Aeroflot · RUS:AFLT
Aeroflot — Investor Day by VTB Capital, London, May 2016
50 slides from Aeroflot's conference presentation, May 2016
Slide 1: Aeroflot Group
Aeroflot Group Investor Day by VTB Capital London May 2016
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: 12M 2015 Highlights
12M 2015 Highlights Aeroflot Group • Aeroflot Group carried 4.7 million more passengers in 12M 2015 compared to 12M 2014 (+13.4% passenger traffic; growing seat load factor of 78.3%). • Expansion in the number of customers resulted in market share increase by 5.6 p.p. from 31.1% in 12M 2014 to 36.7%
Slide 4: Market Update
Market Update 4
Slide 5: Russian Air Transportation Market: Room for Growth
Russian Air Transportation Market: Room for Growth Russian Total Passenger Traffic Growth, mn PAX(1) Trips per Capita (2) Despite fast growth of the recent years, Total CAGR 8.8% Russian airline industry still has International – 5.8% | Domestic – 12.5% (4.1)% 3.4 promising growth prospects compared
Slide 6: Capacity Optimization by Russian and Foreign Airlines
Capacity Optimization by Russian and Foreign Airlines Russian Carriers Capacity Dynamics1 (ASK) Russian Peers Capacity Optimization (ASK phase out) Change, y-o-y 12M 2015 vs. 12M 2014 (3.1)% (3.0)% (0.9)% (0.1)% (1.1)% (1.4)% (4.6)% (6.1)% (5.9)% (10.9)% (9.1)% Transaero (3.4)% (5.1)% (5.0)% (5.7)%
Slide 7: Aeroflot Group vs Air Transportation Market: Q4 & FY 2015
Aeroflot Group vs Air Transportation Market: Q4 & FY 2015 Passenger Traffic: Market vs Aeroflot Group Change in Airlines’ Passenger Numbers Russian Air Transportation Market (PAX) International Routes mn PAX, 12M 2015 Increase/decrease in PAX million Domestic Routes (4.1%) +4.7 (9.6%) 111.8 107.2 39
Slide 8: Aeroflot Group Overview
Aeroflot Group Overview 8
Slide 9: Multi-Brand Strategy: 2015
Multi-Brand Strategy: 2015 Brand Business Model Focus Airport PAX Contribution1 PAX Growth • Flagship carrier • Moscow 12M 2015 12M 2015 y-o-y 10.6% • Premium product (Sheremetyevo) Premium • High income and middle class 26.1 66.3% • Hub and spoke model • Focus on direct and transit routes via • Sai
Slide 10: Transaero Crisis Resolution
Transaero Crisis Resolution Timeline of the Situation (Sep’15-Dec’15) Transportation of Transaero Passengers (thd PAX) Phase I – Aeroflot Groups takes obligations to buy Transaero airline On Transaero Flights(1) On Aeroflot Flights • 1 Sep: A government commission backed the restructuring of Transae
Slide 11: Expansion Opportunities
Expansion Opportunities 1 • New slots and designations for 56 routes out of 141 international routes serviced by Transaero previously (until November 2016 with prolongation option) New markets (Kazakhstan) 56 New routes Increased flight frequencies to congested European and Asian airports routes
Slide 12: Aeroflot Airline: Group's Flagship Carrier
Aeroflot Airline: Group’s Flagship Carrier Aeroflot Snapshot PAX Growth Decomposition • Premium airline with young fleet and high service standards Description • Based in SVO in Moscow 10.6% • Hub and spoke model 1.0 26.1 1.5 23.6 • Current network comprises 125 destinations both domestic and intern
Slide 13: Rossiya Airline: the New Vision
Rossiya Airline: the New Vision Overview of the Initiative Current and Target Consolidated Fleet Structure • Unite Rossiya, Donavia and Orenair under one brand-name Aircraft Aircraft type As of YE2015 Target Description • Focus on regional operations in the middle price segment with An-148 Narrow-bo
Slide 14: Pobeda Airline: Group's Low Cost Carrier
Pobeda Airline: Group’s Low Cost Carrier Overview of Pobeda Pobeda’s Network 35 Arkhangelsk • Operating from Vnukovo airport (3rd Moscow airport by PAX) Surgut Surgut • Network comprising 24 unique destinations or 30 routes (as of Dec) Khanty-Mansiysk 60 Network • In addition to scheduled destinatio
Slide 15: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network – 2015-2016 Winter Schedule (12M 2015, y-o-y) Murmansk Arkhangelsk Novy Urengoy Russia 16.2 % St. Petersburg Syktyvkar Surgut Nizhnevartovsk Yakutsk Magadan Stockholm Ekaterinburg Tomsk Kaliningrad MOSCOW Tyumen Krasnoyarsk
Slide 16: Domestic and International Transit
Domestic and International Transit Connectivity and Frequency of Flights1 Aeroflot’s Transit Traffic Growth in Sheremetyevo CAGR Connectivity ratio 11.0x 12.7x 13.5x 16.0x 2012-2015 Share of Transit of Aeroflot Airline in Sheremetyevo 44.2% Average weekly frequency per route 5.6% 39.2% 20.3 22.9 35.
Slide 17: Operating Performance
Operating Performance 17
Slide 18: Aeroflot Group Operating Results Overview
Aeroflot Group Operating Results Overview Passenger Traffic, thd PAX Passenger Turnover, mn RPK Aeroflot Group passenger traffic reached a record 39.4 mn in 2015 Group’s RPK growth supported by Aeroflot airline revenue passenger representing 13.4% YoY growth. Aeroflot airline traffic increased by 10
Slide 19: Aeroflot Group Monthly Operating Results
Aeroflot Group Monthly Operating Results Passenger Traffic, thd PAX Seat Load Factor Change (SLF2015 – SLF 2014 for respective month) 43.6% 39.7% 4.0 37.1% 2.6 2.4 2.3 33.2% 34.8% 34.4% 32.9% 34.1% 1.9 1.2 30.5% 0.8 1.1 0.5 0.2 25.0% (1.0) 18.8% 2.7 1.6 1.3 1.4 1.2 24.3% 0.2 (0.5) 0.3 0.7 0.4 0.1 (0
Slide 20: 12M 2015 Operating Data by Region
12M 2015 Operating Data by Region Americas Russia CIS 3.2 p.p. 0.7 p.p. 32.7 % 28.0 % 29.4 % (1.0)% (1.7)% (2.6)% (2.6)% (0.9) p.p. (4.8)% (3.4)% Passengers RPK ASK SLF Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried carried SLF improvement results from network Russian market is a star
Slide 21: 2015 – the Year of Realized Opportunities
2015 – the Year of Realized Opportunities Competitive Strengths Description 12M’15 Results Checklist 1 • Diversified network balanced between the regions with different demand drivers Improved network convenience Balanced global network (frequencies up by 6.0%) • The only Russian airline to captur
Slide 22: Revenue and Yield Management
Revenue and Yield Management 22
Slide 23: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mn)1 12M 2015 12M 2015, % of total 4Q 2014 4Q 2015 Y-o-Y Region 12M 2014 12M 2015 Y-o-Y scheduled revenue Sheduled Passenger Flights 95.6% Charter Passenger 25,467 34,888 37.0% Russia 104,008 145,378 39
Slide 24: Scheduled Flights Revenue Units
Scheduled Flights Revenue Units 4Q 2015 Yield (PAX Revenue / RPK) 4Q 2015 RASK (PAX Revenue / ASK) RUB RUB 23.1% 24.7% 18.2% 21.4% 12.9% 17.4% 4.11 2.98 2.83 3.76 2.65 3.36 3.34 3.18 2.25 2.39 2.33 2.97 Domestic International Total Domestic International Total 12M 2015 Yield (PAX Revenue / RPK) 12M
Slide 25: Fleet Overview
Fleet Overview 25
Slide 26: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 3 Aircraft Average Age Azul 4.1 10.4 IndiGo 4.3 8.8 4.4 7.7 Hainan Airlines 4.6 7.0 6.4 Lion Air 4.7 Garuda Indonesia 4.8 232 251 247 Sichuan Airlines 5.0 209 222 Xiamen Airlines 5.1 China Eastern Airlines
Slide 27: Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Breakdown Operated by Lease type Total as of Total as of Change vs. Aircraft Type Aeroflot Subsidiaries Finance Operating 31-Dec-2015 31-Dec-2014 31-Dec-2014 Wide-body 35 4 18 21 39 43 (4) Boeing 767 - 1 - 1 1 3 (2) Airbus A330 22 - 8 14 22 22 - Boeing 777 13 3 10 6 16 13 3 Il-9
Slide 28: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule in Accordance with Existing Contracts Type of 2015 (Actual) 2016 2017 2018 2019 2020 and beyond Current (1) aircraft Delivery Phase out fleet Delivery Phase out Delivery Phase out Delivery Phase out Delivery Phase out Delivery Phase out Wide-body
Slide 29: Financial Performance
4 AEROFLOT~ = = Russian Airlines “F) Financial “a ile Performance a
Slide 30: Financial Highlights
Financial Highlights RUB mn 4Q 2014 4Q 2015 Change 12M 2014 12M 2015 Change (where applicable) Revenue 83,073 105,663 27.2 % 319,771 415,173 29.8 % EBITDAR1 8,494 23,932 >2x 48,674 103,118 >2x EBITDAR1 margin 10.2 % 22.6 % 12.4 p.p. 15.2 % 24.8 % 9.6 p.p. EBITDA 1,282 10,857 >8x 24,840 58,703 >2x EB
Slide 31: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mn RUB mn 29.8% 29.8% + + 2.1% + 0.3% 28.1% + (2.8%) + 0.3% + 4.2% 6.7% 20.7% (8,877) 13,551 415,173 6,724 703 415,173 89,815 66,309 913 21,666 319,771 319,771 12M 2014 Volume Currency Pricing Other 12M 2015 12M 201
Slide 32: Operating Costs
Operating Costs Change Change 4Q 4Q Change Operating Expense 12M 12M Change % of total operating ex. FX & (RUB mn If not stated otherwise) ex. FX & 2014 2015 y-o-y 2014 2015 y-o-y expense (12M 2015) NRE NRE 22,461 23,381 4.1 % (17.1)% Fuel 87,199 94,382 8.2 % (18.8)% 25.4% 63,005 74,984 19.0 % 6.1 %
Slide 33: Group Unit Costs
Group Unit Costs 4Q 2014 4Q 2015 Change Operating Expense per ASK (CASK), RUB 12M 2014 12M 2015 Change 0.79 0.76 (3.6)% Fuel 0.75 0.76 0.5 % 2.21 2.43 10.3 % Opex (ex. Fuel): 1.91 2.22 16.1 % 0.55 0.61 11.2 % Aircraft, Traffic and Passenger Servicing 0.53 0.60 14.3 % 0.49 0.49 (0.3)% Staff 0.45 0.45
Slide 34: Effective Fuel Cost Management
Effective Fuel Cost Management Flight Hours Fuel Consumption per ASK Fuel Consumption per ATK (thousand hours) 5.4% (gr/ASK) (gr/ATK) (2.0)% (1.8)% (3.1)% (2.8)% 860 815 23.4 23.5 196.5 23.0 23.1 194.9 188.9 190.9 3.8% 202 210 4Q 2014 4Q 2015 12M 2014 12M 2015 4Q 2014 4Q 2015 12M 2014 12M 2015 4Q 20
Slide 35: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline Flight crew personnel 31-Dec-2014 31-Dec-2015 Y-o-Y 10.4% 11.5% Flight crew 3,257 3,524 8.2% Other airline Cabin crew 8,594 9,758 13.5% personnel 16.3% Technical maintenance and repair 4,109 3,871 (5.8)% Cabin crew 28.7% Ticke
Slide 36: EBITDA Evolution
EBITDA Evolution (RUB mn) Net FX ∑=(538) RUB mn 66,309 (66,847) Net effect ∑=5,309 RUB mn Net volume and price ∑=29,093 RUB mn 16,360 (2,821) (5,144) (7,404) 7,652 2,031 6,724 (2,311) (1,023) 21,666 703 58,703 60,734 24,840 Reported Volume Other Pricing FX benefit FX drag Fuel* Staff* Aircraft, Oper
Slide 37: Operating Income Evolution
Operating Income Evolution (RUB mn) Net FX ∑=(538) RUB mn 66,309 (66,847) Net effect ∑= 4,284 RUB mn 16,360 (2,821) Net volume and price (5,144) ∑=29,093 RUB mn (7,404) 7,652 2,031 6,724 (1,025) (2,311) (1,023) 21,666 703 46,138 44,107 11,268 Reported Volume Other Pricing FX benefit FX drag Fuel* St
Slide 38: Net Income Evolution
Net Income Evolution (RUB mn) 13,551 (62,564) 81,851 2,513 (3,301) (11,516) (5,743) (6,494) (17,145) (4,140) Reported Net Traffic revenue Other revenue Opex Financial income* Financial Result from Result from finance Taxation Reported Net Income 12M 2014 expense** derivatives hedging leasing hedging
Slide 39: Reported and Adjusted Operating and Net Income Analysis
Reported and Adjusted Operating and Net Income Analysis 12M Adjusted Operating Income Build-Up (RUB mn) 8,166 (8,021) 1,319 567 44,107 46,138 Reported Operating Income Pre-term return of aircraft at FA write off at Vladavia Transaero accounts Income from VAT refund Adjusted Operating Income 12M 2015
Slide 40: Hedge Accounting and Finance Income/Costs
Hedge Accounting and Finance Income/Costs P/L Other RUB mn 12M 2015 Change in Ineffective Actual Comprehensive Instrument Fair Value Portion Cost Profit Statement of Profit or Loss Currency 1,343 - - - options Financial income 15,811 Fuel options 10,542 1,187 (38,457) 12,763 Gain on change in fair v
Slide 41: Leverage and Liquidity
Leverage and Liquidity Debt Profile Net Debt / LTM EBITDA¹ RUB mn 31-Dec-2014 31-Dec-2015 Change 5.9 Borrowings 24,203 68,460 >2x 3.6 3.3 3.4 Finance Lease Liabilities 149,278 164,524 10.2% Pension Liabilities 659 745 13.2% Customs Duties 169 - n/a 31-Dec-2014 30-Jun-2015 30-Sep-2015 31-Dec-2015 Tot
Slide 42: Operating Free Cash Flow
Operating Free Cash Flow (RUB mn) 5,395 (8,568) 43,937 (5,366 ) (8,647) (14,880) Adjustment for derivatives in Operating CF = 25 385 mn 69,664 (later subtracted in Finance CF) 64,269 7,737 849 13,306 32,203 15,795 (1,560) Profit Before D&A Interest Unrealized Other Adj. Cash Flows Working Net Cash N
Slide 43: Appendix
Appendix 43
Slide 44: Operating and Market Data – 1Q 2016
Operating and Market Data – 1Q 2016 Aeroflot airline Aeroflot Group Growth Unit January February March 1Q 2016 January February March 1Q 2016 Passenger Traffic % 10.7% 15.3% 15.5% 13.9% 11.6% 17.1% 12.4% 13.6% International Routes % 4.6% 7.3% 7.2% 6.4% 2.7% 7.3% 6.2% 5.3% Domestic Routes % 18.5% 25.
Slide 45: Operating Data – 4Q & 12M 2015
Operating Data – 4Q & 12M 2015 Aeroflot airline Aeroflot Group 4Q 4Q 12M 12M 4Q 4Q 12M 12M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2014 2015 2014 2015 2014 2015 2014 2015 Indicator Unit Passenger Traffic th PAX 5,777 6,443 11.5% 23,610 26,112 10.6% 8,204 9,340 13.8% 34,735 39,393 13.4% International Routes th PAX 3
Slide 46: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Orenair Donavia Aurora Vladavia Pobeda Total Passenger Traffic, 12M 2015 4,752 2,840 1,475 1,125 - 3,090 13,282 thousand PAX 12M 2014 5,192 3,035 1,736 1,051 5 107 11,125 Y-o-Y (8.5)% (6.4)% (15.0)% 7.1% - - 19.4% Passenger Turnover, 12M 2015 8,695 6
Slide 47: 4Q 2015 Operating Data by Region
4Q 2015 Operating Data by Region Americas Russia CIS 5.5 % 27.1 % 4.6 % 21.3 % 3.6 p.p. (1.3) p.p. 16.7 % (12.7)% (11.1)% 0.9 % (16.6)% 3.0 p.p. Passengers RPK ASK SLF Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried carried Americas: performance improvement results from Russia: star pe
Slide 48: 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 100% LLC Aeroflot-Finance 99.99% Financial services JSC Orenair 100% JSC Sherotel 100% Hotel services JSC Aurora Airlines 51% Aeroflot Aviation School
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) Kirill Androsov Chairman of the Board of Directors Vitaly Saveliev Personnel and Remuneration Board of D
Slide 50: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru 50
Aeroflot Group — Investor Day by VTB Capital, London, May 2016 on 6ix