Aeroflot · RUS:AFLT
Aeroflot — Q1 2018 Earnings Presentation
51 slides from Aeroflot's earnings presentation, May 30, 2018
Slide 1: Aeroflot Group Q1 2018 Financial Results
Aeroflot Group Q1 2018 Financial Results Shamil Kurmashov, Deputy CEO for Commerce and Finance Ivan Batanov, Head of Revenue Management Andrey Napolnov, Head of Investor Relations Moscow, Russian Federation 30 May, 2018 1
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 Group Q1 2018 Highlights
Aeroflot Group Q1 2018 Highlights + 6.6 % + 6.1 % + 0.4 p.p. + 8.5 % 112 bn 103 bn 11.0 mln 36.6 bn 78.0% 78.5% 10.3 mln 34.5 bn PASSENGER LOAD Revenue (RUB) PAX ASK FACTOR¹ Q1 2017 Q1 2018 • In Q1 2018, Aeroflot Group has continued operational development via expanding capacity on the back of oppor
Slide 4: Aeroflot Group Business Seasonality
Aeroflot Group Business Seasonality Passenger Traffic Passenger Revenue (Sch. + Charter) Blended yield (Sch. + Charter) Million PAX Billion RUB RUB/RPK 15.4 149.7 3.74 12.7 11.8 3.50 3.50 113.6 11.0 107.9 3.37 10.3 96.9 3.24 87.2 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 201
Slide 5: Agenda
1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 5
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, Q1 2018 Domestic Routes Increase in PAX million inc. PAX of Russian and Foreign Carriers and int. transit PAX +0.7 20.3
Slide 7: Continuing Market Recovery
Continuing Market Recovery Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in PAX traffic y-o-y, % Change in ASK y-o-y, % 18.6% 25.7% 20.5% 16.4% 12.9% 21.0% 21.8% 19.6% 42.5 % 17.2% 16.9% 16.4% 36.1 % 14.6% 13.0% 11.9% 25.3 % 20.7 % 15.3 % 13.4% 12.2%
Slide 8: Aeroflot Group Overview
1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 8
Slide 9: Aeroflot Group Multi-Brand Strategy
Aeroflot Group Multi-Brand Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth • Q1 2018 • Flagship carrier Moscow +5.4% • Premium product (4 Stars) (Sheremetyevo) 7.0 7.4 Premium • High income and middle class 7.4 67.3% • Hub and spoke model 3M 2017 3M 2018 • Regional and leisu
Slide 10: Pobeda Airline: Three Full Years of Successful Operations
Pobeda Airline: Three Full Years of Successful Operations Overview of Pobeda Pobeda’s Network (Summer 2018) • Operating from Vnukovo airport (3rd Moscow airport by PAX) Network • Network comprising 62 routes (38 unique for the Group) Surgut • Additional expansion to international destinations (10 co
Slide 11: 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 12: Network and Schedule Overview
1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 12
Slide 13: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (Q1 2018, y-o-y) Murmansk Salekhard Arkhangelsk New Urengoy Russia 2.9 % Saint Petersburg Nizhnekamsk Syktyvkar Surgut Khanty Mansiysk Nizhnevartovsk Perm Yakutsk Magadan Nizhny Novgorod Tyumen Ekaterinburg Kemerovo MOSCOW S
Slide 14: Network Plans – Summer 2018
Network Plans – Summer 2018 Increasing frequencies on Increasing frequencies on New destinations to be launched from domestic routes (examples) international routes (examples) Summer 2018 11 April Yekaterinburg 56 7 Prague 35 7 1 Cairo (Egypt) 3 flights per week Rostov 42 7 Rome 28 7 1 May 2 Saransk
Slide 15: 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 19.1x 21.2x 1
Slide 16: Aeroflot and FIFA World Cup 2018 in Russia
Aeroflot and FIFA World Cup 2018 in Russia Scheduled Routes to World Cup Locations Aeroflot Efforts 1 sourced by: High frequencies to all host cities (scheduled flights) * Saint Petersburg 2 (4.5mm from Moscow) 140 42 Direct flights between host cities 42 Nizhny 49 Ekaterinburg Novgorod (1.9mm from
Slide 17: Fleet Overview
1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 17
Slide 18: 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-Mar-18 31-Dec-17 31-Dec-17 Wide-body 38 15 18 35 - 53 52 1 Airbus A330 22 - 8 14 - 22 22 - Boeing 777 16 6 10 12 - 22 21 1 Boeing 747 - 9 - 9 - 9 9
Slide 19: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule1 Aeroflot Group Fleet as at Year-end2 Number of aircraft Type of Q1 2018 (Actual) Q2-Q4 2018 Current 409 (1) Delivery Phase fleet Delivery Phase aircraft out out Wide-body (long-haul) 1 - 53 5 - A-330 325 331 - - 22 - - B-777 1 - 22 5 - B-747 - -
Slide 20: Financial Performance
1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 20
Slide 21: Financial Highlights: Q1 2018
Financial Highlights: Q1 2018 RUB mln Q1 2017 Q1 2018 Change (where applicable) Passenger Traffic (mln PAX) 10,302 10,985 6.6% Revenue 103,125 111,942 8.5% Traffic Revenue 87,205 96,896 11.1% EBITDAR1 13,742 10,767 (21.6)% EBITDAR1 margin 13.3% 9.6% (3.7) p.p. EBITDA (1,136) (7,732) 6.8x • Financial
Slide 22: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mln RUB mln 8.5% 8.5% 5.2% + 2.8% + 0.7% + (0.1)% 8.5% + 0.9% + 0.4% + (1.2)% 2,837 722 (75) 111,942 (1,274) 111,942 5,333 8,772 920 400 103,125 103,125 Charter RPK up Cargo Mainly Appreciation of by c6% y-o-y RUB i
Slide 23: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units Q1 Yield (PAX Revenue / RPK) Q1 RASK (PAX Revenue / ASK) RUB RUB 3.1% 5.1% 3.67 2.80 3.6% 4.3% 3.49 2.72 3.43 2.65 3.31 1.6% 6.0% 2.55 3.09 3.05 2.44 2.30 Domestic International Total Domestic International Total % Y-o-Y increase 2017 2018 Note: Data pr
Slide 24: Aeroflot Airline Yield Dynamics (Monthly)
Aeroflot Airline Yield Dynamics (Monthly) Aeroflot Airline Total Yield Aeroflot Airline International Yield RUB/RPK, Change y-o-y in % 7.9% RUB/RPK, Change y-o-y in % 9.8% 4.5% 4.4% (0.1)% (2.6)% (1.8)% (4.2)% (4.2)% (7.3)% (9.5)% (11.4)%(11.9)%(10.6)% 0.4% 0.0% Apr May Jun Jul Aug Sep Oct Nov Dec J
Slide 25: Operating Costs
Operating Costs Operating Expense Change Change % of Total OpEx Q1 2017 Q1 2018 (RUB mln If not stated otherwise) y-o-y ex. FX & NRE (Q1 2018) Fuel 27,427 34,042 24.1% 27.2% 27.6% Opex (ex. Fuel) 80,635 89,495 11.0% 12.0% 72.4% Aircraft, traffic and passenger 21,154 21,908 3.6% 2.2% 17.7% servicing
Slide 26: Group Unit Costs
Group Unit Costs Operating Expense per ASK (CASK), RUB Q1 2017 Q1 2018 Change Fuel 0.79 0.93 17.0% Opex (ex. Fuel): 2.34 2.44 4.6% Aircraft, Traffic and Passenger Servicing 0.61 0.60 (2.4)% Staff 0.54 0.58 8.5% Operating Lease 0.43 0.51 17.2% Maintenance 0.24 0.23 (2.4)% SG&A 0.18 0.17 (5.9)% D&A an
Slide 27: Fuel Cost Management
Fuel Cost Management Flight Hours Fuel Consumption per ASK Fuel Consumption per RTK (thousand hours) (gr/ASK) (gr/RTK) 7.6% (1.2)% (1.5)% 242 22,9 22,6 294,8 290,2 225 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Q1 2017 Q1 2018 Aeroflot Airline Jet Fuel Price Comments (RUB per tonne of jet fuel) • Efficient fue
Slide 28: EBITDA Evolution
EBITDA Evolution (RUB mln) Total effect on revenue Total effect on costs ∑=8,817 RUB mln ∑=(15,412) RUB mln Net volume and price effect Net FX effect Net volume and price effect ∑=5,980 RUB mln ∑=4,484 RUB mln ∑=(17,059) RUB mln 1,647 (7,469) Volume effect 2,837 (1,641) RUB mln 722 (75) Price effect
Slide 29: Pobeda Financial Results
Pobeda Financial Results 1 Increasing PAX Traffic RASK dynamics Growing Revenues of LCC Segment Million passengers RUB Change RUB mln Q1 2017 Q1 2018 1.4 (Q1 18/17) 1.0 1.89 1.94 Revenue 3,277 5,079 55.0% Q1 2017 Q1 2018 Q1 2017 Q1 2018 PAX up by 42.2% in Q1 2018 RASK up by 2.7% in Q1 2018 EBITDAR1
Slide 30: Capital Structure and Liquidity
1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 30
Slide 31: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / LTM EBITDA2 1.1 RUB mln 31-Dec-2017 31-Mar-2018 Change 0.9 0.9 Borrowings 3,181 3,530 11.0% 0.7 0.6 Finance Lease Liabilities 100,689 88,257 (12.3)% Pension Liabilities 922 931 1.0% Total Debt 104,792 92,718 (11.5)% 31-Mar-2017 30-Jun-2017 30-Sep-2017
Slide 32: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mln) Billion RUB Q1 2018 Billion RUB Q1 2018 Other adjustments before working capital changes, incl. 5.1 Working capital changes and income tax, incl. 14.5 Change in provisions1 3.5 Change in accounts receivable and prepayments (6.6) (20.3)% Effect from revenue hed
Slide 33: Appendix
1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 33
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 4.5% Russian airline industry still has International – (1.3)% | Domestic – 12.4% 20.3% promising growth prospects compared t
Slide 35: Operating Data – Q1 2018
Operating Data – Q1 2018 Aeroflot airline Aeroflot Group Indicator Unit Q1 2017 Q1 2018 Y-o-Y Q1 2017 Q1 2018 Y-o-Y Passenger Traffic th PAX 7,015 7,394 5.4% 10,302 10,985 6.6% International Routes th PAX 3,754 3,899 3.9% 4,578 4,888 6.8% Domestic Routes th PAX 3,262 3,495 7.1% 5,724 6,097 6.5% Pass
Slide 36: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Airline Pobeda Airline Aurora Airline Indicator Unit Q1 2018 Y-o-Y Q1 2018 Y-o-Y Q1 2018 Y-o-Y Passenger Traffic th PAX 1,862 (6.7)% 1,402 42.2% 327 7.8% International Routes th PAX 611 10.5% 298 53.5% 80 2.7% Domestic Routes th PAX 1,252 (13.3)% 1,1
Slide 37: Rossiya Airline: Q1 Highlights
Rossiya Airline: Q1 Highlights Overview of the Initiative Mix of Scheduled and Charter Operations PAX, Q1 2017 PAX, Q1 2018 Intelligent capacity management to increase efficiency (domestic routes) Continued growth in international segment backed by leisure demand Charter Charter 24% 26% Launched dir
Slide 38: Q1 2018 Operating Data by Region (Scheduled Routes)
Q1 2018 Operating Data by Region (Scheduled Routes) Americas Russia CIS 9.4 % 8.0 % 15.4 % 10.6 % 4.8 % 8.6 % 3.3 p.p. (1.2) p.p. (2.5)% Passengers RPK ASK PLF (4.9)% (4.8) p.p. carried (6.4)% Passengers RPK ASK PLF Passengers RPK ASK PLF carried carried Performance of North and Central American Rus
Slide 39: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units Q1 Yield (PAX Revenue / RPK) Q1 RASK (PAX Revenue / ASK) RUB RUB 5.1% 3.6% 3.1% 4.3% 1.6% 3.67 2.80 3.49 3.43 2.72 3.31 6.0% 2.65 3.05 3.09 2.55 2.44 2.30 Domestic International Total Domestic International Total Q1 Yield ex. Pobeda (PAX Revenue / RPK)
Slide 40: Aeroflot Group Flights Revenue Units
Aeroflot Group Flights Revenue Units Q1 Yield (Scheduled PAX Revenue / RPK) Q1 RASK (Scheduled PAX Revenue / ASK) RUB RUB 5.1% 3.6% 3.1% 4.3% 1.6% 3.67 2.80 3.49 3.43 2.72 3.31 6.0% 2.65 3.05 3.09 2.55 2.44 2.30 Domestic International Total Domestic International Total Q1 Yield (Scheduled + Charter
Slide 41: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 Aircraft Average Age 4.0 Hainan Airlines 4.9 7.7 Shandong Airlines 4.9 7.0 Spirit Airlines 5.3 6.4 6.5 6.2 6,1 Xiamen Airlines 5.3 Azul 5.5 325 336 China Eastern Airlines 5.5 289 232 251 247 Sichuan Airline
Slide 42: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mln)1 Q1 2018 Q1 2018, % of Region Q1 2017 Q1 2018 Y-o-Y Sheduled sch. revenue Passenger Flights 90.5% Russia 30,562 33,959 11.1% 37.3% Europe 22,362 25,352 13.4% 27.8% Asia 16,087 17,465 8.6% 19.2% Car
Slide 43: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline 31-Dec-2017 31-Mar-2018 % personnel Flight crew 11.9% 10.0% Cabin crew 11,259 11,661 3.6 % Airport services 7,034 7,064 0.4 % Other airline personnel 13.9% Technical maintenance and repair 4,702 4,914 4.5 % Cabin crew Flight c
Slide 44: Reported and Adjusted Net Loss Analysis
Reported and Adjusted Net Loss Analysis Q1 Adjusted Net Loss Build-Up (RUB mln) (11,543) (11,605) 1,052 (251) (863) Reported Net Loss Q1 2018 Discounting of receipt of lease Change in the fair value of FOREX on PDP Adjusted Net Loss Q1 2018 deposits investments in equity securities • One-off effects
Slide 45: Net Income Evolution
Net Income Evolution (RUB mln) 10,091 (1,274) (15,476) (5,339) (11,543) 1,061 9 (253) (732) 98 272 Pressure from higher fuel prices, staff costs and operating lease expenses in Q1 2018. Reported Net Traffic Revenue Other Revenue Operating Finance Income Finance Costs Hedging Result Revaluation of Ta
Slide 46: Statement of Comprehensive Income
Statement of Comprehensive Income RUB mln, unless otherwise stated 2013 2014 2015 2016 2017 Q1 2017 Q1 2018 Traffic revenue 257,546 277,354 359,205 433,966 474,916 90,583 100,674 Other revenue 33,410 42,417 55,968 61,914 58,018 12,542 11,268 Revenue 290,956 319,771 415,173 495,880 532,934 103,125 11
Slide 47: Condensed Statement of Financial Position
Condensed Statement of Financial Position Assets (RUB mln) 31.12.2013 31.12.2014 31.12.2015 31.12.2016 31.12.2017 31.03.2018 Cash and cash equivalents 18,660 26,547 30,693 31,476 45,978 59,105 Short-term financial investments 272 961 5,917 6,319 8,931 4,143 Accounts receivable and prepayments 55,691
Slide 48: Statement of Cash Flows
Statement of Cash Flows RUB mln, unless otherwise stated 2013 2014 2015 2016 2017 Q1 2017 Q1 2018 Operating cash flows before working capital changes 32,944 31,603 64,269 81,994 65,330 215 (4,242) Change in accounts receivable and prepayments (3,014) 4,658 (2,251) (6,191) (27,816) (5,359) (6,556) Ch
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 (4 members) Mikhail Poluboyarinov Chairman of the Board of Directors Vitaly Saveliev Personnel and Remuneration Lars
Slide 50: 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 51: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 51