Singapore Airlines Ltd. · SGX:C6L
Singapore Airlines — FY2017/18 Earnings Presentation
43 slides from Singapore Airlines's earnings presentation, May 18, 2018
Slide 1: SIA Analyst/Media Briefing Q4 and FY2017-18 Results
SIA ANALYST/MEDIA BRIEFING Q4 and FY2017-18 Results Slide 1 18 May 2018
Slide 2: The Parent Airline Q4 and FY17/18 Results
THE PARENT AIRLINE Q4 AND FY17/18 RESULTS
Slide 3: The Parent Airline Company Operating Performance
THE PARENT AIRLINE COMPANY OPERATING PERFORMANCE Q4 % % FY17/18 Change FY17/18 Change Available Seat-KM (million) 29,074 +0.8 118,127 +0.4 Revenue Pax-KM (million) 23,587 +1.4 95,855 +3.2 Passenger Load Factor (%) 81.1 +0.5 pt 81.1 +2.1 pts Passenger Yield 10.3 +1.0 10.2 -1.0 (¢/pkm) Revenue per ASK
Slide 4: Operating Performance: Monthly Pax Yields
THE PARENT AIRLINE COMPANY OPERATING PERFORMANCE Monthly Pax Yields (¢/pkm) 11.5 FY15/16 FY16/17 FY17/18 11.2 11.1 11.0 11.0 10.8 10.8 10.7 10.7 10.7 10.7 10.7 10.6 10.5 10.5 10.5 10.4 10.4 10.3 10.6 10.3 10.3 10.2 10.4 10.4 10.3 10.3 10.2 10.2 10.2 10.2 10.2 10.1 10.1 10.1 10.0 9.8 9.8 9.5 Apr May
Slide 5: The Parent Airline Company Results
THE PARENT AIRLINE COMPANY RESULTS Q4 Better/ Better/ FY17/18 (Worse) FY17/18 (Worse) $million $million $million $million Total Revenue 2,934 221 11,584 490 Total Expenditure 2,797 (43) 10,881 (173) - Net Fuel Cost 771 (25) 2,971 (77) Fuel Cost 835 (98) 3,044 (419) Fuel Hedging Gain (64) 73 (73) 342
Slide 6: The Parent Airline Company Revenue Breakdown
THE PARENT AIRLINE COMPANY REVENUE BREAKDOWN FY17/18 ($’M) Passenger Flown Revenue 9,816.6 (+209.7, +2.2%) Bellyhold Revenue from SIA Cargo 84.7% 8.4% 975.1 (+71.7, +7.9%) Passenger Other Revenue 493.4 (+83.1, +20.3%) Others 298.7 (+125.1, +72.1%) Slide 6
Slide 7: The Parent Airline Company Cost Composition
THE PARENT AIRLINE COMPANY COST COMPOSITION FY17/18 ($’M) Handling Charges Staff Cost 922.9 1,762.3 (+11.8, +1.3%) (+89.6, +5.4%) AMO Costs 724.3 LPO* Charges (-60.4, -7.7%) 630.5 16.2% 7.3% 15.6% 8.5% 8.5% 6.6% (+27.3, +4.5%) 5.7% 5.8% Aircraft Depreciation 17.3% 16.7% and Lease Rentals 5.9% 6.3% 1
Slide 8: SIA Group Q4 and FY17/18 Results
SIA GROUP Q4 AND FY17/18 RESULTS
Slide 9: Group Revenue
GROUP REVENUE ($ million) FY16/17 FY17/18 4,200 4,077 FY17/18 4,017 Revenue 4,000 3,864 3,848 3,847 $15,806M 3,800 3,711 3,658 3,653 Year-on-Year 3,600 $937M 3,400 +6.3% 3,200 3,000 Q1 Q2 Q3 Q4 Slide 9
Slide 10: Group Expenditure
GROUP EXPENDITURE ($ million) FY16/17 FY17/18 4,200 FY17/18 Expenditure 4,000 $14,749M 3,803 3,800 3,747 3,683 3,583 3,616 3,554 Year-on-Year 3,600 3,544 3,465 $503M 3,400 +3.5% 3,200 3,000 Q1 Q2 Q3 Q4 Slide 10
Slide 11: Group Operating Profit
GROUP OPERATING PROFIT ($ million) 1,200 FY17/18 1,057 Op Profit 1,000 $1,057M 800 681 623 Year-on-Year 600 $434M 410 400 +69.7% 259 200 0 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 Slide 11
Slide 12: Group Operating Profit
GROUP OPERATING PROFIT ($ million) 1,500 +92 -152 +91 -88 1,400 +52 +694 One-offs: -355 1,300 • KrisFlyer Higher Higher Lower Higher breakage engineering net fuel rentals depreciation revenue revenue costs on 1,200 (+178) aircraft • Compensation for changes in 428 1,100 aircraft delivery +100 1,057
Slide 13: Group Fuel Expenditure
GROUP FUEL EXPENDITURE ($ million) Composition of Increase in Fuel Cost 4,600 (After Hedging) 4,400 +612 -439 4,200 +59 -80 4,000 3,899 Hedging +152 gain Higher uplift Weaker 3,800 3,747 USD (+4.1%) versus loss against Higher SGD 3,600 weighted average fuel price 3,400 FY16/17 Price Hedging Volume E
Slide 14: Contribution to Group Operating Profit
CONTRIBUTION TO GROUP OPERATING PROFIT ($ million) FY17/18 FY16/17 Change % Change Singapore Airlines 703 386 317 + 82.1 SilkAir 43 101 -58 - 57.4 Scoot 77 67 10 + 14.9 SIA Cargo 148 3 145 n.m. SIAEC 76 72 4 + 5.6 Slide 14
Slide 15: Group Profit Attributable to Owners of Parent
GROUP PROFIT ATTRIBUTABLE TO OWNERS OF PARENT ($ million) 1,000 FY17/18 893 Net Profit 804 800 $893M 600 Year-on-Year $533M 400 359 368 360 +148.1% 200 0 FY13/14 FY14/15 FY15/16 FY16/17 FY17/18 Slide 15
Slide 16: Group Profit Attributable to Owners of Parent
GROUP PROFIT ATTRIBUTABLE TO OWNERS OF PARENT ($ million) 1,100 Higher taxation 1,000 +18 -87 +38 Net interest +74 expense vs 893 900 income last Lower year +61 NCI +434 -57 +52 Share of 800 losses & • Gain on profits of disposal assoc. & 700 Absence of: vs losses JVs • SIA Cargo provision for (+48)
Slide 17: Fleet Development
FLEET DEVELOPMENT SIA SilkAir Scoot Cargo Operating Fleet as at 31 March 2018 107 32 40 7 IN: A380-800 +3 A350-900 +3 A350-900ULR +7 787-10 +8 787-9 +2 737 MAX 8 +3 A320 +10^ OUT: A380-800 -1 A330-300 -4 777-200 -1 777-200ER -5 A320 -1 -4 A319 -1 Operating Fleet as at 31 March 2019 117 33 48 7 ^ Eig
Slide 18: Capacity Growth
CAPACITY GROWTH Projected capacity growth for FY18/19 vs FY17/18 Passenger operations (in ASK): SIA 5% SilkAir 9% Scoot 17% Group 8% Cargo operations (in CTK) : 6% Slide 18
Slide 19: Group Capital Expenditure
GROUP CAPITAL EXPENDITURE ($’million) FY18/19 FY19/20 FY20/21 FY21/22 FY22/23 Aircraft 5,700 5,900 5,800 5,000 4,100 Other Assets 500 400 300 300 300 Total 6,200 6,300 6,100 5,300 4,400 Slide 19
Slide 20: Group Fuel Hedging Position
GROUP FUEL HEDGING POSITION Q1 FY18/19 Jet Fuel Brent Percentage hedged (%) 42.9 - Average hedged price (USD/BBL) 64 - FY18/19 Jet Fuel Brent Percentage hedged (%) 20.0 25.2 Average hedged price (USD/BBL) 65 54 Maturities Up To 2022-23 Jet Fuel Brent Percentage hedged (%) - Up to 46% Average hedged
Slide 21: Dividends – FY17/18
DIVIDENDS – FY17/18 FY17/18 FY16/17 Earnings Per Share (¢) 75.5 30.5 Interim Dividend Per Share (¢) 10.0 9.0 Proposed Final Dividend Per 30.0 11.0 Share (¢) Total Dividend Per Share (¢) 40.0 20.0 Slide 21
Slide 22: Adoption of IFRS
ADOPTION OF IFRS 1
Slide 23: IFRS 1 - Background
IFRS 1 - BACKGROUND SGX listed companies are required to adopt International Financial Reporting Standards (IFRS) beginning 1 January 2018 SIA Group’s effective date of implementation is 1 April 2018 Opportunity to make the following allowable adjustments, as at 1 April 2017, that have an impa
Slide 24: IFRS 1 - Rationale
IFRS 1 - RATIONALE Using fair values of certain aircraft & aircraft spares as their new costs Under IFRS 1, the Group may measure an asset at its market value as at 1 Apr’17 and use this market value as its deemed cost For certain aircraft with significantly higher book values than market values
Slide 25: IFRS 1 – Financial Impact
IFRS 1 – FINANCIAL IMPACT The estimated impact of applying the adjustments on 1 Apr’17 is set out below: Increase/(decrease) ($'M) Impact on Restated General Reserve FY17/18 Profit Adjustment to aircraft & aircraft spares (2,147.0) 490.7^ Cumulative translation differences (FCTR) (123.7) - Total (
Slide 26: IFRS 1 – Financial Impact
IFRS 1 – FINANCIAL IMPACT Assuming the adjustments had been effected in the FY17/18 financial statements, the pro forma financial effects on the Group’s financial ratios would be as follows: FY17/18 Financial Metrics FY17/18 (Restated) EPS (basic, cents per share) 75.5 110.0 EPS (diluted, cents pe
Slide 27: IFRS 1 – Financial Impact
IFRS 1 – FINANCIAL IMPACT The estimated depreciation expense impact on Group P&L for the next three financial years is as follows: Increase ($'M) Operating Profit FY18/19 425.6 FY19/20 322.3 FY20/21 234.5 The depreciation impact will decline over time, until all affected aircraft have been dispo
Slide 28: Strategic Developments
STRATEGIC DEVELOPMENTS
Slide 29: Key Strategies
KEY STRATEGIES Strengthening Premium Positioning Portfolio Multi-Hub New Business Opportunities Slide 29
Slide 30: Strengthening Premium Positioning
STRENGTHENING PREMIUM POSITIONING Delivery of A380 with all new cabin products Services to Sydney, London and Hong Kong A380 fleet to be progressively retrofitted New industry leading cabin products, with enhanced KrisWorld experience Slide 30
Slide 31: Strengthening Premium Positioning
STRENGTHENING PREMIUM POSITIONING First to fly 787-10 with new regional Business Class First airline group in the world to operate all three variants of Boeing’s Dreamliner family of aircraft Fully lie-flat beds and direct aisle access for Business Class Scheduled services to Osaka and Perth,
Slide 32: Strengthening Premium Positioning
STRENGTHENING PREMIUM POSITIONING Fleet renewal and investment Nearly US$50B worth of aircraft on order as a Group A350-900ULR Late 2018 – Expansion of non-stop services to USA, including New York and Los Angeles 777-9 & 787-10 US$13.8B order signed with Boeing for 20 777-9s and 19 787-10s C
Slide 33: Portfolio
PORTFOLIO Completion of Scoot and Tigerair Integration Enhanced synergies with both LCCs under a single brand from 25 July 2017 New destinations include Athens (Jun’17), Honolulu (Dec’17), Berlin (Jun’18), Pekanbaru (Jun’18) and Nanchang (Jul’18) Completion of SIA Cargo Re-integration Seamless
Slide 34: Portfolio: SIA Group serves 138 destinations
PORTFOLIO The SIA Group serves 138 destinations in 37 countries and territories Slide 34
Slide 35: Multi-Hub
MULTI-HUB Investments in strategic markets Complements and strengthens Singapore hub through synergies Serving 22 destinations across India 20th A320 aircraft delivered in Apr’18, with two more to be delivered by Jul’18 Preparing to launch international operations from 2H 2018 8 destinat
Slide 36: New Revenue & Business Opportunities
NEW REVENUE & BUSINESS OPPORTUNITIES SIA-CAE Flight Training Centre Equally-owned JV for pilot training in Singapore Operations expected to commence from 2H 2018 Provides full range of initial type rating and recurrent training programmes for Boeing 737 MAX, 747, 777 and 787 aircraft types Tra
Slide 37: Transformation
TRANSFORMATION
Slide 38: Positioning SIA for Growth
POSITIONING SIA FOR GROWTH Slide 38
Slide 39: Positioning SIA for Growth
POSITIONING SIA FOR GROWTH A few illustrative examples… Revenue growth Rollout of new fare management system (KM3) and airfare pricing structure Centralisation of pricing unit overlaid with introduction of new pricing playbook Data-driven decision making through application of test and learn t
Slide 40: Positioning SIA for Growth
POSITIONING SIA FOR GROWTH A few illustrative examples… Investing in digital capabilities Launch of Digital Innovation Blueprint Ramping up IT staff recruitment to build capacity and new competencies New digital curriculum for staff Organisational effectiveness Organisational redesign Adop
Slide 41: Positioning SIA for Growth
POSITIONING SIA FOR GROWTH Transformation programme on track with good progress Key mid-term initiatives have been completed or are work-in- progress Future Group network Customer experience Simplify@SIA Organisational redesign Going digital Slide 41
Slide 42: SilkAir
SILKAIR More than S$100M investment to enhance customer experience Lie-flat Business Class seats Seat-back IFE in Business Class and Economy Class Cabin upgrades expected to start in 2020, based on availability by seat suppliers SilkAir to be merged entirely into SIA after sufficient numbe
Slide 43: Thank You
THANK YOU SINGAPORE AIRLINES