China Airlines Ltd. · TWSE:2610
China Airlines — H1 2019 Earnings Presentation
32 slides from China Airlines's earnings presentation, Aug 23, 2019
Slide 1: China Airlines 2019 Investor Conference
China Airlines 2019 Investor Conference August 23, 2019 TSE：2610
Slide 2: Legal Disclaimer
• The information contained in this presentation, Legal including all forward-looking information, is subject to change without notice, whether as a Disclaimer result of new information, further events or otherwise, and China Airlines(the “Company”) undertakes no obligation to publicly update or rev
Slide 3: Agenda
1. 1st Half 2019 Operating Results Agenda 2. Aviation Industry Outlook 3. Passenger Performance and Strategies 4. Cargo Performance and Strategies 5. Operating Fleet 3
Slide 4: 1st Half 2019 Operating Results
1st Half 2019 Operating Results 4
Slide 5: Operating Performance
Operating Performance Consolidated Financial Statistics TWD 100 Million 1st Half 2018 1st Half 2019 YoY % Operating Revenue 810.11 832.98 2.82% Net Operating Income 11.98 13.34 11.35% Net Income (Loss) After Tax 4.03 -4.38 - Net Income (Loss) Attributable to Owners of the company 1.89 -6.86 - Earnin
Slide 6: Composition of Op. Revenue
Composition of Op. Revenue 1st Half 2018 1st Half 2019 TWD 71.16 Billion TWD 72.01 Billion Other Op Other Op Revenue Revenue 5% 5% Cargo Cargo Revenue Revenue 29% 30% Passenger Revenue Passenger 65% Revenue 66% In the first half of 2019, Passenger, Cargo and other operating revenues accounted for 66
Slide 7: Composition of Op. Expenses
Composition of Op. Expenses 1st Half 2018 1st Half 2019 TWD 71.12 Billion TWD 72.17 Billion Insurance Insurance Pax. Service 0.2% Others 3.3% Pax. Service 0.2% Others 3.5% 4.0% 4.0% Sales Sales & &General General Adm. 4.0% Adm 4.3% Maintenance Fuel 30.5% Fuel 31.8% Maintenance 12.3% 13.4% Rental& De
Slide 8: Changes in Op. Income
Changes in Op. Income Rental, TWD 100 Million Depreciation & Pax. Cargo Fuel Insurance Revenue Revenue -6.25 -0.06 +14.01 -7.11 Maintenance +9.42 Airport & Other Op. Ground Revenue Handling +1.58 +2.77 Sales & General Adm. Op. +3.01 Op. Expenses Other Op. Revenue ▲10.50 Personnel Cost 0.42 ▲8.48 +0.
Slide 9: Financial Risk Management - Fuel
Financial Risk Management - Fuel Fuel Cost 1st Half 2018 1st Half 2019 YoY% Jet Fuel (MOPS) USD/BBL 83.68 78.05 -6.7% Fuel Consumption 10KBBL 865.13 854.58 -1.2% Fuel Expend TWD/100Million 225.98 219.65 -2.6% Hedging Loss(Gain) TWD/100Million -0.03 0.05 - Total Fuel Cost TWD/100Million 225.95 219.70
Slide 10: Financial Risk Management – Currency of Revenue and Expenditure
Financial Risk Management – Currency of Revenue and Expenditure 1st Half 2018 1st Half 2019 Rev. Exp. Rev. Exp. 100% 4% 5% 13% 2% 13% 2% 2% 2% 2% 2% 3% 6% 4% 7% 6% 6% 7% 7% 8% 9% 46% 42% 14% 15% 50% 49% 47% 37% 40% 0% TWD USD JPY CNY HKD EUR Others 10
Slide 11: Aviation Industry Outlook
Aviation Industry Outlook 11
Slide 12: Passenger Traffic Continues to Grow
Passenger Traffic Continues to Grow • According to IATA forecast, global RPK growth is slowing down, the growth rate of Asia-Pacific is larger than global average with similar trend. • The growth rate of global and Asia-Pacific traffic in 2019 are expected to be 5% and 6.3% respectively. RPK,% YOY G
Slide 13: Air Cargo Growth Slows Down
Air Cargo Growth Slows Down • Global and Asia-Pacific FTKs have grown by 3.4% and 1.7% respectively in 2018. • IATA expects the growth rate of global FTKs in 2019 will be flat and the Asia-Pacific is expected to be negative growth. FTK, %YOY Global Asia Pacific 15 9.7 10 5.8 9.8 5 3.6 3.4 5.3 2.3 0
Slide 14: Passenger Performance and Strategies
Passenger Performance and Strategies 14
Slide 15: Passenger Performance
Passenger Performance Revenue Composition by Region Australia Trans /New TWD 47.76 Billion Pacific Zealand 6% TWD 46.36 Billion Ocean 15% Europe 9% ▲3.0% Hong Kong 7% Southeast Asia 18% Northeast Mainland Asia 30% China 15% 1st Half 2018 1st Half 2019 • Passenger revenue increased by 3%, reaching TW
Slide 16: Passenger Operation Index
Passenger Operation Index ASK (MN) Load Factor Yield (TWD) 78.9% 79.8% 2.32 2.24 ▲0.9ppt ▲3.6% 26,196 25,821 ▼1.4% 1st Half 2018 1st Half 2019 1st Half 2018 1st Half 2019 1sth Half 2018 1st Half 2019 ASK decreased by 1.4% while the load factor and yield increased by 0.9ppt and 3.6% respectively in t
Slide 17: Market Outlook
Market Outlook Regional Market Long-haul Market Northeast Asia Trans Pacific Ocean • Taiwan outbound flow to NEA region • The travel volume between Taiwan and North continues to grow. America keeps growing. • The extra or charter flights to Northeast Asia • Aggressive Ontario/Los Angeles 17 flights/
Slide 18: Secure Taiwan Market by Multiple Brands
Secure Taiwan Market by Multiple Brands In response to intense market competition, China Airlines established Tigerair Taiwan to differentiate products from traditional airlines in order to achieve competitive advantage and create positive synergy. Operate high-end market by elevating the quality of
Slide 19: Flight Networks
Flight Networks 119 Flights per 232 Flights per week with 28 week with 17 destinations destinations North Europe Northeast America China Asia 22 Flights per week with 37 Flights per week 5 destinations with 6 destinations Southeast Asia/ Hong Kong New Zealand/ 22 Flights per week with 293 Flights pe
Slide 20: Cooperation with Other Airlines
Cooperation with Other Airlines China Airlines works with more than 20 airlines worldwide to expand global flight network and share operation resources. 20
Slide 21: Cargo Performance and Strategies
Cargo Performance and Strategies 21
Slide 22: Cargo Performance
Cargo Performance Revenue Composition by Region Australia/ New Zealand 2% TWD 21.64 Billion TWD 20.93 Billion Hong Kong Europe 12% 1% ▼3.3% Northeast Asia 7% Trans Mainland Pacific China 7% Ocean 54% Southeast Asia 17% 1st Half 2018 1st Half 2019 • Cargo revenue totaled TWD 20.93 billion, a 3.3% dec
Slide 23: Cargo Operation Index
Cargo Operation Index FATK (MN) Load Factor Yield (TWD) 3,938 3,852 ▼2.2% 70.5% 65.8% 7.79 8.25 ▼4.7ppt ▲5.9% 1st Half 2018 1st Half 2019 1st Half 2018 1st Half 2019 1st Half 2018 1st Half 2019 FATK decreased by 2.2% and the load factor dropped 4.7ppt while yield grew by 5.9% in the first half of 20
Slide 24: Cargo Performance – Where We Are
Cargo Performance – Where We Are In 2018, China Airlines Cargo ranked globally NO. 6 in terms of tonnage carried and NO. 12 in terms of FRTK basis Top Air Cargo Carriers in 2018 by Tonnage by FRTK Rank Airline (in thousands) Airline (in millions) 1 Emirates (1) 2,609 Emirates (1) 12,713 2 Qatar Airw
Slide 25: Global Cargo Market Trend
Global Cargo Market Trend Year-over-year FRTK (traffic) and FATK (capacity) growth 12% 10% FRTK Growth 8% FATKs 6% Growth 3.3% 4% 2% 0% -2% -2.0% -4% 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 Air Cargo growth is expected to weaken in 2019 due to recent escalating China-US
Slide 26: 2019 Business Opportunity-Project Shipment
2019 Business Opportunity-Project Shipment • Continuously focusing on recurrent traffic Semiconductor, Capital Equipment , Electronic products/semi-products , Functional textile , auto parts , Pharmaceuticals , Medical Equipment , Fresh produces , e-Commerce , Aircraft materials • Actively explore p
Slide 27: Freighter Network Planning
Freighter Network Planning Deploy regional networks such as Southeast Asia and India and optimize the long- haul flight revenues to Europe and America. Eff. From 2019JUL 53 Flt/week Regional 6 36 NEA 5+PRC 14 HKG 15+SEA 19 Flt/week Europe Flt/week Trans Pac 27
Slide 28: Interline Cooperation
Interline Cooperation Cooperate with other airlines to develop Mid-Asia and Latin American markets. TPE 28
Slide 29: Challenge: China-US Trade War
Challenge: China-US Trade War China-US Trade war Effect on TW The impact of China-US trade war on air Many overseas Taiwanese businesses cargo transport : have taken steps to adjust their • Short term: Urgent order shipment due to tariff issue production by relocating funds back to • Mid term: Air c
Slide 30: Operating Fleet
S28.CHINA AIRLINES a) Operating Fleet 30
Slide 31: Operating Fleet as of August 2019
Operating Fleet as of August 2019 • Aircrafts in storage are excluded. Aircraft Type Owned On Lease 777-300ER - 10 747-400 4 - A350-900 14 - A330-300 13 10 737-800 4 15 747-400F (Freighter) 18 - Number of aircraft in fleet 53 35 To maximize fuel efficiency, CI is expected to receive the first of 3 7
Slide 32: Thank you
Thank you 2019.08 China Airlines│No.1, Hangzhan S. Rd., Dayuan Dist., Taoyuan City, Taiwan TEL│03.399.8888