Aeroflot · RUS:AFLT
Aeroflot — H1 2014 Earnings Presentation
38 slides from Aeroflot's earnings presentation, Aug 28, 2014
Slide 1: Aeroflot Group 6 Months 2014 Financial Results
Aeroflot Group 6 Months 2014 Financial Results Moscow August 28, 2014 Speaker: Shamil Kurmashov Deputy CEO for Finance, Network and Revenue Management Giorgio Callegari Deputy CEO for Strategy and Alliances 1
Slide 2: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 2
Slide 3: Key Highlights
Key Highlights • Aeroflot Group continued to outperform the Russian market in passenger traffic, solidifying its leading position across domestic and international routes • Revenue growth of 9.4% year-on-year supported primarily by stronger traffic, as positive FX effect was offset by lower fares in
Slide 4: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 4
Slide 5: Russian Air Transportation Market
Russian Air Transportation Market Russian Total Passenger Traffic (m PAX)1 CAGR 2008-13 2014-17F 103.7 9% 91.6 80.1 13% 7% 70.5 61.5 56.7 64.4 47.3 56.2 45.9 50.2 35.3 41.2 32.8 30.0 8% 5% 28.7 26.2 29.2 32.7 35.4 39.2 23.8 17.3 20.2 2008 2009 2010 2011 2012 2013 6m 2013 6m 2014 Aeroflot Group Passe
Slide 6: Aeroflot Group Market Position
Aeroflot Group Market Position Passenger Traffic (6 months 2014, m PAX) Russian Passenger Traffic1 31% 15.7 19 % 20 % 19 % 20 % 19 % 18 % 17 % 18 % 18 % 18 % 18% 28 % 24 % 25 % 22 % 17% 12% 8.7 8.8 9% 9% 5.8 4.5 4% 63 % 64 % 65 % 4.4 56 % 55 % 58 % 53 % 2.2 Aeroflot Transaero S7 Group UTair Ural For
Slide 7: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 7
Slide 8: Networks Operated and Key Statistics
Networks Operated and Key Statistics # of Flights Dynamics of Aeroflot Group by Region Average Weekly Flight Frequency per Route of Aeroflot Group (6M 2014 / 6M 2013) 6M 2013 6M 2014 Change Europe 4.8% Scheduled 8.0 9.0 12.5% CIS 5.7% Charter 0.8 0.3 (62.5)% Russia 17.0% International Scheduled 6.0
Slide 9: Traffic and Capacity Development by Regions
Traffic and Capacity Development by Regions (%, 6M 2014 vs. 6M 2013) North and Central America Europe Russia 24.8 % 3.0 % 17.6 % 2.1 % 13.8 % 0.8 % 0.1 % 2.5 p.p (0.1)% (1.5) p.p (2.0) p.p -2.4 % Passengers RPK ASK SLF Passengers RPK ASK SLF Passengers RPK ASK SLF carried carried carried Middle East
Slide 10: Key Operating Indicators
Key Operating Indicators Monthly Passenger Traffic (‘000 PAX) Monthly Passenger Turnover (m pkm) 3,797 3,371 9,761 3,394 3,453 8,606 9,138 2,858 3,018 3,080 7,341 8,909 8,044 2,481 2,542 2,703 7,295 2,256 2,157 2,979 3,072 6,528 6,622 8,098 2,610 2,803 2,365 6,180 7,896 8,141 6,363 6,253 2,306 2,649
Slide 11: Revenue Breakdown
Revenue Breakdown Traffic Revenue Breakdown by Type (H1 2014) Revenue from Scheduled Passengers Carriages (RUBm)1 Charter Passenger Flights Y-o-y 5.9% 6M 2013 6M 2014 Change Cargo 3.1% Russia 37,351 42,965 15.0% Scheduled Passenger Flights 91.0% Europe 28,415 30,855 8.6% Scheduled Traffic Revenue
Slide 12: Revenue Units
Revenue Units Yield: PAX Revenue / RPK RASK: PAX Revenue / ASK (RUB / RPK) (RUB / ASK) 4.3% 3.3% 2.76 2.88 2.18 2.11 6M 2013 6M 2014 6M 2013 6M 2014 Yield (RUB / RPK)1,2 RASK (RUB / ASK)1,2 2.92 2.99 2.91 2.85 2.19 2.21 2.19 2.21 International Domestic International Domestic 6M 2013 6M 2014 • Total
Slide 13: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 13
Slide 14: Aeroflot Group Fleet in Operation
Aeroflot Group Fleet in Operation Financial Operating Aeroflot Subsidiaries Total Owned Lease Lease Total Change 1 Type 30-Jun-2014 30-Jun-2014 30-Jun-2014 30-Jun-2014 30-Jun-2014 30-Jun-2014 31-Dec-2013 31-Dec-2013 Boeing B-767 2 3 5 - - 5 8 (3) Airbus A-330 22 - 22 - 8 14 22 - Long-haul Tu-204 - 2
Slide 15: Aeroflot Group Fleet Order and Phase-Out Schedule
Aeroflot Group Fleet Order and Phase-Out Schedule Total Aircraft Delivery Schedule in Accordance with Existing Contracts 1 Type of Aircraft Delivered as at 30-Jun-2014 2014 2015 2016 2017 Long-haul² 51 - 3 5 9 A-330 22 - - - - B-767 5 - - - - B-777 13 - 3 3 - B-787 - - - 2 9 Medium-haul 177 11 13 31
Slide 16: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 16
Slide 17: Key Financial Results of Aeroflot Group
Key Financial Results of Aeroflot Group 6M 2014 (ex. non-recurring RUBm 6M 2013 6M 2014 expenses³) 128,180 140,281 140,281 Revenue – +9% growth +9% growth 19,967 16,657 18,754 EBITDAR¹ 16% margin 12% margin 13% margin 45 (1,905) 375 Net Income / (loss) 0% margin neg. margin 0% margin 22,096 26,476 2
Slide 18: Revenue Analysis
Revenue Analysis 9% 10,084 (9,383) 10,791 609 Net positive impact of 701m RUBm 140,281 128,180 6M 2013 Volume Currency Pricing Other 6M 2014 Revenue growth was a result of traffic volume growth, as currency effect was offset by softer fares on the back of macroeconomic headwinds and intensified mark
Slide 19: Cost Analysis
Cost Analysis 6М 2014 Y-o-y Change 6M 2014, (excl. currency and (excl. currency and 6М 2013 6M 2014 Y-o-y Change RUBm non-recurring non-recurring expenses)2,3 expenses) 28.4% Fuel 36,942 39,256 40,236 6.3% 8.9% Opex (ex. Fuel) 86,057 95,516 101,429 11.0% 17.9% 19.6% Aircraft, Traffic and 24,239 26,6
Slide 20: Group Unit Costs
Group Unit Costs Cost Per ASK ($ cents) 1.5% (4.2)% 7.70 0.03 (0.08) 0.11 7.49 0.05 (0.18) 7.38 (0.05) (0.02) (0.02) (0.05) Other costs⁴ Δ in SBC¹ 6M 2013 CASK 6M 2014 Δ in Fuel² Maintenance Air, Traffic and PAX NRE⁵ Δ in Staff (ex. SBC¹) CASK 6M 2014 Operating Lease D&A and CD³ (ex.NRE⁵) CASK (ex.N
Slide 21: Managing Fuel Costs
Managing Fuel Costs • Continuous fuel supply optimisation Fuel Consumption per ASK (gr/ASK) – 5-year supply contract at Sheremetyevo and 1-year supply contracts in 29 regional airports across Russia • Majority of fuel purchased in Russia (83%) and almost all (4.0)% fuel at international airports sup
Slide 22: Headcount Overview and Labour Productivity
Headcount Overview and Labour Productivity Headcount H1 2013 H1 2014 Y-o-y Change Aeroflot JSC 16,083 17,321 7.7% Aeromar 2,865 3,225 12.6% Subsidiary Airlines 8,742 8,677 (0.7)% Other1 2,435 2,376 (2.4)% Total 30,125 31,599 4.9% Airlines Labour Productivity2 Traffic Revenue / Avg. Headcount RPK / A
Slide 23: Adjusted Operating and Net Income Analysis
Adjusted Operating and Net Income Analysis 6M Adjusted Operating Income Build-Up (RUBm) 874 713 1,817 (594) (1,384) Operating Income 6M 2014 Provision on accounts receivable Provision for pre-term return of Gain on pre-term return of TU- Adjusted Operating Income 6M in relation to doubtful debtors M
Slide 24: Group Operating Income Analysis
Group Operating Income Analysis 6M Operating Income Evolution, y-o-y basis (RUBm) 10,084 609 10,791 (4,796) 5,181 (2,730) (9,383) (2,947) (2,365) 713 (1,260) (681) (1,790 ) (2,097) (1,384) Other FX drag Volume Pricing D&A and CD** Fuel* NRE**** Staff FX benefit Operating Leases* Other opex*** Operat
Slide 25: Group Net Income
Group Net Income Aeroflot Group Net Income (RUBm) 1,835 163 (708) 2,280 375 (527) (293) 267 407 52 (251) (1,905) (3,143) Aeromar Sherotel Aeroflot JSC Orenair NRE¹ Aurora Net Income H1 2013² Rossiya Airlines Vladivostok Air Group Net Income Donavia Net Income H1 2014 (including minority) Adjusted Gr
Slide 26: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 26
Slide 27: Leverage and Liquidity
Leverage and Liquidity Debt (RUBm) Total Debt / LTM EBITDA¹ 4.3 x 3.8 x 30-Jun-2013 30-Jun-2014 Change 2.6 x Borrowings 13,638 14,403 5.6% Finance Lease 30-Jun-2013 31-Dec-2013 30-Jun-2014 76,389 97,308 27.4% Liabilities Finance Lease Repayment Schedule (RUBm)2 60,327 Pension Liabilities 722 735 1.8
Slide 28: Operating Free Cash Flow
Operating Free Cash Flow 6M 2014 Operating Free Cash Flow (RUBm) 19.8% 19,673 26,703 26,476 2,169 22,096 (2,396) 2,244 1,766 7,030 5,586 (1,361) (1,205) Profit Before D&A Interest Unrealized Other Adj. Cash Flows Working Net Net Net Free Free Income Tax Expense Net FX Loss before from Capital Cash F
Slide 29: Table of Contents
Table of Contents 1. Key Highlights 2. Market Update 3. Operating Performance 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 29
Slide 30: Key Operating Data for JSC Aeroflot and Aeroflot Group
Key Operating Data for JSC Aeroflot and Aeroflot Group JSC Aeroflot Aeroflot Group Unit 6M 2013 6M 2014 Change 6M 2013 6M 2014 Change Passenger Turnover m pkm 27,774 31,171 12.2% 39,272 40,927 4.2% International Routes 19,064 20,205 6.0% 26,397 25,787 (2.3)% Domestic Routes 8,711 10,966 25.9% 12,875
Slide 31: Key Financial Data for JSC Aeroflot
Key Financial Data for JSC Aeroflot RUBm, Unless Otherwise Stated 6M 2013 6M 2014 Change Revenue 97,388 113,790 16.8% RPK1 (m pkm) 27,774 31,171 12.2% Yield2 (RUB/pkm) 2.9 3.0 3.4% EBITDAR3 15,377 15,024 (2.3)% Margin (%) 15.8% 13.2% (2.6)p.p EBITDA4 9,597 6,904 (28.1)% Margin (%) 9.9% 6.1% (3.8)p.p
Slide 32: Key Financial Data for Aeroflot Group
Key Financial Data for Aeroflot Group RUBm, Unless Otherwise Stated 6M 2013 6M 2014 Change Revenue 128,180 140,281 9.4% RPK1 (m pkm) 39,272 40,927 4.2% Yield2 (RUB/pkm) 2.8 2.9 3.0% EBITDAR3 19,967 16,657 (16.6)% Margin (%) 15.6% 11.9% (3.7)p.p EBITDA4 10,914 5,030 (53.9)% Margin (%) 8.5% 3.6% (4.9)
Slide 33: Key Operating Data of Subsidiary Airlines
Key Operating Data of Subsidiary Airlines Rossiya Vladivostok Donavia Orenair Aurora Dobrolet Total Airlines Air 6M 2014 794 2,177 1,244 5 466 19 4,704 Passenger Traffic 6M 2013 576 1,930 1,430 546 119 4,601 (‘000 PAX) Change, % 37.8% 12.8% (13.0)% (99.1)% 291.6% 2.2% 6M 2014 1,134 4,145 3,679 8 766
Slide 34: Summary Financial Tables Income Statement
Summary Financial Tables Income Statement 6 months 6 months 30-Jun-2013 30-Jun-2014 Traffic Revenue 113,667 121,796 Other Revenue 14,513 18,485 Revenue 128,180 140,281 Operating Costs (96,600) (109,009) Staff Costs (21,357) (24,304) Depreciation and Amortisation (5,052) (5,586) Other (Expenses)/Inco
Slide 35: Summary Financial Tables Balance Sheet
Summary Financial Tables Balance Sheet 31-Dec-2013 30-Jun-2014 Assets Current Assets Cash and Cash Equivalents 18,660 36,703 Short-term Investments 273 114 Accounts Receivable and Prepayments 55,690 51,942 Aircraft Lease Deposits 405 219 Income Tax Receivables 476 472 Expendable Spare Parts and Inve
Slide 36: Summary Financial Tables Balance Sheet (continued)
Summary Financial Tables Balance Sheet (continued) 31-Dec-2013 30-Jun-2014 Liabilities and Equity Current Liabilities Accounts Payable and Accrued Liabilities 36,248 47,436 Unearned Transportation Revenue 16,334 29,730 Deferred Revenue Related to Frequent Flyer Programme 577 675 Provisions 881 2,100
Slide 37: Summary Financial Tables Condensed Cash Flow Statement
Summary Financial Tables Condensed Cash Flow Statement 6 months 6 months 30-Jun-2013 30-Jun-2014 Operating Cash Flow before Working Capital Changes 10,158 7,030 Net Cash Flows from Operating Activities 21,173 26,703 Net Cash Flows Used in Investing Activities 1,133 (28) Net Cash Flows Used in Financ
Slide 38: Aeroflot Group Structure
Aeroflot Group Structure JSC Aeroflot Airlines Service companies CJSC Aeromar JSC Sheremetyevo JSC Donavia 100% 51% 8.96% In-flight catering Base airport JSC Orenair 100% CJSC AeroMASh-AB CJSC Transport 45% 3.85% Aviation security Clearing House JSC Rossiya 75%-1 Airlines share LLC Aeroflot-Finance