Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (September 2013)
29 slides from Transat A.t's investor presentation, September 2013
Slide 1: Road Map for the Future
BACK TO PROFITABILITY IN 2013 ROAD MAP FOR THE FUTURE INVESTORS PRESENTATION SEPTEMBER 2013
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE CORPORATION. THESE FORWARD-LOOKING STATEMENTS, BY THEIR NATURE, NECESSARILY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE
Slide 3: Agenda
AGENDA REMINDER – WHO IS TRANSAT ? KEY FINANCIAL RESULTS COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES RESHAPED EXECUTIVE TEAM PRODUCT & CUSTOMER EXPERIENCE OVERVIEW AND STRATEGY TRANSAT FRANCE FLEET STRATEGY DISTRIBUTION INTERNATIONAL TOURISM AND ROADMAP 3
Slide 4: Reminder: Seasons and Main Markets
REMINDER : 2 SEASONS AND 3 MAIN MARKETS SUMMER SEASON WINTER SEASON May - October Nov. - April M A South (10%) South (80%) R K Transatlantic (65%) Transatlantic (10%) E T France (25%) France (10%) S MULTI-BRAND, MULTI-CHANNEL 4
Slide 5: Key Financial Results: Winter Season 2013
KEY FINANCIAL RESULTS WINTER SEASON 2013 Winter season ended April 30 HIGHLIGHTS (vs. 2012) (in thousands of C$) 2013 2012 2013 vs. 2012 Improved results on all markets Actual Actual $ % REVENUES 1,912,538 2,041,722 (129,184) -6.3% Sun destinations EBITDAR(1) 22,688 (16,594) 39,282 236.7% • Capacity
Slide 6: Key Financial Results: Third Quarter 2013
KEY FINANCIAL RESULTS THIRD QUARTER 2013 3rd quarter ended July 31 HIGHLIGHTS (vs. 2012) (in thousands of C$) 2013 2012 2013 vs. 2012 Best third quarter ever Actual Actual $ % Transatlantic markets REVENUES 927,004 909,056 17,948 2.0% • Capacity reduced by 11% EBITDAR(1) 74,901 44,435 30,466 68.6% •
Slide 7: Key Financial Results: Fourth Quarter 2013
KEY FINANCIAL RESULTS FOURTH QUARTER 2013 4th quarter ended October 31 OUTLOOK (vs. 2012) (in thousands of C$) 2013 2012 2011 2010 Better results expected vs. last year Outlook but to a lesser extent than in the 3rd Actual Actual Actual quarter REVENUES 763,441 809,927 778,585 Transatlantic EBITDAR(
Slide 8: Financial Position
FINANCIAL POSITION THIRD QUARTER 2013 As at HIGHLIGHTS (in thousands of C$, except ratios) Jul. 31, 2013 Jul. 31, 2012 Oct. 31, 2012 Outstanding ABCP investment sold Actual Actual Actual in Q1, 2013 Free cash + ABCP investment (fair value) 389,337 318,692 198,525 Higher level of cash than last year
Slide 9: Mark-to-Market
MARK-TO-MARKET THIRD QUARTER 2013 HIGHLIGHTS Fuel (P&L impact) Currency (B/S impact) TOTAL Fuel and USD hedging – In (in thousands of C$) MtM Quarterly variation MtM Quarterly variation MtM Quarterly variation line with our bookings for October 31, 2012 (46) 2,104 (989) (3,139) (1,035) (1,035) Q4(si
Slide 10: Cost Reduction and Margin Improvement Initiatives
COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES 2012: Achieved targeted cost reductions of $20M TARGETS Completed implementation of new IT system BENEFITS OF NEW IT SYSTEM (TTS): Increased agility for adjustments in prices and promotions (from 24 hours to 10 minutes) Enhanced yield management proc
Slide 11: Reshaped Executive Team
RESHAPED EXECUTIVE TEAM CORE BUSINESS UNITS Jean-Marc Eustache President and CEO Jean-François Lemay Annick Guérard Patrice Caradec Airline Sun destinations and Tour Operating Transatlantic (Canada) Distribution (France) All core operating units All support services now In the process of merging all
Slide 12: Sun Destinations
PRODUCT AND CUSTOMER EXPERIENCE SUN DESTINATIONS THE SUN DESTINATIONS MARKET TRANSAT ‘ALL-INCLUSIVE’ STRATEGY Highly competitive market posing differentiation Differentiated experience through: and seasonality challenges • Exclusive properties Lifestyle discretionary purchase, no easy substitution •
Slide 13: Differentiated Experience: Exclusive Properties
ALL-INCLUSIVE SUN & SAND DIFFERENTIATED EXPERIENCE: EXCLUSIVE PROPERTIES EXCLUSIVE ROOM HOTELS NIGHTS IN WINTER 2013, TRANSAT HAD 62 14% EXCLUSIVE HOTELS (OUT OF 452) SOLD 38% UNDER ITS TWO MAIN BRANDS, REPRESENTING 38% OF 2.7M ROOM NIGHTS SOLD TRANSAT HOLIDAYS NOLITOURS Mainly 4- to 5-star hotels:
Slide 14: Differentiated Experience: Branded Collections
ALL-INCLUSIVE SUN & SAND DIFFERENTIATED EXPERIENCE: BRANDED COLLECTIONS VOLUME MARGIN IN WINTER 2013, FOR TRANSAT HOLIDAYS 19% 46% AND NOLITOURS, DISTINCTION & LUXURY COLLECTIONS ACCOUNTED FOR 19% OF VOLUME AND 46% OF MARGIN DISTINCTION LUXURY OTHER COLLECTIONS (24 clubs in 2013) (12 clubs in 2013)
Slide 15: Authenticity and Discovery
PRODUCT AND CUSTOMER EXPERIENCE ‘AUTHENTICITY AND DISCOVERY’ EMERGING TREND TRANSAT STRATEGY Internal and external research show growing appeal for a touch Launched new Experience collection in winter 2013: of authenticity or inclusion of a discovery component in sun Escapade: 24-hour authentic expe
Slide 16: Transatlantic Market: Air and Land
PRODUCT AND CUSTOMER EXPERIENCE TRANSATLANTIC MARKET: AIR AND LAND Europe: largest tourism market in the world CAPACITY Transat (more than 50% of travellers inbound & outbound) SUMMER Air France 3.8M seats in summer 2013 between Canada and Europe British Airways 2013 Air Canada Other TRANSAT STRATEG
Slide 17: Transatlantic Market: Air and Land
PRODUCT AND CUSTOMER EXPERIENCE TRANSATLANTIC MARKET: AIR AND LAND EACH YEAR, TRANSAT SELLS: More than 100,000 tours to destinations all around the world (40% in Canada or Europe), with an average margin of over 10% More than 200,000 room nights in Europe, to Canadian travellers More than 325,000 ro
Slide 18: Transat France
TRANSAT FRANCE MARKET CONDITIONS AND TRANSAT POSITION Demand has weakened due to economic uncertainty Tunisia and Egypt hit hard and required quick action to offer substitution products Transat doing better than its peers, thanks to adjustments in capacity and reduced commitments Expect to break-eve
Slide 19: Fleet Strategy
AIR TRANSAT FLEET STRATEGY NOW: IN SUMMER 2014: Transat uses a mix of wide-body aircraft Transat will migrate towards a fleet of variable (operated by Air Transat) and a variable number size for both wide-body and narrow-body to (depending on season) of narrow-body aircraft adjust the mix of aircraf
Slide 20: Fleet Strategy
AIR TRANSAT FLEET STRATEGY WIDE-BODY W13 S13 W14 S14 W15 S15 Air Transat Base Fleet 21 21 21 21 21 21 Less:Temporarily withdrawn(1) - - (4) - (6) - Less:Sub-Lease (1) - (1) - (1) - Total 20 21 16 21 14 21 1) As announced in July, we signed an agreement for the renewal of six A330 with improved terms
Slide 21: Up-Selling Strategy
AIR TRANSAT UP-SELLING STRATEGY Revised terms and conditions: more flexibility for a fee (2012) Coming in Q1 2014: variable airfares on Air Transat Core business ancillary revenues: more than $40M/year • Seat selection • Option Flex introduced in winter 2013 • Option Plus (premium eco) • Excess bagg
Slide 22: Distribution
DISTRIBUTION MULTI-CHANNEL DISTRIBUTION: Travel agencies (B2B), B2C (online, call centres), and GDS TRAVEL AGENCIES: Largest network in Canada: 588 outlets (99 owned, 282 franchisees, 207 affiliates) People window-shop on the web, but more than 90% of sun destination packages are sold through travel
Slide 23: International Tourism: A Growth Market
INTERNATIONAL TOURISM: A GROWTH MARKET International Arrivals (Destination markets) 1.8 billion international travellers in 2030 1,809 Emerging countries Developed countries Actual Forecast 940 674 799 528 435 Source : UNWTO Source : Conference Board of Canada Canada: Outbound leisure trips to Non-U
Slide 24: Road Map to 2015
ROAD MAP TO 2015 2012-2014 2015 Leaner and more efficient organization Innovative and efficient tourism operator Strategic product mix with core of branded and Differentiated and attractive offering exclusive properties Controlled Customer Experience Transition to new fleet strategy: accordion fleet
Slide 25: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 1,912,538 2,041,722 1,911,263 1,852,948 2,006,331 EBITDAR(1) 22,688 (16,594) 26,440 23,386 57,554 EBITDA(1) (18,287) (58,065) (5,470) (4,211) 30,632 As % of revenues -1.0% -2.8% -0.3% -0
Slide 26: Annex: Summer Financial Results
ANNEX: SUMMER FINANCIAL RESULTS (5-YEAR HISTORICAL) Summer (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 1,672,497 1,746,901 1,645,929 1,539,010 EBITDAR(1) 121,910 78,907 157,145 90,128 EBITDA(1) 75,020 41,967 131,793 62,763 As % of revenues 4.5% 2.4% 8.0% 4.1% Adjusted net income (loss)(2)
Slide 27: Annex: Annual Financial Results
ANNEX: ANNUAL FINANCIAL RESULTS (5-YEAR HISTORICAL) Annual (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 3,714,219 3,568,164 3,498,877 3,545,341 EBITDAR(1) 105,316 105,347 180,531 147,682 EBITDA(1) 16,955 36,497 127,582 93,395 As % of revenues 0.5% 1.0% 3.6% 2.6% Adjusted net income (loss)(
Slide 28: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at July 31 As at October 31 (in thousands of C$) 2013 2012 2011 2010 2009 2013 2012 2011 2010 2009 Free cash + ABCP investment (fair value) 389,337 318,692 385,778 286,960 285,461 198,525 260,327 252,973 251,953 Cash in trust or otherwise reserved 290
Slide 29: Thank You!
BACK TO PROFITABILITY IN 2013 ROAD MAP FOR THE FUTURE THANK YOU!
Transat A.T. — Investor Presentation (September 2013) on 6ix