Aeroflot · RUS:AFLT
Aeroflot — Investor Presentation (April 2019)
51 slides from Aeroflot's investor presentation, April 2019
Slide 1: Aeroflot Group Investor Presentation
Aeroflot Group Investor Presentation April 2019
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: Years in the World’s Sky: Jubilee Year’s Highlights
Years in the World’s Sky: Jubilee Year’s Highlights Aeroflot: 95 years in world’s sky Passengers Passenger Load Factor mn PAX 55.7 % 82.8% 82.7% Strengthening positions 41 aircraft addition in global Top-20 increased fleet to ranking: 56 mn PAX 366 aircraft1 50.1 Acceleration of LCC Updated growth (
Slide 4: Market Update
In the 1960s, flight attendant uniforms were styled in warm gray shades and the jacket was fastened with three shiny half-round buttons. The flight attendant uniform in the 1970s consisted of a jacket with white trim and buttons with the Aeroflot logo. Market Update 01
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, 12M 2018 Increase in PAX million inc. PAX of Russian and Foreign Carriers and int. transit PAX Domestic Routes 10.7% +5
Slide 6: Market Return to Growth
Market Return to Growth Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in PAX traffic y-o-y, % Change in ASK y-o-y, % 16.4% 12.9% 12.2% 8.5% 10.7% 30.2 % 20.7 % 15.3 % 14.4 % 18.6 % 16.9 % 12.7% 10.9 % 14.6 % 10.8% 10.5% 9.9% 9.1% 11.9% 11.9% 10.6% 11
Slide 7: Aeroflot Group Overview
A dark blue uniform was used in winter in the 1970s. It had a collarless jacket with five contrasting buttons and a white turtleneck-style blouse. An elegant summer dress was designed in the 1970s for flights to hot countries. Aeroflot Group Overview 02
Slide 8: Aeroflot Group Multi-Brand Strategy
Aeroflot Group Multi-Brand Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth • 12M 2018 +8.9% • Flagship carrier Moscow • Premium product (4 Stars) (Sheremetyevo) 32.8 35.8 Premium • High income and middle class 64.2% 35.8 • Hub and spoke model 12M 2017 12M 2018 • Scheduled ne
Slide 9: Pobeda Airline: Acceleration of Growth
Pobeda Airline: Acceleration of Growth Overview of Pobeda Pobeda’s Network (Winter 2018/2019) • Operating from Vnukovo airport (3rd Moscow airport by PAX) Petrozavodsk Network • Network comprising 84 routes (44 unique for the Group) Surgut Helsinki • Additional expansion to international destination
Slide 10: Strategy 2023
The summer uniform of the 1980s took on the typical look of this time – a short-sleeve cropped jacket with bold shoulders. At that time, Aeroflot was transporting more than 120 million passengers per year. This achievement was entered in the Guinness Book of Records. The scarlet uniform returned in
Slide 11: Strategy 2023 in Historical Context
Strategy 2023 in Historical Context Passenger traffic 139 mln 1990 90-100 mln 2023 55.7 mln 11.1 mln 2018 3.1 mln 2009 years 11 1994
Slide 12: 2023: New Strategic Vision
2023: New Strategic Vision Passenger 90-100 mln accelerated expansion of LCC traffic (25-30 mln) International transit traffic 10-15 mln Regional New international hub (Krasnoyarsk) and development 3 bases (Sochi, Ekaterinburg, Novosibirsk) Fleet expansion ≈ 520 aircraft New technologies and Strengt
Slide 13: 2023 Strategic Targets Decomposition
2023 Strategic Targets Decomposition Airline 2018 2023 Development brand mn PAX mn PAX Focus • International transfer Focus on 35.8 to increase 2-3x to 52 efficiency and new technologies 10-15 mn PAX • Legacy carriers (Aeroflot+Rossiya) Transformation of net of transfer to the airline 11.1 grow at C
Slide 14: Moscow as a Global Transfer Hub
Moscow as a Global Transfer Hub Hubs of largest airlines offering Europe-Asia transit Average Europe-Asia distance via hubs, km Time economy 3 hours CASK, RUB. Helsinki Moscow Europe Asia 9,272 km London Moscow Helsinki 9,310 Frankfurt Frankfurt Munich 9,558 Munich Paris 9,838 Paris Dubai London 9,9
Slide 15: Pobeda: LCC Strategy
Pobeda: LCC Strategy Why Pobeda Has a Lot of Potential? Pobeda in 2023 1 Market stimulation effect mn PAX 30% increase in passenger traffic on new Pobeda routes – new passengers number of lowest fare tickets >400k (RUB 499/999) sold in 2018 25 - 30 2 Operational efficiency >13h Pobeda is the most ef
Slide 16: Regional Development
Regional Development New Regional Bases to Be Established in the Next 5 Years New International Hub in Krasnoyarsk Saint Petersburg 2х Russia and Asia Moscow New Potential network may Boeing 737 /Airbus A320 include: international Sochi Yekaterinburg hub • Key federal markets (Moscow, Petersburg, So
Slide 17: Network Strategy
Passengers were especially delighted by the uniform of the 1970s, which consisted of a deep red French style suit, Russian shirt, felt hat and gloves. A new summer uniform was introduced in the late 1980s – a light blue dress with a white collar symbolizing summer and the light blue sky. Network Str
Slide 18: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (12M 2018, y-o-y) Murmansk Salekhard Arkhangelsk New Urengoy Syktyvkar Khanty Mansiysk Saint Petersburg Russia 6.7 % MOSCOW Nizhnekamsk Nizhny Novgorod Tyumen Surgut Ekaterinburg Nizhnevartovsk Kemerovo Perm Krasnoyarsk Yaku
Slide 19: Network Expansion in 2018-2019
Network Expansion in 2018-2019 Destinations launched Destinations to be Destinations launched in Winter 2018/2019 in Summer 2018 launched in Summer 2019 Bukhara Cairo (Egypt) Nalchik (Russia) 8 Marseille (France) 1 1 (Uzbekistan) 1 3 flights per week 7 flights per week 5 flights per week 2 flights p
Slide 20: 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 19.1x 2
Slide 21: Operating Results and Yields
A uniform consisting of a dark blue plaid skirt and vest captured the spirit of the 1980s. In 1994, the renowned fashion designer Valentin Yudashkin created a new uniform: a black suit with a red vest, white shirt and bow tie. Operating Results and Yields 05
Slide 22: Operating Data – Q4 & 12M 2018
Operating Data – Q4 & 12M 2018 Aeroflot airline Aeroflot Group Indicator Unit Q4 Q4 12M 12M Q4 Q4 12M 12M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2017 2018 2017 2018 2017 2018 2017 2018 Passenger Traffic th PAX 8,056 8,992 11.6% 32,845 35,762 8.9% 11,789 13,462 14.2% 50,129 55,710 11.1% International Routes th PAX
Slide 23: 12M 2018 Operating Data by Region (Scheduled Routes)
12M 2018 Operating Data by Region (Scheduled Routes) Americas Russia CIS 13.2 % 13.7 % 10.9 % 6.0 % 4.1 % 4.0 % 2.6 % 1.8 % 1.6 % 2.1 p.p. (0.8) p.p. Passengers RPK ASK PLF (0.1) p.p. Passengers RPK ASK PLF carried Passengers RPK ASK PLF carried carried Performance of North and Central American Russ
Slide 24: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units Q4 Yield (PAX Revenue / RPK) Q4 RASK (PAX Revenue / ASK) RUB RUB 3.5% 0.9% 3.0% 2.1% 3.87 4.1% 2.92 2.7% 3.74 2.90 3.62 2.85 3.51 2.74 2.79 3.21 3.29 2.64 Domestic International Total Domestic International Total 12M Yield (PAX Revenue / RPK) 12M RASK (
Slide 25: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mln)1 12M 2018 12M 2018, % of Q4 2017 Q4 2018 Y-o-Y Region 12M 2017 12M 2018 Y-o-Y sch. revenue Sheduled Passenger Flights 38,767 46,300 19.4% Russia 176,141 202,192 14.8% 40.7% 89.7% 26,505 30,096 13.5
Slide 26: Aircraft Fleet
The summer uniform of the 1980s took on the typical look of this time – a short-sleeve cropped jacket with bold shoulders. At that time, Aeroflot was transporting more than 120 million passengers per year. This achievement was entered in the Guinness Book of Records. The scarlet uniform returned in
Slide 27: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 Aircraft Average Age 4.2 Hainan Airlines 4.8 7.7 7.0 Shandong Airlines 5.3 6.4 6.5 6.2 6,3 Xiamen Airlines 5.3 366 Sichuan Airlines 5.4 325 289 Spirit Airlines 5.6 232 251 247 China Eastern Airlines 5.7 Ind
Slide 28: Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Breakdown Operated by Lease type Total as of Total as of Change vs. Aircraft Type Owned Aeroflot Subsidiaries Finance Operating 31-Dec-18 31-Dec-17 31-Dec-17 Wide-body 39 19 18 40 - 58 52 6 Airbus A330 22 - 8 14 - 22 22 - Boeing 777 17 10 10 17 - 27 21 6 Boeing 747 - 9 - 9 - 9 9
Slide 29: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule1 Aeroflot Group Fleet as at Year-end2 Number of aircraft Type of 12M 2018 (Actual) 2019 (Plan) Current (1) Phase fleet Phase aircraft Delivery Delivery out out Wide-body (long-haul) 6 - 58 2 (3) ~520 A-330 - - 22 - (3) B-777 6 - 27 2 - B-747 - - 9
Slide 30: Financial Results
The renowned Russian fashion designer, Victoria Andreyanova, created a dark blue uniform in 2004. A dark blue uniform for flights in autumn and winter was introduced in 2010 and ranked first in international ratings for being the most stylish and elegant flight attendant uniform. Financial Results 0
Slide 31: Financial Highlights: Q4 and 12M 2018
Financial Highlights: Q4 and 12M 2018 RUB mln Q4 2017 Q4 2018 Change 12M 2017 12M 2018 Change (where applicable) 11,789 13,461 14.2% Passenger Traffic (mln PAX) 50,129 55,710 11.1% 128,161 145,225 13.3% Revenue 532,934 611,570 14.8% 107,888 124,318 15.2% Traffic Revenue 458,390 534,292 16.6% 20,792
Slide 32: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mln RUB mln 14.8% 14.8% 9.0% + 5.1% + 0.6% 12.9% + 1.3% + 0.4% + 0.1% 3,450 68,925 6,977 2,374 360 611,570 27,421 611,570 47,765 532,934 532,934 Charter RPK up Domestic Cargo Depreciation of yield up by by 3.5% y-o-
Slide 33: Operating Costs
Operating Costs Change Change Change Operating Expense Change % of Total OpEx Q4 2017 Q4 2018 ex. FX 12M 2017 12M 2018 ex. FX y-o-y (RUB mln If not stated otherwise) y-o-y (12M 2018) & NRE & NRE 32,742 49,899 52.4% 28.8% Fuel 122,685 181,864 48.2% 37.9% 30.7% 96,871 112,515 16.1% 7.3% Opex (ex. Fuel
Slide 34: Group Unit Costs
Group Unit Costs Q4 2017 Q4 2018 Change Operating Expense per ASK (CASK), RUB 12M 2017 12M 2018 Change 0.85 1.14 34.2% Fuel 0.78 1.05 34.6% 2.52 2.58 2.3% Opex (ex. Fuel): 2.35 2.37 0.7% 0.56 0.65 14.8% Aircraft, Traffic and Passenger Servicing 0.61 0.63 2.3% 0.58 0.49 (15.1)% Staff 0.53 0.48 (9.1)%
Slide 35: Fuel Cost Management
Fuel Cost Management Aeroflot Airline Jet Fuel Price Fuel Consumption per ASK (thousand RUB per tonne of jet fuel) (gr/ASK) (1.2)% 50.0 22.8 22.5 46.0 44% 22% 45% 44% 12M 2017 12M 2018 40.0 49% 55% Comments 54% 43% 19% 18% • Efficient fuel procurement: 1-year supply contracts in 13% 28% airports acr
Slide 36: EBITDA Evolution
EBITDA Evolution (RUB mln) Total effect on revenue Total effect on costs ∑=78,636 RUB mln ∑=(101,052) RUB mln Net volume and price effect Net FX effect Net volume and price effect ∑=51,215 RUB mln ∑=(1,099) RUB mln ∑=(72,532) RUB mln 27,421 (28,520) 47,765 3,450 (46,546) Total fuel price and FX effe
Slide 37: Pobeda Financial Results
Pobeda Financial Results 1 Increasing PAX Traffic RASK dynamics Growing Revenues of LCC Segment Million passengers RUB Q4 2017 Q4 2018 Change RUB mln 12M 201712M 2018 Change 7.2 2.45 2.47 4.6 4,631 7,891 70.4% Revenue 20,633 34,373 66.6% 24 212 >8x EBITDAR1 6,727 8,305 23.5% 12M 2017 12M 2018 12M 20
Slide 38: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / EBITDA2 RUB mln 31-Dec-2017 31-Dec-2018 Change 2.0 Borrowings 3,181 3,486 9.6% Finance Lease Liabilities 100,689 93,224 (7.4)% Pension Liabilities 922 908 (1.5)% 0.9 0.7 0.6 Total Debt 104,792 97,618 (6.8)% Cash and Short Term n/m 54,909 30,148 (45.1)%
Slide 39: 2019 Guidance
2019 Guidance Market Indicator 2018 Targets Checklist 2019 Targets Total Market Single digit growth (6%-7%, in Double digit growth (10-14%) +11% (PAX) line with long-term CAGR) International Key driver +13% Single digit growth Segment (PAX) Domestic Secondary driver +10% Single digit growth Segment
Slide 40: Appendix
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Slide 41: 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 5.2% Russian airline industry still has International – 1.0% | Domestic – 10.4% 10.7% promising growth prospects 3.73 137.0 C
Slide 42: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Airline Pobeda Airline Aurora Airline Indicator Unit 12M 2018 Y-o-Y 12M 2018 Y-o-Y 12M 2018 Y-o-Y Passenger Traffic th PAX 11,140 (0.1)% 7,185 56.8% 1,623 4.8% International Routes th PAX 4,353 5.2% 1,766 101.8% 405 5.2% Domestic Routes th PAX 6,787
Slide 43: Infrastructure Expansion to Support Future Growth
Infrastructure Expansion to Support Future Growth New Terminal B Highlights New infrastructure objects launched in 2018 Capacity – 20 mln PAX (4,200 PAX per hour) Size – 110 thd sqm New technologies implemented in the new terminal Connected to terminal E via interteminal tunnels Terminal B Interterm
Slide 44: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units 12M Yield (PAX Revenue / RPK) 12M RASK (PAX Revenue / ASK) RUB RUB 8.2% 6.0% 5.0% 4.9% 3.5% 0.9% 4.10 3.24 3.06 3.12 3.79 3.81 2.97 3.63 2.95 3.43 3.46 2.85 Domestic International Total Domestic International Total 12M Yield ex. Pobeda (PAX Revenue / RP
Slide 45: Aeroflot Group Blended Flights Revenue Units
Aeroflot Group Blended Flights Revenue Units Q4 Yield (Scheduled + Charter PAX Revenue / RPK) Q4 RASK (Scheduled + Charter PAX Revenue / ASK) RUB RUB 3.2% 2.3% 0.6% 1.4% 1.4% 2.8% 3.77 2.88 2.90 2.85 3.65 3.58 2.76 2.81 3.50 2.68 3.26 3.31 Domestic International Total Domestic International Total 12
Slide 46: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline personnel Flight crew 31-Dec-2017 31-Dec-2018 % 12.5% 10.0% Cabin crew 11,259 12,168 8.1 % Other airline Airport services 7,034 6,853 (2.6)% personnel 4,702 5,313 13.0 % 13.6% Technical maintenance and repair Cabin crew Flight
Slide 47: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mln) Billion RUB 12M 2018 Billion RUB 12M 2018 Other adjustments before working capital changes, incl. 12.7 Working capital changes and income tax, incl. (23.6) Change in provisions 11.4 Change in accounts receivable and prepayments (15.9) Effect from revenue hedgi
Slide 48: Introduction of IFRS 16
Introduction of IFRS 16 Significant changes are expected in Operating lease and Maintenance lines of PnL PnL statement 2018 2019 Explanation Operating lease expenses $$$ $$$ • Redistribution of Lease and Maintenance expenses to D&A and Finance costs due to reflecting aircraft and other leased assets
Slide 49: 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 (3 members) Evgeny Ditrich Vitaly Saveliev Personnel and Remuneration Board of Directors Mikhail Poluboyarinov Commi
Slide 50: Aeroflot Group Structure
Aeroflot Group Structure PJSC Aeroflot(1) Airlines Ancillary Companies JSC Rossiya Airlines 75%-1 sh. CJSC Aeromar 51% On-board sales/catering LLC Aeroflot-Finance LLC Pobeda Airlines 100% 100% Financial services JSC Sherotel JSC Aurora Airlines 51% 100% Hotel services Aeroflot Aviation School 100%
Slide 51: Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru
Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru