Liquidity 6. Fleet Dynamics 7. Appendix 5
Slide 6: Russian Air Transportation Market
Russian Air Transportation Market Russian Total Passenger Traffic (m PAX)1 CAGR 2008-13F 2014-17F 82.9 74.0 64.1 65.2 56.9 14% 7% 56.9 49.8 45.1 44.4 38.6 27.7 31.4 35.5 23.6 29.9 21.3 38.5 8% 6% 26.2 29.2 32.7 35.4 27.0 29.8 23.8 2008 2009 2010 2011 2012 2013F 9m 2012 9m 2013 Source: TCH, Company e
Slide 7: Aeroflot Group Market Position
Aeroflot Group Market Position Passenger Traffic (9 months 2013, m PAX)1 Passenger Turnover (9 months 2013, bn pkm)1 37% 38% 24.0 65.4 22% 21% 19% 14.3 15% 36.3 34.3 11% 10% 9.8 9% 8% 7.1 6.6 5% 5% 14.9 13.0 3.4 9.1 Aeroflot Transaero S7 Group Utair Group Ural Others Aeroflot Transaero S7 Group Utai
Slide 8: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Financial Performance 5. Capital Structure and Liquidity 6. Fleet Dynamics 7. Appendix 8
Slide 9: Networks Operated and Key Statistics
Networks Operated and Key Statistics Flights Dynamics by Region (%) Average Flight Frequency per Route of JSC Aeroflot 9m 2012 9m 2013 Change Europe 8.0% Scheduled 11.3 12.6 12% CIS 31.8% Charter 1.5 1.0 (33)% Russia 12.3% International Scheduled 9.0 10.1 12% Asia, Pacific 6.0% Domestic Scheduled 17
Slide 10: Traffic and Capacity Development
Traffic and Capacity Development (%, 9m 2013 vs. 9m 2012) North and Central America Europe Russia and CIS 62.2% 56.1% 21.4% 19.4% 18.1% 16.7% 1.2 p.p. 0.9 p.p. (3.1)p.p RPK ASK . SLF RPK ASK SLF RPK ASK SLF Middle East and Africa Asia 20.4% 17.0% 2.2 p.p. (2.8)p.p. (18.3)% (20.8)% RPK ASK SLF RPK AS
Slide 11: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Financial Performance 5. Capital Structure and Liquidity 6. Fleet Dynamics 7. Appendix 11
Slide 12: Revenue Breakdown
Revenue Breakdown Traffic Revenue Breakdown (9m 2013) Revenue from Scheduled Passengers Carriages ($m)1 9m 2013 9m 2013 Y-o-y Change Charter Passenger Flights 6.7% 41% Russia 2,322 20.5% Cargo 3.7% 33% Europe 1,832 15.3% Scheduled Passenger Flights 19% 89.6% Asia 1,089 21.7% 5% North America 259 70.
Slide 13: Revenue Units
Revenue Units Yield: PAX Revenue / RPK RASK: PAX Revenue / ASK Cargo Yield: Cargo Revenue / CTK ($ cents / pkm) ($ cents / ASK) ($ cents / CTK) 11% 3% 9% 3% 1% 3% 9.7 8.1 29.0 29.2 29.0 29.8 9.0 9.2 7.5 7.1 7.3 8.7 Q3 2012 Q3 2013 9m 2012 9m 2013 Q3 2012 Q3 2013 9m 2012 9m 2013 Q3 2012 Q3 2013 9m 20
Slide 14: Cost Analysis
Cost Analysis 9m 2013, $m Q3 2013 Y-o-y Change 9m 2013 Y-o-y Change 30.4% Fuel 687 10.8% 1,878 11.4% Opex (ex. Fuel) 1,531 4.9% 4,305 10.1% 20.3% Aircraft, Traffic and 471 12.7% 1,253 17.9% Passenger Servicing 16.2% Staff 315 (4.4)% 1,004 11.7% 7.2% SG&A1 156 2.9% 447 9.0% 7.2% Operating Lease 152 4
Slide 15: Group Unit Costs
Group Unit Costs Cost Per ASK ($ cent) (2.2)% (4.6)% 8.32 0.07 8.14 (0.15) 7.84 (0.06) (0.03) (0.04) 7.48 (0.09) (0.06) (0.17)² CASK 2011 ∆ in ∆ in ∆ in ∆ in CASK 2012 CASK 9m 2012 ∆ in ∆ in ∆ in ∆ in CASK 9m 2013 Staff Fuel Maintenance Other¹ Staff Fuel Maintenance Other¹ Continual focus on cost re
Slide 16: Managing Fuel Costs
Managing Fuel Costs Flight Hours (‘000 hrs.) Specific Fuel Consumption (gr / tkm) 8.5% 1.0% (1.0)% 587 541 313 310 294 297 6.9% 218 204 Q3 2012 Q3 2013 9m 2012 9m 2013 Q3 2012 Q3 2013 9m 2012 9m 2013 • Efficiency gains in fuel costs as new aircraft are put into operation and old and less fuel-effici
Slide 17: Headcount Overview and Labour Productivity
Headcount Overview and Labour Productivity Headcount Change 30-Sep-2013 Change 30-Sep-2013 30-Sep-2012 31-Dec-2012 30-Sep-2013 to 30-Sep-2012 to 31-Dec-2012 Aeroflot JSC 16,110 16,418 17,678 10% 8% Aeromar 2,896 2,938 2,966 2% 1% Subsidiary Airlines 9,243 9,214 9,432 2% 2% Other1 677 978 252 (63%) (
Slide 18: Group Operating Income Analysis
Group Operating Income Analysis Aeroflot Group Operating Income Evolution ($m) 73 (255) 64 162 786 (10) (105) (191) (52) (47) 850 425 x2 Operating Air Carriage Air Carriage Other Fuel Fuel Carriage Fuel Price Staff Costs Aircraft, D&A³ Other Operating Income 9m Volume Tariff Revenue Consumption Volu
Slide 19: Group Net Income
Group Net Income Aeroflot Group Net Income ($m) 84% 18 0.4 (7) 52 (12) 20 (3) 0.2 4 (52) 1 545 524 Total net income of subsidiary airlines of $57m 296 JSC Rossiya Vladivostok Donavia Orenair SAT Sherotel Aeromar Aerofirst¹ Aerofirst A/R Other Group Group Aeroflot Airlines Air Disposal² reserve³ Net
Slide 20: Continued Improvement of Subsidiaries Performance
Continued Improvement of Subsidiaries Performance Operating Income / Net Income ($m)1 Q3 Q3 9m 9m 2012 2013 Change 2012 2013 Change Highlights • New code-share agreement, fleet restructured, MRO centralised, unified fiscal/accounting/tax policies (4) / (3) 7/6 11 / 9 (9) / (7) 26 / 20 35 / 27 • Key
Slide 21: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Financial Performance 5. Capital Structure and Liquidity 6. Fleet Dynamics 7. Appendix 21
Slide 22: Leverage
Leverage Debt ($m) Total Debt / LTM EBITDA 3.9 x 3.6 x 30-Jun-2013 30-Sep-2013 Change 2.4 x Borrowings 417 401 (4%) 31-Dec-2012 30-Jun-2013 30-Sep-2013 Finance Lease Liabilities 2,335 2,264 (3%) Net Debt / LTM EBITDA 3.2 x Pension Liabilities 22 22 - 2.7 x 1.7 x Customs Duties 12 10 (17%) 31-Dec-201
Slide 23: Operating Free Cash Flow and Liquidity
Operating Free Cash Flow and Liquidity 9 Months 2013 Operating Free Cash Flow ($m) (26) 1,113 47% 107 90 (211) 902 898 (99) 96 249 694 612 Profit Before Depreciation Interest Unrealized Other Adj. Cash Flows Working Net Cash Net Capital Net Pre- Free Cash Free Cash Income Tax and Expense Net Foreign
Slide 24: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Financial Performance 5. Capital Structure and Liquidity 6. Fleet Dynamics 7. Appendix 24
Slide 25: Aeroflot Group Fleet
Aeroflot Group Fleet Type Aeroflot Subsidiaries Total Owned Financial Lease Operating Lease Boeing B-767 5 3 8 - - 8 Airbus A-330 22 - 22 - 8 14 Long-haul Tu-204 - 6 6 - 6 - Boeing B-777 4 3 7 - 4 3 Illyshin Il-96-300 6 - 6 6 - - McDonnell Douglas MD-11 3 - 3 - - 3 Total 40 12 52 6 18 28 Airbus A-31
Slide 26: Group Fleet Order and Phase-Off Schedule
Group Fleet Order and Phase-Off Schedule Total Aircraft Delivery Schedule in Accordance with Existing Contracts1 Type of Aircraft Delivered as at 27-Nov-2013 2013 2014 2015 2016 Long-haul 37 - 6 3 5 A-330 22 - - - - B-767 5 - - - - B-777 4 - 6 3 3 B-787 - - - - 2 Illyshin Il-96 6 - - - - Medium-haul
Slide 27: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Financial Performance 5. Capital Structure and Liquidity 6. Fleet Dynamics 7. Appendix 27
Slide 28: Route Network – Winter 2013 Schedule
Route Network – Winter 2013 Schedule Increase in Available Seat-Kilometers (ASK) in Winter 2013 Schedule Compared to Winter 2012 Schedule Long-Haul Destinations Mid-Haul Destinations 7.4% 9.1% 41.6% 8.5% Domestic International Domestic International Long-Haul Destinations Mid-Haul Destinations 7.7%
Slide 29: Aeroflot Group Structure
Aeroflot Group Structure JSC Aeroflot Strategic investment Airlines Ancillary Subsidiaries assets CJSC Aeromar JSC Sheremetyevo Transnautic Aero JSC Donavia 100% 51% 8.96% 49% Catering International Airport Cargo Sales CJCS Jetalliance 49% Vostok1 CJSC AeroMASh-AB CJSC Transport 45% 3.85% Aviation S
Slide 30: Key Financial Data for JSC Aeroflot
Key Financial Data for JSC Aeroflot $m, Unless Otherwise Q3 2012 Q3 2013 Change 9m 2012 9m 2013 Change Stated Revenue1 1,754 2,162 23% 4,392 5,302 21% RPK2 (m pkm) 15,152 17,588 16% 37,771 45,362 20% Yield3 ($ cents/pkm) 9.7 10.3 6% 9.6 9.6 1% EBITDAR4 445 762 72% 922 1,258 36% Margin (%) 25% 35% 10
Slide 31: Key Operating Data for JSC Aeroflot and Aeroflot Group
Key Operating Data for JSC Aeroflot and Aeroflot Group JSC Aeroflot Aeroflot Group Unit 9m 2012 9m 2013 Change 9m 2012 9m 2013 Change Passenger Turnover m pkm 37,771 45,362 20% 56,229 65,363 16% International Routes 26,023 30,741 18% 37,606 43,147 15% Domestic Routes 11,748 14,621 24% 18,624 22,216
Slide 32: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Vladivostok Orenair SAT Donavia Total Airlines Air 9m 2013 3,589 2,547 930 204 1,004 8,275 Passenger Traffic 9m 2012 3,362 2,436 913 202 732 7,645 (‘000 PAX) Change, % 7% 5% 2% 1% 37% 8% 9m 2013 7,241 8,873 2,190 190 1,506 20,001 Passenger Turnover 9
Slide 33: Currency Risk Management
Currency Risk Management Revenue Structure, 2012 Cost Structure, 2012 Revenue Structure, 2013F Cost Structure, 2013F USD and EUR USD EUR Others Other USD and 8% 6% 3% 20% 23% Other 30% EUR EUR RUB USD 50% RUB RUB 48% 40% 51% RUB 62% 32% 27% Hedged Hedged Revenue Structure, 2012 Revenue Structure, 20
Slide 34: Summary Financial Tables Income Statement
Summary Financial Tables Income Statement 3 months 3 months 9 months 9 months 30-Sep-2012 30-Sep-2013 30-Sep-2012 30-Sep-2013 Traffic Revenue 2 148 2,594 5,311 6,259 Other Revenue 258 306 710 774 Revenue 2,406 2,900 6,021 7,033 Operating Costs (1,678) (1,790) (4,492) (4,905) Staff Costs (330) (315)
Slide 35: Summary Financial Tables Balance Sheet
Summary Financial Tables Balance Sheet 31-Dec-2012 30-Sep-2013 Assets Current Assets Cash and Cash Equivalents 496 759 Short-term Investments 5 8 Accounts Receivable and Prepayments 1,553 1,900 Aircraft Lease Deposits 8 14 Income Tax Receivables 69 3 Expendable Spare Parts and Inventories 141 142 As
Slide 36: Summary Financial Tables Balance Sheet (continued)
Summary Financial Tables Balance Sheet (continued) 31-Dec-2012 30-Sep-2013 Liabilities and Equity Current Liabilities Accounts Payable and Accrued Liabilities 989 1,190 Unearned Transportation Revenue 503 444 Deferred Revenue Related to Frequent Flyer Programme 12 12 Provisions 4 40 Short-term Borro
Slide 37: Summary Financial Tables Condensed Cash Flow Statement
Summary Financial Tables Condensed Cash Flow Statement Nine-Month Period Ended Nine-Month Period Ended 30-Sep-2012 30-Sep-2013 Operating Profit Before Working Capital Changes 629 1,113 Net Cash Flows from Operating Activities 631 902 Net Cash Flows Used in Investing Activities (5) (4) Net Cash Flows