Aeroflot · RUS:AFLT
Aeroflot — Investor Presentation (October 2017)
43 slides from Aeroflot's investor presentation, October 2017
Slide 1: Aeroflot Group Investor Presentation October 2017
AEROFLOT GROUP I N V E S T O R P R E S E N TAT I O N October 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: 6M 2017 Highlights
6M 2017 Highlights Aeroflot Group • Aeroflot Group carried 23.0 mln passengers in 6M 2017 (up by 3.3 mln or +16.6% vs. 6M 2016) • Passenger load factor increased 2.0 p.p. to 80.6% • 6M 2017 financials results: - Total revenue of 234.9 bn RUB (up 4.9% y-o-y) - EBITDAR and EBITDA margins of 19.6% and
Slide 4: Market Update
MARKET UPDATE AEROFLOT ~~ 3) ~=2 Russian Airlines
Slide 5: 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, 6M 2017 Increase in PAX million inc. PAX of Russian and Foreign Carriers and int. transit PAX Domestic Routes (4.1%) 22
Slide 6: Market Recovery Continued in 2017
Market Recovery Continued in 2017 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, % (7.2)% 10.6% 18.6% 25.7% 21.0% 19.6% 42.5 % 13.0 % 25.3 % 9.3% 13.6% 13.4% 12.2% 7.4 % 2.9% (1.5)% (2.5
Slide 7: Aeroflot Group Overview
AEROFLOT GROUP OVERVIEW AEROFLOT ~~ 3) ~=2 Russian Airlines
Slide 8: 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 3.0% 21.5% 9.1% Contribution to 15.2 66.4% 4.9 0.7 2.1 PAX, 6M 2017 +13.5% +34.9% +13.1% +5.2% 15.2 4.9 0.7 2.1 PAX growth, y-o-y 13.4 3.7 0.6 2.0 6M 2016 6M 201
Slide 9: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (6M 2017, y-o-y) Russia 13.7 % Murmansk Arkhangelsk Salekhard New Urengoy Syktyvkar Khanty Mansiysk Saint Petersburg Surgut Yakutsk Nizhnekamsk Nizhnevartovsk Perm Magadan Nizhny Novgorod Tyumen Ekaterinburg Kemerovo Europe
Slide 10: 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 12.7x 13.5x 1
Slide 11: 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 52 routes (32 unique for the Group) • Additional expansion to international destinations (10 countries) Surgut Saint Petersburg • 12
Slide 12: Operating Performance
OPERATING PERFORMANCE AEROFLOT ~~ 3) e ~=2 Russian Airlines
Slide 13: Operating Data – 2Q & 6M 2017
Operating Data – 2Q & 6M 2017 Aeroflot airline Aeroflot Group Indicator Unit 2Q 2Q 6M 6M 2Q 2Q 6M 6M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2016 2017 2016 2017 2016 2017 2016 2017 Passenger Traffic th PAX 7,209 8,230 14.2% 13,438 15,246 13.5% 10,674 12,660 18.6% 19,695 22,962 16.6% International Routes th PAX 3,57
Slide 14: Aeroflot Group Monthly Operating Results
Aeroflot Group Monthly Operating Results Passenger Traffic Dynamics PAX Load Factor Change (PLFM 2017 – PLFM 2016 for respective month) 6.4 19.4% 5.6 15.8% 4.3 3.8 20.9% 3.3 3.2 14.5% 3.0 15.4% 2.5 12.6% 32.0% 1.7 1.6 1.7 26.3% 0.8 30.0% 21.7% 25.6% 22.4% 0.2 (0.9) (0.7) 10.7% 14.4% 8.4% (2.3) (2.2)
Slide 15: Revenue and Yield Management
REVENUE AND YIELD MANAGEMENT
Slide 16: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mln)1 6M 2017 6M 2017, % of Sheduled Passenger Flights 90.6% total Region 6M 2016 6M 2017 Y-o-Y scheduled Charter Passenger revenue Flights 6.0% Russia 71,867 75,288 4.8% 40.0% Cargo 3.4% Europe 48,414
Slide 17: Scheduled Flights Revenue Units
Scheduled Flights Revenue Units 6M 2017 Yield (PAX Revenue / RPK) 6M 2017 RASK (PAX Revenue / ASK) RUB RUB (7.8)% (6.6)% (12.0)% (8.1)% (5.0)% (2.8)% 3.14 4.13 2.90 2.96 3.79 2.72 2.77 3.64 3.48 2.59 3.36 3.27 Domestic International Total Domestic International Total 6M 2017 Yield ex. FX effect (PAX
Slide 18: 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 19: Fleet Overview
FLEET OVERVIEW AEROFLOT ~~ 3) == Russian Airlines
Slide 20: 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 30 Jun 17 31 Dec 16 31 Dec 16 Wide-body 38 15 18 35 - 53 50 3 Airbus A330 22 - 8 14 22 22 - Boeing 777 16 6 10 12 - 22 21 1 Boeing 747 - 9 - 9 - 9 7 2
Slide 21: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule in Accordance with Existing Contracts 2017 (Actual) 2017 2018 2019 2020 2021 and beyond Current Type of aircraft Phase (1) Phase Phase Phase Phase Phase fleet Delivery Delivery Delivery Delivery Delivery Delivery out out out out out out Wide-body
Slide 22: Financial Performance
FINANCIAL PERFORMANCE AEROFLOT ~~ ~=2 Russian Airlines
Slide 23: Financial Highlights
Financial Highlights Despite the decline in key P&L profitability lines in H1 … in historical context both margins and absolute net 2017 vs H1 2016… income and EBITDAR look quite strong (vs 2012-2016) EBITDA, EBITDAR and Net Income Margins RUB mln 6M 2016 6M 2017 Change 30% 26.1% (where applicable)
Slide 24: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mln RUB mln 4.9% 4.9% 16.4% + (13.5)% + 1.8% + 0.2% 3.3% + 2.4% + 0.9% + (1.6)% (30,117) 36,731 1,965 (3,616) 5,367 234,860 4,012 7,320 410 234,860 223,824 223,824 Up by 846 Cargo Other Appreciation thd PAX (or volu
Slide 25: Operating Costs
Operating Costs % of Total Operating Operating Expense Change Change 6M 2016 6M 2017 Expense (RUB mln If not stated otherwise) y-o-y ex. FX & NRE (6M 2017) Fuel 44,790 56,217 25.5% 42.7% 24.7% Opex (ex. Fuel) 155,784 170,946 9.7% 18.3% 75.3% Aircraft, traffic and passenger servicing 40,120 45,961 14
Slide 26: Group Unit Costs
Group Unit Costs Operating Expense per ASK (CASK), RUB 6M 2016 6M 2017 Change Fuel 0.70 0.76 8.3% Opex (ex. Fuel): 2.45 2.32 (5.3)% Aircraft, Traffic and Passenger Servicing 0.63 0.62 (1.1)% Staff 0.49 0.52 6.6% Operating Lease 0.45 0.42 (6.7)% Maintenance 0.28 0.21 (22.8)% SG&A 0.20 0.20 (2.5)% D&A
Slide 27: Fuel Cost Management
Fuel Cost Management Flight Hours Fuel Consumption per ASK Fuel Consumption per RTK (thousand hours) (gr/ASK) (gr/RTK) 10.8% (0.3)% (4.6)% 477 22.85 298.4 22.79 284.7 431 6M 2016 6M 2017 6M 2016 6M 2017 6M 2016 6M 2017 Aeroflot Airline Jet Fuel Price Comments (RUB per tonne of jet fuel) • Efficient
Slide 28: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline personnel Flight crew 31-Dec-2016 30-Jun-2017 Y-o-Y 12.6% 10.0% Flight crew 3,741 3,799 1.6% Other airline Cabin crew 10,263 10,834 5.6% personnel 14.2% Technical maintenance and repair 4,396 4,519 2.8% Cabin crew 28.5% Ticket
Slide 29: EBITDA Evolution
EBITDA Evolution (RUB mln) Total effect on revenue Total effect on costs ∑=11,036 RUB mln ∑=(25,666) RUB mln Net volume and price effect Net FX effect ∑=41,153 RUB mln ∑=(7,881) RUB mln Net volume and price effect 4,012 (30,117) ∑=(47,903) RUB mln 36,731 410 22,237 (19,115) (7,720) (9,623) (6,903) (
Slide 30: Reported and Adjusted Operating and Net Income Analysis
Reported and Adjusted Operating and Net Income Analysis 6M Adjusted Operating Income Build-Up (RUB mln) 2,577 (1,324) 8,950 7,697 Reported Operating Income 6M 2017 Release of legal reserve Increase of liabilities for social payments Adjusted Operating Income 6M 2017 6M Adjusted Net Income Build-Up (
Slide 31: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / LTM EBITDA2 RUB mln 31-Dec-2016 30-Jun-2017 Change 1.6 1.4 Borrowings 20,367 17,448 (14.3)% 1.2 Finance Lease Liabilities 122,736 112,374 (8.4)% 0.7 Pension Liabilities 805 929 15.4% Total Debt 143,908 130,751 (9.1)% 30-Jun-2016 30-Sep-16 31-Dec-16 30-
Slide 32: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mln) 6M 2017 Other adjustments before working capital changes, incl. 7,665 Effect from revenue hedging (finance lease hedge accounting) 2,748 Loss on fixed assets disposal 688 (4.6)% Change in provisions1 4,783 Other (554) 11,743 (121) 30,585 (1,801) (337) 61,788 6
Slide 33: Appendix
APPENDIX AEROFLOT ~~ 3) ~=2 Russian Airlines
Slide 34: 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 2.9% 3.78 Russian airline industry still has .0 International – (4.7)% | Domestic – 12.3% (4.1)% promising growth prospects c
Slide 35: 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 36: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation1 Average Age of the Fleet2 Aircraft Average Age 4.3 Shandong Airlines 4.6 Hainan Airlines 4.9 8.8 7.7 Azul 5.2 7.0 6.5 6.5 Sichuan Airlines 5.2 6.4 Xiamen Airlines 5.2 289 297 China Eastern Airlines 5.3 232 251 247 222 Spirit Airlines
Slide 37: 12M 2016 Operating Data by Region (Scheduled Routes)
12M 2016 Operating Data by Region (Scheduled Routes) Americas Russia CIS 6.5 % 6.5 % 10.2 % 18.6 % 18.0 % 5.5 % 7.8 % 7.7 % 14.2 % 2.6 p.p. (0.8) p.p. (1.8) p.p. Passengers RPK ASK PLF Passengers RPK ASK PLF Passengers RPK ASK PLF carried carried carried Performance of North and Central American Rus
Slide 38: Blended Flights Revenue Units (scheduled + charter)
Blended Flights Revenue Units (scheduled + charter) 6M 2017 Yield (PAX Revenue / RPK) 6M 2017 RASK (PAX Revenue / ASK) RUB RUB (9.8)% (7.9)% (14.7)% (10.1)% (5.1)% (3.3)% 3.12 4.06 2.81 2.96 3.76 2.74 2.60 2.72 3.37 3.26 3.46 3.38 Domestic International Total Domestic International Total 6M 2017 Yie
Slide 39: Net Income Evolution
Net Income Evolution (RUB mln) 14,652 (3,616) (26,589) 3,097 1,913 2,890 2,467 4,047 9,085 (2,166) Reported Net Traffic Revenue Other Revenue Operating Financial Subs Settlement of Reclass from Taxation Reported Net Income 6M 2016 Expenses Income/Expense Reorganization and Derivative Reserve (Equity
Slide 40: 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 41: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Indicator Rossiya¹ Pobeda Aurora Total 6M 2017 4,936 2,094 687 7,716 Passenger Traffic, th PAX 6M 2016 3,659 1,991 607 6,257 Y-o-Y 34.9% 5.2% 13.1% 23.3% 6M 2017 12,050 3,499 1,042 16,591 Passenger Turnover, mln pkm 6M 2016 7,634 3,074 976 11,684 Y-o-Y 57.8%
Slide 42: 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 43: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 43