Grupo Aeromexico, S.a.b. De C.v. · BMV:AERO
Grupo Aeromexico, S.a.b. De C.v — Investor Day (2013)
81 slides from Grupo Aeromexico, S.a.b. De C.v's investor day presentation, 2013
Slide 1: Enhancing Value
ENHANCING VALUE Andrés Conesa, CEO 1
Slide 2: Disclaimer
DISCLAIMER This presentation is neither an offer for sale nor a request to buy any securities. Such offer or request may only be made through an offering memorandum containing the description of the terms and conditions of such offer and shall include detailed information of the company and its mana
Slide 3: Table of Contents
TABLE OF CONTENTS AEROMEXICO AT A GLANCE RECOVERING POSITIVE MOMENTUM ENHANCING VALUE INVESTMENT HIGHLIGHTS 3
Slide 4: Aeromexico: Mexico's Premium Revenue Carrier
AEROMEXICO: MEXICO’S PREMIUM REVENUE CARRIER Leading airline in Mexico Presence on three continents and 18 countries More than 15.3 million passengers transported in 2013 Only Latin American carrier with flights to Asia Strong slot position at Mexico City Airport Enhanced alliance +3.5 million frequ
Slide 5: Industry Overview: Market Leader
INDUSTRY OVERVIEW: MARKET LEADER Focus on Share of Value Total Passengers, Mexico (million) 58.2 55.2 80% of International Share 29.5 is North America International 27.1 Domestic 28.1 28.7 2012 LTM Aug 2013 60 mn pax estimated 2013 Market Share Total Passengers (1) Domestic (1) International (1) oth
Slide 6: Since 2012 Aeromexico Day...
SINCE 2012 AEROMEXICO DAY... Network Alliances • + 40 additional domestic and • Partnership with Delta consolidated international destinations • Additional alliances with key Latin American • Additional frequencies in key markets partners • Increased connectivity through hubs Service Financial Stren
Slide 7: Challenging Economic Environment Starting Q4 2012
CHALLENGING ECONOMIC ENVIRONMENT STARTING Q4 2012 2013 GDP Growth Forecast (1)) Global Index of Economic Activity (2) Monthly YoY (%) Monthly YoY (%) 4.5 4.0 3.5 3.0 Mean 2.5 Median 2.0 Interquartile range 1.5 J F M A M J J A S O N D J F M A M J J 2012 A 2013 2010 2011 2012 2013 Reacted proactively
Slide 8: Recovering Positive Momentum Through Operational Excellence
RECOVERING POSITIVE MOMENTUM THROUGH OPERATIONAL EXCELLENCE Strengthening Key Passenger-Oriented Operational Drivers On-time Departure Performance Mishandled Baggage Complaints Completion Factor (%, within 15 min ) 92.4% 90.6% 85.2% 81.4% 79.2% 74.1% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 8
Slide 9: Recovering Positive Momentum Through a High Quality Product
RECOVERING POSITIVE MOMENTUM THROUGH A HIGH QUALITY PRODUCT Enhancing our Premium Product Offering and Services Product Offering Services New B-737 800 Business Lounge Renovation B-787 Dreamliner Loyalty Program Top of the line cabin 9
Slide 10: Recovering Positive Momentum in Passenger Traffic and Load Factor
RECOVERING POSITIVE MOMENTUM IN PASSENGER TRAFFIC AND LOAD FACTOR 7.5% Passenger Traffic Monthly YoY (%) 3.2% 3.2% 1.0% 1.0% 1.3% 0.6% 0.6% 0.6% -1.3% 0.4% 0.0% -4.3% -7.1% Load Factor % 86.2 83.4 79.0 79.4 77.9 77.1 77.0 76.8 75.6 75.9 75.5 75.4 74.8 74.1 73.2 71.3 Jan Feb March Apr May June July A
Slide 11: Recovering Positive Momentum Through Strict Cost Control
RECOVERING POSITIVE MOMENTUM THROUGH STRICT COST CONTROL CASK Ex-Fuel EBITDAR Margin Operating Margin (mxn) 0.790 0.787 20.8 19.4 7.9 -2.5pp 6.6 +1.4pp 0.770 +1.3pp 0.765 2Q12 2Q13 2Q121H 13 1H 12 2Q13 2Q12 2Q13 Note: Information presented under the equity accounting method for the aircraft maintena
Slide 12: Building for the Future With Our Flight Plan
BUILDING FOR THE FUTURE WITH OUR FLIGHT PLAN PRODUCTIVITY & RISK MGMT COMMERCIAL NETWORK • Fleet Strategy • Revenue Management and • Productivity Ancillaries • Labor Costs • Connectivity and Alliances • Risk Management • Wide Body Strategy • TechOps and Maintenance • AM Contigo Efficiencies • Labor
Slide 13: Positioned to Capitalize on Future Growth
POSITIONED TO CAPITALIZE ON FUTURE GROWTH Low Penetration of Air Transportation Strengthening Mexican Economy Strength Flights per capita(1) Mexican GDP Growth and Estimated RANK Impact of Reforms (3) Canada 3.7 14 6.0% 18 5.0% +0.8%-1.7% United States 3.1 GDP growth 4.0% Chile 0.7 50 3.0% Brazil 61
Slide 14: Future Value Through Cost Savings: New Labor Contracts
FUTURE VALUE THROUGH COST SAVINGS: NEW LABOR CONTRACTS Improved Productivity to Drive Growth Pilots Flight Attendants Ground Personnel MRO Services Cargo Improved productivity Improved productivity New Market based contracts for new entrants Competitive costs compared to Mexican airline industry 14
Slide 15: Future Value Through Cost Savings: Fleet Strategy
FUTURE VALUE THROUGH COST SAVINGS: FLEET STRATEGY Fleet Renewal Reduced Ownership Cost • New Technology • Increase Owned Aircraft • Reduced Fuel Consumption and Reductions in CASK • Fleet balance to maintain flexibility with staggered contracts Annual Cost of Financing E-145 E-170/175190 10%-12% 4%
Slide 16: Enhancing Value Through Our Strategic Partnerships
ENHANCING VALUE THROUGH OUR STRATEGIC PARTNERSHIPS Loyalty Program • Enhanced codeshare in more than 330 worldwide • Strategic Partnership with destinations AIMIA • Joint efforts in sales, marketing • AIMIA has a 49% investment in and customer experience PLM • JV - MRO facility in Querétaro • Owns 4
Slide 17: Building for the Future: Enhancing Value
BUILDING FOR THE FUTURE ENHANCING VALUE • Consolidating future growth opportunities, driven by a low per capita flight penetration, Mexico’s economic strength and our unique position in Mexico City Airport • Projected seat capacity increase of 9-10% in 2014. ASK´s will grow more due to productivity
Slide 18: Driving Operational Value
DRIVING OPERATIONAL VALUE Corneel Koster, COO 18
Slide 19: Table of Contents
TABLE OF CONTENTS AEROMEXICO OPERATION IN A NUTSHELL OPERATIONAL MOMENTUM ENHANCING VALUE OPERATIONAL FLIGHT PLAN 19 19
Slide 20: Our Operation in a Nutshell
OUR OPERATION IN A NUTSHELL 600+ Passenger flights a day Largest Cargo player in Mexico 15.3 M Passengers in 2013 101,304 Tons of cargo yearly 46 Domestic destinations 38% Cargo Market share 35 International destinations 2 AOC’s AM and AM Connect Aeromexico Servicios Ground handling at 46 airports A
Slide 21: Positive Operational Momentum: Industry Leading Punctuality
POSITIVE OPERATIONAL MOMENTUM: INDUSTRY LEADING PUNCTUALITY On-time Departure (within 15 mins) On-time Performance Benchmark YTD June 13 YTD Aug YTD Aug %p var 2013 2012 Arrival 14 87.7% 67.8% 20 Departure 15 90.1% 78.1% 12 Source: DOT Department of Transportation (for YTD June 13 data) 21
Slide 22: Positive Operational Momentum: Strong Reliability
POSITIVE OPERATIONAL MOMENTUM: STRONG RELIABILITY Completion Factor Mainline Completion Factor Regionals YTD June 13 YTD June 13 100 99.9 99.8 100 99.6 99.5 99.5 99.5 99.1 99.1 98.9 99.0 99 98.8 99 98.5 98.4 98 98 97.6 97.5 97.1 97.0 97 97 96.7 96.5 96.4 96 96 95.5 95 95 HA VX AS DL AM FL WN US UA A
Slide 23: Excellent Fleet Utilization
POSITIVE OPERATIONAL MOMENTUM & EFFICIENCY: EXCELLENT FLEET UTILIZATION Fleet Utilization Benchmark Aug 2012 - Jul 2013 Flight Time B777 B767 B737 UNITED 13.16 DUBAI 11.63 CONDOR 13.13 ETHIOPIAN 11.21 THOMSON 13.10 VIRGIN AUSTRALIA 10.95 ASIANA 15.65 TUI 12.87 COPA 10.94 KLM 15.34 AIRCANADA 12.38 AM
Slide 24: Excellent Fleet Utilization
POSITIVE OPERATIONAL MOMENTUM & EFFICIENCY: EXCELLENT FLEET UTILIZATION Fleet Utilization Benchmark Aug 2012 - Jul 2013 Flight Time E190 E170 E145 CEA JIANG SU 8.19 PORTUGALIA 7.89 AZUL 9.13 CEA WUHAN 7.83 JET BLUE 7.93 FUJI 7.85 AM CONNECT 7.78 AM CONNECT 7.92 COMPASS 7.64 EXPRESSJET 7.11 VIRGIN Au
Slide 25: Focus on Baggage Handling Performance
POSITIVE OPERATIONAL MOMENTUM: FOCUS ON BAGGAGE HANDLING PERFORMANCE Mishandled Baggage Complaints Complaints per 1000 Passengers Grupo Aeroméxico Airline Ranking 4.70 4.84 Rank US Operations YTD July-13 3.78 1 Virgin America 0.99 3.55 3.33 3.24 2 Jetblue Airways 1.98 2.87 3 Frontier Airways 2.15 2.
Slide 26: Strong Net Promoter Program
POSITIVE OPERATIONAL MOMENTUM IN SERVICE: STRONG NET PROMOTER PROGRAM Delivering world-class service: • Customer feedback used for continuous improvement • NPS scores calculated per business area • Detailed scores discussed teams monthly • NPS information shared on an employee level • Continuous coa
Slide 27: Smooth Introduction of B787 Dreamliner
ENHANCING VALUE OF OUR WIDEBODY PRODUCT: SMOOTH INTRODUCTION OF B787 DREAMLINER • Certification finished a week ahead of schedule: successful 100 flight hours and positive initial reliability • Operation, maintenance and training approvals received from DGAC and FAA • E-enabling infrastructure • Ful
Slide 28: AM/DL MRO: State of the Art Set-Up With Room to Grow
ENHANCING VALUE AM/DL MRO: STATE OF THE ART SET-UP WITH ROOM TO GROW General description Queretaro New Home Base Investment $50-60 MUSD Job Generation (direct 4,800 & indirect) Day of Opening 2 January 2014 Wide & Narrow B 9 Bays/Production Lines Capacity B737 B757 MD 88 MD Capability 90 ERJ 145 UD-
Slide 29: AM/DL MRO: State of the Art Facilities
ENHANCING VALUE AM/DL MRO: STATE OF THE ART FACILITIES Construction status Back Shops Hangar (A) Warehouse Hangar B Hangar C Apron Hangar (A) Services Construction Camp 29
Slide 30: AM/DL MRO: Environment Friendly Tech
ENHANCING VALUE AM/DL MRO: ENVIRONMENT FRIENDLY TECH State of the art environmental friendly facility design Wash Rack Water Treatment Recycling Re- usage System T5 Lightning system Semi transparent Roofing Rain Harvesting System Solar P. Parking Lot Water less Lightning restrooms Chemical Spill Sol
Slide 31: Other Facilities and Tech Investments
ENHANCING VALUE: OTHER FACILITIES AND TECH INVESTMENTS New Maintenance Hangar, Mexico City • Can fit 1 wide body & 3 narrow body aircraft • Includes new engine and component shops New Domestic Cargo Facility, Mex. City Security tech • Secure and cold storage • Full Cargo process monitoring by CCTV •
Slide 32: Current Tech Investments
ENHANCING VALUE: CURRENT TECH INVESTMENTS Operational Control • System integration in new Operations Control Centre • Integrated AM and AMC planning, quicker recovery from disruption, schedule integration and cost control Flight planning • Implementation during 2014, RFP stage • Flight planning proc
Slide 33: Operational Flight Plan
OPERATIONAL FLIGHT PLAN Service Excellence Operational Excellence Operational Efficiency Applying global best practices to our solid foundations in operations, maintenance and safety Continuous benchmarking, process re-engineering and improvement Generating further benefits of our strong industry pa
Slide 34: Commercial Value Creation
COMMERCIAL VALUE CREATION Sergio Allard, CCO Roger Harris, SVO RM 34 34
Slide 35: Table of Contents
TABLE OF CONTENTS NETWORK AND COMMERCIAL STRATEGY REVENUE MANAGEMENT ANCILLARY REVENUES DISTRIBUTION AND SALES ALLIANCES 35
Slide 36: Commercial Strategy
COMMERCIAL STRATEGY • Key focus on business travelers and high yield segments • High-frequency product in major business markets • Strategic participation in leisure and VFR markets • Strengthening schedule and presence in high value markets • Leveraging position in connecting markets in Mexico and
Slide 37: Network and Commercial Strategy: Reinforcing Existing Network
NETWORK AND COMMERCIAL STRATEGY REINFORCING EXISTING NETWORK Low risk growth to address an expanding market USA / LATAM WIDEBODY DOMESTIC PRODUCT • Higher frequencies • More frequency • Strengthening our and capacity on schedule • Capacity increase to main markets address market • Unrivaled long hau
Slide 38: 787 Dreamliner, State-of-the-Art Product and Enhanced Service
787 DREAMLINER, STATE-OF-THE-ART PRODUCT AND ENHANCED SERVICE • Upgauging B-767 Fleet • Upgauging B-767 Fleet • Consolidating markets with Additional Frequencies • Strengthening our schedule 38
Slide 39: AM Contigo Program
AM CONTIGO PROGRAM Low cost/risk tactic to address price sensitive segment • Cost efficient sub fleet (CASK reduction of 12-15%) for ethnic markets • CASK improvement achieved from seat density and aircraft utilization • Leverages existing infrastructure and strengths: Product, brand, distribution,
Slide 40: Revenue Management
REVENUE MANAGEMENT Load factor gains have generated positive RASK momentum Performance Indicators YoY monthly change 6 4 2 - Jan Feb Mar Apr May Jun Jul Aug (2) (4) (6) (8) (10) Yield RASK LF Source: Aeromexico Internal information 40
Slide 41: Developing Ancillary Revenues
DEVELOPING ANCILLARY REVENUES Ancillary revenues add low cost incremental margin Current Products Forward Strategy • Bags fees • Increase distribution of • Administrative / Change existing products fees • New products • Upgrades and insurance – Concierge – Choice seats – Ground transportation Ancill
Slide 42: Strengthening Distribution and Sales
STRENGTHENING DISTRIBUTION AND SALES Distribution and Sales efforts lower costs, increase Yields SEGMENT CHANNEL COST • Leading position in the • Focus on high yield • Adjust commission corporate market channels scheme to lower cost and improve high yield share • Strong revenue production • Stronges
Slide 43: Growing the Value of the Delta Alliance
GROWING THE VALUE OF THE DELTA ALLIANCE Significant benefits being realized in alliance with Delta • Optimization of network connectivity • Synergies and sharing of best practices • Joint penetration of global corporate accounts 43
Slide 44: SkyTeam and Other Alliances
SKYTEAM AND OTHER ALLIANCES Relationships with other alliances also reinforce Aeromexico product • Growing virtual network • Strengthening AM world wide and regional presence in a low cost and low risk manner 44
Slide 45: Enhancing Product Value
ENHACING PRODUCT VALUE Strengthening key attributes for our business passengers • Top tier on-time and operational performance • Excellent execution on product delivery • Club Premier: the only frequent flyer program in Mexico • Corporate programs for SMEs • Two cabin onboard product • VIP lounges 4
Slide 46: Unique Position to Enhance Commercial Value for Sustainable Growth
UNIQUE POSITION TO ENHANCE COMMERCIAL VALUE FOR SUSTAINABLE GROWTH Superior RASK Performance Operational excellence and Enhancing Product Revenue Value Management Network Sales and Distribution 46
Slide 47: Value in PLM
ENHANCING VALUE 7 @ ABOVE & BEYOND = a VALUE IN PLM “a Pe P os “ <i , — co. —_— —_, —_
Slide 48: PLM Is a Joint Venture Between Grupo Aeromexico and Aimia
PLM IS A JOINT VENTURE BETWEEN GRUPO AEROMEXICO AND AIMIA Corporate Structure Commercial Structure PLM Grupo Aeroméxico AIMIA 1) Member flies 2) Sale of and earns Kilometers from Kilometers PLM to Aeromexico 51% 49% Aeromexico 3) Member Premier Loyalty & redeems Marketing (PLM) Kilometers for 4) Aer
Slide 49: Club Premier Is the Leading Coalition Loyalty Program in Mexico
CLUB PREMIER IS THE LEADING COALITION LOYALTY PROGRAM IN MEXICO Members can earn Kilometers Premier (KmP) with over 85 partners including airlines, hotels, car rentals, credit cards, stores and other services. 49
Slide 50: Aeromexico, the Leading Airline Partner
AEROMEXICO, THE LEADING AIRLINE PARTNER Customer Perception: Ease of earning/using points Which airline has a better frequent flyer program? 5.9 Competition 5.3 5.1 -18% 82% -25% 0% 25% 50% 75% 100% Aeromexico United Delta Source: LEK Research (Apr-13) Source: 100% Market Research (Oct-12) 50
Slide 51: Over 20 Airline Partners to Earn and Redeem KMP
OVER 20 AIRLINE PARTNERS TO EARN AND REDEEM KMP 51
Slide 52: Partners With Leading Hotels Including New Addition SPG
PARTNERS WITH LEADING HOTELS INCLUDING NEW ADDITION SPG 52
Slide 53: Earn KMP With Major Car Rental Companies and Now Taxis
EARN KMP WITH MAJOR CAR RENTAL COMPANIES AND NOW TAXIS 53
Slide 54: Cobrand or Conversion Deals With All Major Mexican Banks
COBRAND OR CONVERSION DEALS WITH ALL MAJOR MEXICAN BANKS 54
Slide 55: Recent Expansion in Retail With POS Earn
RECENT EXPANSION IN RETAIL WITH POS EARN New POS Direct Earn 55 55
Slide 56: Best Reward Portfolio in Mexico
BEST REWARD PORTFOLIO IN MEXICO 20+ airlines 15,000+ daily flights Combos of flight, 1,000+ destinations hotel, car and 180+ countries activities 100,000+ properties Online gaming Car rentals Hundreds of thousands of reward options Over 2,500 merchandise SKU’s POS redemption Redemption Thousands of
Slide 57: New Products Maintain Engagement While Keeping Costs Low
NEW PRODUCTS MAINTAIN ENGAGEMENT WHILE KEEPING COSTS LOW Charters Experiences Low Cost Redemption Raffles Games Auctions Stickers Experience Store Lots.com.mx Mobile App Low Cost Engagement Mall Premier Club Premier League Earn comparisons 57
Slide 58: Improved Value Proposition Has Created Growth
IMPROVED VALUE PROPOSITION HAS CREATED GROWTH Enrolled Members Commercial Partners (millions) 3.6 CAGR 7.8% CAGR 22.8% 3.5 100 89 3.4 3.2 80 3.2 72 3.0 2.9 59 60 2.8 2.6 40 Q2 2011 Q2 2012 Q2 2013 Q2 2011 Q2 2012 Q2 2013 Company Valuation (USD millions) 600 CAGR 204.7% 518 500 400 300 200 170 100 0
Slide 59: Consistent Growth in Sales of KMP
CONSISTENT GROWTH IN SALES OF KMP Gross Billings (USD millions) 45 42.0 40 38.0 36.1 36.4 34.8 35 32.1 31.9 28.8 29.8 30 24.5 25 22.2 20 15 10 5 0 Q1 Q1 Q1 Q2 Q2 Q2 Q3 Q3 Q4 Q4 Q4 2011 2012 2013 2011 2012 2013 2011 2012 2010 2011 2012 59
Slide 60: Major Improvements in Customer Perception
MAJOR IMPROVEMENTS IN CUSTOMER PERCEPTION Net Promoter Score Index 50 45 44 40 39 35 31 30 30 25 20 19 17 15 10 5 0 Jan-12 Jun-12 Feb-13 Source: Bain NPS Survey (Jan. 2012, Jun. 2012, Feb. 2013) 60
Slide 61: PLM Has Large Untapped Growth Opportunities
PLM HAS LARGE UNTAPPED GROWTH OPPORTUNITIES Program membership as % of population 52.8 46.9 Credit card growth prospects 35.7 Cards Per Capita 31.0 29.6 2.12 23.7 23.5 0.40 0.14 Mexico Brazil Canada 14.0 13.4 13.0 9.4 Credit Cards 4.4 3.8 (Dec-09 to Dec-12 CAGR) 2.3 23% 8% 2% Classic Gold Platinum S
Slide 62: Enhancing Financial Value
ENHANCING FINANCIAL VALUE Ricardo Sánchez Baker, CFO 62
Slide 63: Table of Contents
TABLE OF CONTENTS FINANCIAL DISCIPLINE STRICT COST CONTROL RISK MANAGEMENT BUILDING FOR THE FUTURE: PRODUCTIVITY 63
Slide 64: Proven Track Record of Cost Discipline
PROVEN TRACK RECORD OF COST DISCIPLINE Strong pipeline of productivity and cost reduction initiatives CASK ex fuel (mxn)* CASK ex fuel (mxn) 0.892 -2.8% 0.787 -14.1% 0.765 0.765 2009 1H13 1H12 1H13 Source: Aeromexico Quarterly Financial Statements Stage Length Adjusted @1000 miles * 2009 CASK expres
Slide 65: Domestic Competitive Environment: CASK
DOMESTIC COMPETITIVE ENVIRONMENT: CASK CASK CASK (Stage Length Adjusted) 1H13, USD cents 1H13, USD cents 8.9 22% 7.3 7.3 57% 26% 28% 5.7 5.8 5.7 GAM Interjet Volaris GAM Interjet Volaris Aeromexico * Aeromexico* Stage Length Adjustment @1,000 miles. Estimated ASK for Interjet 2Q13 – Source: PAXIS So
Slide 66: Domestic Competitive Environment: Positive Trend in Unit Costs
DOMESTIC COMPETITIVE ENVIRONMENT: AEROMEXICO POSITIVE TREND IN UNIT COSTS WITH MODERATE GROWTH CASK-Ex Fuel Base 1H12=100 Aeromexico 101.1 101.0 100 100 100 +1.02% 97.2 +1.11% -2.8% 1H12 1H13 1H12 1H13 1H12 1H13 ASK GROWTH: +23.4% ASK GROWTH: +18.2% ASK GROWTH: +4.1% Estimated ASK for Interjet 2Q13
Slide 67: Domestic Competitive Environment: Protecting Premium Revenues
DOMESTIC COMPETITIVE ENVIRONMENT: AEROMEXICO FOCUSED ON PROTECTING PREMIUM REVENUES Network and product consumers are willing to pay for PRASK PRASK (Stage Length Adjusted) 1H13, USD cents 1H13, USD cents 8.4 7.1 13% 7.4 22% 5.8 71% 44% 4.9 4.9 GAM Interjet Volaris GAM Interjet Volaris Aeromexico Ae
Slide 68: Domestic Competitive Environment: Strong Profitability
DOMESTIC COMPETITIVE ENVIRONMENT: STRONG PROFITABILITY DESPITE CHALLENGING ECONOMIC SCENARIO Operating Margin Operating Margin 2012 1H13 7.8% 6.9% 6.1% 5.0% 2.6% 1.9% Interjet GAM Volaris Interjet GAM Volaris Aeromexico Aeromexico Source: 2013 Quarterly Financial Statements 68
Slide 69: Recovering Positive Momentum: Margin Expansion
Recovering RECOVERING Positive Momentum: POSITIVE Improved Profitability MOMENTUM: MARGIN EXPANSION EBITDAR margin Operating margin +1.4pp +1.3pp 14 consecutive quarters with positive operating results Source: 2013 Quarterly Financial Statements 2Q12-4Q12 (Proforma ) and 1Q13 -2Q13 as presented retr
Slide 70: International Competitive Environment: Unit Costs
INTERNATIONAL COMPETITIVE ENVIRONMENT: UNIT COSTS, WORK IN PROGRESS CASK (Stage Length Adjusted) 12.2 1H13, USD cents 10.2 10.3 9.4 7.3 6.7 5.7 5.8 5.9 VOLARIS INTERJET GOL COPA GAM LATAM AMERICAN DELTA UNITED * Aeromexico* * Latin American USA Legacy Stage Length Adjustment @1,000 miles Estimated A
Slide 71: International Competitive Environment: Margin Expansion Opportunities
INTERNATIONAL COMPETITIVE ENVIRONMENT: OPPORTUNITIES FOR MARGIN EXPANSION Operating Margin 1H13 24.3% 10.0% 7.8% 6.2% 5.0% 4.2% 3.8% 1.9% 1.7% COPA UNITED INTERJET DELTA GAM AMERICAN LATAM VOLARIS GOL Aeromexico Latin American USA Legacy Source: Quarterly Financial Statements 71
Slide 72: International Competitive Environment: Strong Balance Sheet
INTERNATIONAL COMPETITIVE ENVIRONMENT: STRONG BALANCE SHEET Net Adjusted Financial Debt /EBITDAR June 2013 Average: 5.1 13.61 6.27 6.15 4.95 4.55 3.83 3.40 2.15 1.39 GOL LATAM INTERJET VOLARIS UNITED GAM AMERICAN DELTA COPA Aeromexico Latin American USA Legacy Source: Quarterly Financial Statements
Slide 73: Comprehensive Financial Risk Management
COMPREHENSIVE FINANCIAL RISK MANAGEMENT Fuel Hedging Strategy Interest rate • Over 50% of expected fuel consumption for the next 12 months is hedged 39% • Fuel surcharges complement Grupo 61% Aeromexico’s hedging strategy Variable rate Fixed rate Staggered lease agreements FX (expirations) Aircraft
Slide 74: Building for the Future: Productivity
BUILDING FOR THE FUTURE: PRODUCTIVITY Strong pipeline of cost reduction initiatives Operational & Fleet Strategy Labor Costs Administrative Processes • Implement more • New contracts with • Fleet Renewal efficient processes pilots, flight • Balance between attendants and Owned and Leased ground staf
Slide 75: Implementing Process Efficiencies
IMPLEMENTING PROCESS EFFICIENCIES Operational Processes • CCO Restructuring and Integration and AM /AM Connect Engineering • Online Maintenance Process Reengineering • MRO Facility in Queretaro will provide reduced maintenance costs Administrative Processes • ERP • Shared Service Center Finance, Hum
Slide 76: Fleet Strategy: Short & Medium Term
FLEET STRATEGY: SHORT & MEDIUM TERM Fleet renewal efforts will ensure CASK Reduced Ownership Cost reductions Leased Aircraft Owned Aircraft 10-12% VS 6% Estimated Reduction in CASK* E170 ERJ145 & B737-7 B737-8 B767 B787 Differential in cost: 4%-6% E190 Fleet Value Owned: 100 100 100 (27%) -16% -14%
Slide 77: Fleet Plan for 2014
FLEET PLAN FOR 2014 Domestic: ~8% growth SEATS GROWTH 2013-2014: 8%-10% International : ~13% growth *Includes Charter and Itinerary 77
Slide 78: Fleet Strategy: Long Term
FLEET STRATEGY: LONG TERM More efficient aircraft mix Today 2018 Fleet Flexibility E-145 E-170/190 E-170 / 175190 737’s 737’s NG/MAX 767’s 787’s 787’s New technology: Additional efficiencies in fuel 777’s consumption and CASK of 12%- 20% vs current aircraft fleet 78
Slide 79: Enhancing Value: An Ongoing Priority for Aeromexico
ENHANCING VALUE: AN ONGOING PRIORITY FOR AEROMEXICO • Aeromexico is #5 airline ranked by ROIC – WACC positive spread of 34 publicly-traded airlines. • Only two Latin American airline companies achieved positive spread Source: Company Filings and Deutsche Bank Airline Research 79
Slide 80: Closing Remarks
CLOSING REMARKS Andrés Conesa, CEO 80
Slide 81: Unique Position to Enhance Value and Sustainable Growth
UNIQUE POSITION TO ENHANCE VALUE AND SUSTAINABLE GROWTH PROFITABLE AND SUSTAINABLE GROWTH STRONG NETWORK AND BALANCED MEXICO REVENUE MANAGEMENT MOMENTUM STRATEGY OPERATIONAL EXCELLENCE STRATEGIC PARTNERSHIPS ENHANCED CASK PRODUCT AND REDUCTION SERVICE Aeromexico Momentum: Profitable and Sustainable