Capital A Berhad · MYX:CAPITALA
Capital A Berhad — AirAsia — Q4 2005 Earnings Presentation
40 slides from Capital A Berhad's earnings presentation, Aug 26, 2005
Slide 1: Now Everyone Can Fly: 2005 Fourth Quarter & Full Year Results
“Now Everyone Can Fly” 2005 Fourth Quarter & Full Year Results 26th th August 2005
Slide 2: Disclaimer
Disclaimer Now Everyone Can Fly Information contained in our presentation is intended solely for your personal reference and is strictly confidential. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the c
Slide 3: Agenda
Agenda Now Everyone Can Fly 1. Highlight & Events 2. Results Commentary 3. Cost Management 4. Manchester United Sponsorship 5. Outlook Question & Answers 2
Slide 4: 1. Highlight & Events
CONFIDENTIAL Now Everyone Can Fly 1. Highlight & Events
Slide 5: Key Features
Key Features Now Everyone Can Fly NPAT of RM112m for FY05 – capacity, fuel and deferred tax; but profits still grew by 128% YoY – profit growth superior to any other listed carrier in Asia-Pacific Passenger numbers grew 55%, our foot print doubled and our revenue grew by 70% Encouraging perfor
Slide 6: Reconciliation and deferred tax
Reconciliation and deferred tax Now Everyone Can Fly Profit item RM '000 Aircraft and fuel had the Profit as per IPO 159,882 greatest profit impact add/(subtract) Deferred tax only calculated in aircraft shortage (77,545) the final quarter lower related opex 70,462 But for its inclusion, AirAs
Slide 7: Doubled Number of Routes in 2005
Doubled Number of Routes in 2005 Now Everyone Can Fly Destinations Period Served* Jan 2002 6 Sep 2002 7 Dec 2002 8 Mar 2003 10 Jun 2003 11 Sep 2003 13 Dec 2003 15 Mar 2004 20 Jun 2004 26 Aug 2004 28 Sep 2004 33 Dec 2004 48 Jun 2005 52 * Excludes Kuala Lumpur and Bangkok as destinations We fly to mor
Slide 8: Consistent passenger growth
Consistent passenger growth Now Everyone Can Fly Passengers Flown by AirAsia Group (‘000) 6,289 CAGR 106% pa 04) 20 v s. 0 5 ( 20 h owt gr 22% 1 2,839 1,630 1,744 1,481 1,561 1,354 611 291 M ar-2001 Jun-2002 Jun-2003 Jun-2004 1Q 2Q 3Q 4Q 2005 Î There is no stopping the LCC phenomenon 7
Slide 9: Load factor as expectation
Load factor as expectation Now Everyone Can Fly ASK & RPK (million) and Load Factor (%) AirAsia Group 7000 78% ASK (Malaysia) ASK (Associates) 76% 6000 Load Factor 74% 5000 72% 4000 70% 3000 68% 2000 66% 1000 64% 0 62% 2002 2003 2004 2005 Not just any kind of growth, but HIGH QUALITY GROWTH 8
Slide 10: Profitability linked to fleet development
Profitability linked to fleet development Now Everyone Can Fly Aircraft Expansion Indonesia 5 Thailand 3 Malaysia 2 2 8 6 6 6 4 20 21 22 19 13 7 2 3 Jun-02 Jun-03 Jun-04 Jun-05 Mar-01 Mar-05 NOW Dec-05 E Slight shortage of originally stated number of aircraft - merely a delay in rollout 9
Slide 11: Impact of aircraft deployment delays
Impact of aircraft deployment delays Now Everyone Can Fly Capacity loss Capacity loss Actual vs. Forecasted Average # Aircraft Actual vs. Forecast Capacity (million ASK) 25.0 8,000 Shortfall = 15.4% 7,000 20.0 Shortfall = 11.8% 6,000 15.0 5,000 4,000 10.0 3,000 2,000 5.0 1,000 - - Q1 Q2 Q3 Q4 2005 Q
Slide 12: 2. Results Commentary
CONFIDENTIAL Now Everyone Can Fly 2. Results Commentary
Slide 13: Operational Statistics
Operational Statistics Now Everyone Can Fly Strong passenger growth – 44% growth for Q42005 vs. Q42004 – 55% growth for FY2005 vs. FY2004 Effective capacity growth – 76% growth for Q42005 vs. Q42004 – 82% growth for FY2005 vs. FY2004 Superior cost control – 8% improvement yoy for Q4 2.40/ASK U
Slide 14: Operational Statistics – Q4
Operational Statistics – Q4 Now Everyone Can Fly Operational Statistics Q4 -2005 Q4 -2004 ∆ (%) Average Load factor 76% 78% # Passengers 1,203,456 838,247 44% Average fare (RM) 150 126 19% RPK (mn) 1447 843 72% ASK (mn) 1903 1080 76% Rev/RPK (US cents) 3.63 3.56 2% Cost/ASK (US cents) 2.40 2.62 (8%)
Slide 15: Operational Statistics – FY2005
Operational Statistics – FY2005 Now Everyone Can Fly Operational Statistics FY2005 FY2004 ∆ (%) Average Load factor 75% 77% # Passengers 4,414,069 2,838,822 55% Average fare (RM) 143 131 9% RPK (mn) 4881 2771 76% ASK (mn) 6525 3592 82% Rev/RPK (US cents) 3.59 3.74 (4%) Cost/ASK (US cents) 2.22 2.46
Slide 16: Thailand takes off
Thailand takes off Now Everyone Can Fly Thailand Statistics 2005 Q4 Q3 Q2 Q1 Average Load factor 73% 68% 69% 77% 84% # Passengers 1,603,594 389,384 410,005 434,865 369,340 Average fare (RM) 111 125 120 115 91 RPK (mn) 1452 378 351 409 314 ASK (mn) 1982 560 508 544 371 Rev / RPK (US cents) 3.31 3.49
Slide 17: Profitability
Profitability Now Everyone Can Fly ∆ (%) (RM ‘000) Q4-2005 Q4-2004 FY2005 FY2004 qoq yoy Revenue 199,508 113,595 666,250 392,690 76% 70% − EBITDAR 46,206 24,778 204,169 115,402 86% 77% − EBITDA 33,135 13,856 152,819 72,612 139% 110% − EBIT 25,566 8,608 126,103 61,318 197% 106 Profit before tax 26,18
Slide 18: Balance Sheet
Balance Sheet Now Everyone Can Fly Balance Sheet (RM’ million) 899 938 953 Post IPO 150 161 60 3 35 49 46 29 17 -105 -337 (*) -436 -582 Note: (*) For the 15 months ended June 30, 2002 Mar-01 Jun-02 Jun-03 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 SHR Equity Net Debt Î Consistently building shareholder valu
Slide 19: Cash Generating Machine
Cash Generating Machine Now Everyone Can Fly Cashflow from Operating Activities (RM’ million) 113 -19 -12 -3 15 29 Mar-00 Mar-01 Jun-02 Jun-03 Jun-04 Jun-05 -146 (*) Note: (*) For the 15 months ended June 30, 2002 “Normalized CFO” is RM113m. RM259m is paid for aircraft and fuel deposits. Therefore C
Slide 20: 3. Cost Management
CONFIDENTIAL Now Everyone Can Fly 3. Cost Management
Slide 21: Cost Management
Cost Management Now Everyone Can Fly Cost / ASK (US cents) Cost / ASK 3 .4 0 Non Fuel Cost 2 .9 0 2 .4 6 2 .4 0 2 .3 5 2 .2 2 2 .0 8 2 .13 2 .12 1.9 6 1.7 1 1.2 0 1.2 6 1.14 1.0 2 1.0 0 2002 2003 2004 Q1 Q2 Q3 Q4 2005 Malaysian Operations Superior cost containment despite fuel price impact 20
Slide 22: Operating Expenses
Operating Expenses Now Everyone Can Fly Operating Expenses % Revenue (RM ‘000) FY2005 FY2004 2005 2004 Revenue 666,250 392,690 − Staff Cost (78,960) (65,724) 11.7 16.7 − Fuel and Oil (266,610) (102,708) 40.0 26.2 − User & Station Charges (29,383) (9,579) 4.4 2.4 − Maintenance & Overhaul (77,347) (73
Slide 23: Cost / ASK – what changed from last year to this year?
Cost / ASK – what changed from last year to this year? Now Everyone Can Fly 2.22 (2005) vs. 2.46 (2004) {10% improvement} (US cents) Cost per Change Reasons ASK (%) Staff cost 0.31 -34.7 Improved productivity Maintenance & Overhaul 0.31 -42.3 Economies of scale benefits Good Other costs 0.08 -40.9 E
Slide 24: Peer Comparison: the numbers speak for themselves
Peer Comparison: the numbers speak for themselves Now Everyone Can Fly *Jetstar numbers are EBIT, taxed at Qantas parent marginal rate, # Nok Air figures are for three quarters annualised Î AirAsia has the best unit cost in the region and in the industry 23
Slide 25: Peer Comparison – Cost/ASK (ex fuel)
Peer Comparison – Cost/ASK (ex fuel) Now Everyone Can Fly Cost /AS K (ex fuel) vs. S tage L ength 7 EJ 6 5 COST / ASK GO L AT WJ 4 SW 3 RY JB 2 1 0 600 900 1200 1500 1800 2100 2400 St age lengt h (km) Î The true fitness measure for cost efficiency 24
Slide 26: Fuel Hedge FY2006
Fuel Hedge FY2006 Now Everyone Can Fly WTI Crude Oil Capped Swap for FY2006 - Fixed price of US$40/bbl but capped at US$52/bbl - Discount of US$ 12 / bbl for WTI above US$ 52 /bbl - 1HFY06 fully covered, 2HFY06 50% covered - Refining margin (crack) is open to spot market - Insurance cover in place
Slide 27: Fuel Surcharge
Fuel Surcharge Now Everyone Can Fly Fuel surcharge started 14 July AirAsia Flight Schedule (July 2005) – Peninsular Malaysia RM 5 – East Malaysia RM 15 International Peninsular Malaysia 30% 24% – International RM 25 Demand not expected to fall off – experience in Thailand shows demand did not fa
Slide 28: Fuel Surcharge Impact
Fuel Surcharge Impact Now Everyone Can Fly M A S D o m e s t ic L o a d Fa c t o r 100% 80% 60% F uel S ur c har g e Im p l e m e n t e d 40% 20% T unam i S ent im ent t o t r av el r ec o v er s 0% Jan Fe b M ar Apr M ay Ju n Ju l Aug Sep O ct Nov Dec 2004 2005 No fall-off of load factors since f
Slide 29: Impact of Ringgit revaluation
Impact of Ringgit revaluation Now Everyone Can Fly Major cost beneficiary (>70% total cost are US$ denominated) – Fuel requirements (crude & refining margins) – Aircraft cost (lease rates, capital payments for Airbus A320) – Aircraft spare parts and consumables – Landing charges for some internati
Slide 30: 5. Manchester United Sponsorship
CONFIDENTIAL Now Everyone Can Fly 5. Manchester United Sponsorship
Slide 31: Manchester United Sponsorship
Manchester United Sponsorship Now Everyone Can Fly 30
Slide 32: Even football superstars fly with AirAsia
Even football superstars fly with AirAsia Now Everyone Can Fly Teaming up with the World’s highest profile football team Sponsorship for one year; commencing Aug 2005 – global advertising and sponsorship activity, above and below the line – AirAsia & Manchester United will work together in promo
Slide 33: Why sponsor a football team?
Why sponsor a football team? Now Everyone Can Fly The BEST advertising vehicle – Football is the world’s favourite sport (men & women) – English Premier League is the World’s favourite league * 183 countries broadcast EPL TV coverage every week * 570 million worldwide home reach * Over 1000 hours
Slide 34: 6. Outlook
CONFIDENTIAL Now Everyone Can Fly 6. Outlook
Slide 35: Malaysia – Going Strong
Malaysia – Going Strong Now Everyone Can Fly Appetite for travel remains robust Response to new routes & frequency very encouraging Waiting for Government’s directive to rationalize domestic route – significant upside potential from a new improved schedule (reduction of excess capacity and cre
Slide 36: Thailand – turnaround achieved
Thailand – turnaround achieved Now Everyone Can Fly Competition is immobile, average fares improving Fuel surcharge implemented; market responded neutrally Launch pad for new routes to PRC and Indo-China 35
Slide 37: Indonesia
Indonesia Now Everyone Can Fly Start-up losses kept at a minimum Tremendous support seen by exceptionally high load factor (proof that the model has appeal in Indonesia) Operating with two aircraft, will have five aircraft by end 2005 Application of name change to “Indonesia AirAsia” submitt
Slide 38: Ancillary Income Progress
Ancillary Income Progress Now Everyone Can Fly Ancillary Income as % Go Holiday – developing more hotel Revenue selections and locations Advertising – aircraft body advertising, web portal / banners / 6.0 links, in-flight advertising Snack Attack – refreshed menu and food selection 5.5 Cargo
Slide 39: Expansion Strategy
Expansion Strategy Now Everyone Can Fly Increasing frequency to existing destinations – introduced late night and early morning flights (KUL-BKI, KUL-KCH) Introduce new connectivity from existing airports – introduced JHB-MYY Working to introduce new destinations in 2005 – maiden flight to Chi
Slide 40: AirAsia - Concluding Remarks
AirAsia - Concluding Remarks Now Everyone Can Fly Numbers missed, but FY05’s performance was significant given the obstacles we had to face and compared with our peers Fuel remains an issue, but hedge, surcharge, insurance should mitigate this We have far more control over our fleet growth S