Singapore Airlines Ltd. · SGX:C6L

Singapore Airlines — H1 FY2018-19 Earnings Presentation

47 slides from Singapore Airlines's earnings presentation, Nov 14, 2018

  1. Slide 1: SIA Analyst/Media Briefing Q2 and 1H FY2018-19 Results

    SIA ANALYST/MEDIA BRIEFING Q2 and 1H FY2018-19 Results Slide 1 14 Nov 2018

  2. Slide 2: The Parent Airline Q2 and 1H FY18/19 Results

    THE PARENT AIRLINE Q2 AND 1H FY18/19 RESULTS

  3. Slide 3: The Parent Airline Company (PAX) Q2 & 1H FY18/19

    THE PARENT AIRLINE COMPANY (PAX) Q2 & 1H FY18/19 Q2 Change 1H Change FY18/19 % FY18/19 % Available Seat-KM (M) 30,735.7 +2.3 60,519.6 +2.6 Revenue Passenger-KM (M) 26,173.6 +6.5 50,602.6 +6.0 Passenger Load Factor (%) 85.2 +3.4 pts 83.6 +2.7 pts Pax Yield (¢/pkm) 9.9 -1.0 9.9 -2.0 RASK (¢/ask) 8.4 +

  4. Slide 4: Parent Airline (PAX) Monthly RASK

    THE PARENT AIRLINE COMPANY (PAX) Q2 & 1H FY18/19 Monthly RASK 9.0 ¢/ask 2016/17 2017/18 2018/19 8.9 8.6 8.6 8.8 8.5 8.5 8.5 8.5 8.5 8.5 8.5 8.3 8.3 8.3 8.2 8.2 8.1 8.3 8.2 8.2 8.1 8.1 8.1 8.0 8.0 8.0 8.0 7.7 7.9 7.9 7.6 7.6 7.5 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Slide 4

  5. Slide 5: The Parent Airline Company (Cargo) Q2 & 1H FY18/19

    THE PARENT AIRLINE COMPANY (CARGO) Q2 & 1H FY18/19 Q2 Change 1H Change FY18/19 % FY18/19 % Cargo Capacity Tonne-KM (M) 2,790.0 -0.4 5,591.7 +1.4 Cargo Load Tonne-KM (M) 1,771.2 -1.1 3,492.5 -2.3 Cargo Load Factor (%) 63.5 -0.5 pt 62.5 -2.3 pts Cargo Yield (¢/ltk) 32.2 +9.9 31.6 +9.7 Cargo Unit Cost

  6. Slide 6: Parent Airline (Cargo) Monthly Cargo Yields

    THE PARENT AIRLINE COMPANY (CARGO) Q2 & 1H FY18/19 Monthly Cargo Yields 35 ¢/ltk 2016/17 2017/18 2018/19 34.1 34 33 32.7 32.3 32.1 31.8 31.8 32 31 30.6 30.6 30.2 29.9 29.8 30 29.1 29.1 30.2 29.9 28.8 29.6 29 28.6 28.2 28.1 27.8 28 27.5 26.9 27.0 28.1 26.7 27.6 27.7 27 26.5 26.6 26 25 Apr May Jun Jul

  7. Slide 7: The Parent Airline Company Q2 & 1H FY18/19

    THE PARENT AIRLINE COMPANY Q2 & 1H FY18/19 Q2 Q2 Better/ 1H 1H Better/ FY18/19 FY17/18* (Worse) FY18/19 FY17/18* (Worse) ($M) ($M) (%) ($M) ($M) (%) Total Revenue 3,280 3,147 4.2 6,373 6,296 1.2 Total Expenditure 3,043 2,828 (7.6) 5,955 5,607 (6.2) -- Net fuel cost 944 777 (21.5) 1,828 1,549 (18.0)

  8. Slide 8: Parent Airline Cost Composition 1H FY18/19

    THE PARENT AIRLINE COMPANY 1H FY18/19 Cost Composition ($’M) Staff Costs Handling Charges 940.4 595.6 LPO* Charges (+30.6, +3.4%) (-10.7, -1.8%) 340.6 (+2.1, +0.6%) AMO Costs 384.6 10.0% 15.8% (-22.5, -5.5%) Passenger Costs 5.7% 6.5% 330.2 5.5% (+2.5, +0.8%) 12.1% 5.4% Aircraft depreciation and Leas

  9. Slide 9: Passenger Unit Cost Analysis

    THE PARENT AIRLINE COMPANY 1H FY18/19 (¢/ask) Passenger Unit Cost Analysis 10 7.9 8.2 8 Unit Fuel Cost 2.80 (+16.2%) 2.41 6 1.44 Unit Staff Cost 1.47 (+2.1%) 4 Unit Other Cost 2 4.08 3.95 (-3.2%) 0 1H FY17/18 1H FY18/19 Slide 9

  10. Slide 10: Cargo Unit Cost Analysis

    THE PARENT AIRLINE COMPANY 1H FY18/19 (¢/ctk) Cargo Unit Cost Analysis 18 16.4 16.4 16 14 5.38 Unit Fuel Cost 6.06 (+12.6%) 12 10 1.06 Unit Staff Cost 0.91 (-14.2%) 8 6 9.94 Unit Other Cost 9.46 (-4.8%) 4 2 0 1H FY17/18 1H FY18/19 Slide 10

  11. Slide 11: SIA Group Q2 and 1H FY18/19 Results

    SIA GROUP Q2 AND 1H FY18/19 RESULTS

  12. Slide 12: SIA Group Q2 & 1H FY18/19

    SIA GROUP Q2 & 1H FY18/19 Q2 Q2 Better/ 1H 1H Better/ FY18/19 FY17/18* (Worse) FY18/19 FY17/18* (Worse) ($M) ($M) (%) ($M) ($M) (%) Total Revenue 4,062 3,848 5.6 7,907 7,712 2.5 Total Expenditure 3,829 3,491 (9.7) 7,481 6,950 (7.6) -- Net fuel cost 1,156 930 (24.3) 2,235 1,856 (20.4) Fuel cost 1,308

  13. Slide 13: Group Revenue

    SIA GROUP Q2 & 1H FY18/19 Group Revenue ($ million) 4,200 1H 18/19 4,062 Revenue 4,000 $7,907M 3,864 3,848 3,845 3,800 3,600 Year-on-Year $9M $195M 3,400 -0.1% +2.5% 3,200 Q1 Q2 Q1 Q2 FY17/18 FY17/18 FY18/19 FY18/19 Slide 13

  14. Slide 14: Group Revenue (excluding non-recurring)

    SIA GROUP Q2 & 1H FY18/19 Group Revenue ($ million) (exclude non-recurring) 4,200 1H 18/19 4,062 Revenue 4,000 $7,907M 3,848 3,845 3,800 175 3,689 3,600 Year-on-Year $9M $370M 3,400 -0.1% +4.9% 3,200 Q1 Q2 Q1 Q2 FY17/18 FY17/18 FY18/19 FY18/19 Non-recurring revenue Slide 14

  15. Slide 15: Revenue Breakdown 1H FY18/19

    SIA GROUP 1H FY18/19 Revenue Breakdown ($’M) Passenger Flown Revenue 6,294.5 (+345.8, +5.8%) Cargo and Mail 1,104.0 79.6% (+75.8, +7.4%) 14.0% Passenger Other Revenue 209.3 (-113.3, -35.1%) Engineering Services Others 226.1 72.7 (-19.5, -7.9%) (-94.3, -56.5%) Slide 15

  16. Slide 16: Group Expenditure

    SIA GROUP Q2 & 1H FY18/19 Group Expenditure ($ million) 4,000 1H 18/19 Expenditure 3,829 3,800 $7,481M 3,652 3,600 124 124 Year-on-Year $531M 3,400 3,491 (+7.6%) 3,459 3,200 Q1 Q2 Q1 Q2 FY17/18 FY17/18 FY18/19 FY18/19 Restatement for prior year due to adoption of IFRS Slide 16

  17. Slide 17: Cost Composition 1H FY18/19

    SIA GROUP 1H FY18/19 Cost Composition ($’M) Depreciation and AMO Costs Lease Rentals 477.8 982.3 Handling Charges (+25.5, +5.6%) (+1.6, +0.2%) 660.5 (+8.1, +1.2%) Staff Cost LPO* Charges 1,357.8 437.7 79.6% 6.4% 13.1% (+29.8, +2.2%) (+13.4, +3.2%) 8.8% 14.0% 5.9% 18.2% Passenger Costs 4.8% 361.8 12.

  18. Slide 18: Composition of Increase in Fuel Cost

    SIA GROUP 1H FY18/19 Composition of Increase in Fuel Cost (After Hedging) ($ million) 2,700 +732 -313 2,500 2,300 -69 +29 2,235 Hedging gain versus Weaker Higher uplift 2,100 loss USD +379 against SGD (+20.4%) 1,900 1,856 Higher weighted average fuel price 1,700 1H FY17/18 Price Hedging Exchange Vol

  19. Slide 19: Group Operating Profit

    SIA GROUP 1H FY18/19 Group Operating Profit ($ million) 500 1H 18/19 405 Op Profit 400 357 $426M 300 233 193 200 Year-on-Year $336M 100 (-44.1%) 0 Q1 Q2 Q1 Q2 FY17/18 FY17/18 FY18/19 FY18/19 Slide 19

  20. Slide 20: Group Operating Profit (excluding non-recurring revenue)

    SIA GROUP 1H FY18/19 Group Operating Profit ($ million) (excluding non-recurring 500 revenue) 1H 18/19 Op Profit 400 357 $426M 175 300 233 193 200 230 Year-on-Year $161M 100 (-27.4%) 0 Q1 Q2 Q1 Q2 FY17/18 FY17/18 FY18/19 FY18/19 Non- recurring Slide 20 revenue

  21. Slide 21: Composition of Decrease in Operating Profit

    SIA GROUP 1H FY18/19 Composition of Decrease in Operating Profit ($ million) 1,400 Higher Lower Higher cargo engineering Higher pax flown revenue net 1,200 flown revenue -175 fuel revenue -19 costs +76 -379 1,000 Absence of 1H FY17/18 800 762 non-recurring Higher ex- +346 revenue from: fuel costs •

  22. Slide 22: Group Operating Profit by Company

    SIA GROUP 1H FY18/19 Group Operating Profit 1H 1H ($ million) FY18/19 FY17/18R1 Better/(Worse) Better/(Worse) ($’M) ($’M) ($’M) (%) SIAR2 418 689 (271) (39.3) SilkAir (3) 22 (25) n.m. Scoot (10) 5 (15) n.m. SIAEC 22 39 (17) (43.6) R1 Restated depreciation for prior year due to adoption of IFRS R2 Ad

  23. Slide 23: Group Profit Attributable to Owners of the Parent

    SIA GROUP Q2 & 1H FY18/19 Group Profit Attributable to ($ million) Owners of the Parent 400 1H 18/19 338 Net Profit 300 293 $196M 200 140 Year-on-Year $435M 100 56 (-68.9%) 0 Q1 Q2 Q1 Q2 FY17/18 FY17/18 FY18/19 FY18/19 Slide 23

  24. Slide 24: Adjusted Group Profit Attributable to Owners

    SIA GROUP Q2 & 1H FY18/19 Adjusted Group Profit ($ million) Attributable to Owners of 400 the Parent 1H 18/19 Adj Net Profit 293 300 $312M 145 200 172 193 140 Year-on-Year 116 $174M 100 (-35.8%) 0 Q1 Q2 Q1 Q2 FY17/18 FY17/18 FY18/19 FY18/19 Non-recurring Non-recurring Slide 24

  25. Slide 25: Group Profit Attributable to Owners of the Parent 1H FY18/19

    SIA GROUP 1H FY18/19 ($ million) Group Profit Attributable to 700 Owners of the Parent 631 -336 600 Mainly due to 500 non-recurring major accounting changes from Virgin Australia -435 400 (-116) (-68.9%) -97 300 Lower operating profit +40 -15 -27 196 200 Absence of Q1 FY17/18 Higher losses from asso

  26. Slide 26: Per Share Data

    SIA GROUP PER SHARE DATA 1H FY18/19 1H FY17/18 EBITDAR Per Share ($) 1.15 1.53* Earnings Per Share (¢) 16.6 53.4* Interim Dividend Per 8.0 10.0 Share (¢) At 30 Sep’18 At 31 Mar’18 Net Asset Value Per 11.87 10.88* Share ($) *Restated due to IFRS Slide 26

  27. Slide 27: Fleet Development

    SIA GROUP FLEET DEVELOPMENT SIA SilkAir Scoot SIA (Pax) (Cargo) Operating Fleet as at 30 September 2018 110 32 44 7 IN: A350-900ULR +7 A350-900MH +3 787-10 +2 737 MAX 8 +1 A320 +6^ OUT: A330-300 -2 777-200ER -1 A320 -2 Operating Fleet as at 31 March 2019 119 33 48 7 ^ Delivery of two new A320neo air

  28. Slide 28: Capacity Growth

    SIA GROUP CAPACITY GROWTH Projected capacity growth for FY18/19 vs FY17/18  Passenger operations (in ASK): SIA 5% SilkAir 4% Scoot 16% Group 7%  Cargo operations (in CTK) : flat Slide 28

  29. Slide 29: Capital Expenditure

    SIA GROUP CAPITAL EXPENDITURE ($’million) FY19/20 FY20/21 FY21/22 FY22/23 FY23/24 Aircraft 5,900 6,000 5,300 4,200 3,400 Other Assets 500 400 400 300 300 Total 6,400 6,400 5,700 4,500 3,700 Slide 29

  30. Slide 30: Fuel Hedging Position

    SIA GROUP FUEL HEDGING POSITION 2H FY18/19 Jet Fuel Brent Percentage hedged (%) 58 - Average hedged price (USD/bbl) 71 FY19/20 Jet Fuel Brent Percentage hedged (%) 17 35 Average hedged price (USD/bbl) 79 56 FY20/21 to FY23/24 Jet Fuel Brent Percentage hedged (%) Up to 46% - Average hedged price (USD

  31. Slide 31: Strategic Developments

    STRATEGIC DEVELOPMENTS

  32. Slide 32: Key Strategies

    KEY STRATEGIES Strengthening Premium Positioning Portfolio Multi-Hub New Business Opportunities Slide 32

  33. Slide 33: Strengthening Premium Positioning

    STRENGTHENING PREMIUM POSITIONING Launch of non-stop New York and Los Angeles flights with world’s first A350-900ULRs  Capable of long-range missions of up to 9,700 nautical miles, or over 20 hours non-stop  Partnership with Canyon Ranch to enhance customer experience and well-being  Expanded IFE

  34. Slide 34: Strengthening Premium Positioning: Fleet and SilkAir Upgrade

    STRENGTHENING PREMIUM POSITIONING Fleet renewal and investment  Placed orders for more than US$50B worth of aircraft as a Group  Caters for additional growth and fleet modernisation through the next decade  New-generation aircraft enabling new markets to be served in an economically-viable manner

  35. Slide 35: Portfolio

    PORTFOLIO Growing our US footprint  5th US city in SIA network – Seattle (Sep’19)  Non-stop ULR services to SFO, LAX and EWR  57x weekly flights to USA, of which 31x are non-stop (vs 33x weekly one-stop in Jun’16) Scoot going from strength to strength  Inducted first of 39 A320neo aircraft; init

  36. Slide 36: The SIA Group serves 140 destinations in 37 countries and territories

    PORTFOLIO The SIA Group serves 140 destinations in 37 countries and territories Slide 36

  37. Slide 37: Multi-Hub

    MULTI-HUB  Investments in strategic markets  Complements and strengthens Singapore hub through synergies  22 destinations in India; 22 narrow-body aircraft  Plans to induct 50 A320/A321neo and 6 787-9  Preparing for international operations  9 destinations; 5 777-200s  First 737-800 to be ind

  38. Slide 38: New Revenue & Business Opportunities

    NEW REVENUE & BUSINESS OPPORTUNITIES SIA-CAE flight training centre  Equally-owned JV for pilot training in Singapore  Operations commenced in Aug’18  Provides full range of initial type rating and recurrent training programmes for Boeing 737 MAX, 747, 777 and 787 aircraft types Travel Retail Joi

  39. Slide 39: Digital Transformation

    DIGITAL TRANSFORMATION Cultivate Digital Culture  Company-wide training programmes and participation by staff in innovation projects across the Group Build Digital Capabilities  Extensive IT-related recruitment and a shift to agile delivery of IT projects Revamp Technical Infrastructure  Large-sc

  40. Slide 40: Digital Transformation: KrisPay and Alibaba

    DIGITAL TRANSFORMATION KrisPay: Innovative miles-based digital wallet  World’s first blockchain-based airline loyalty digital wallet  Technology developed in collaboration with KPMG Digital Village and Microsoft Strategic partnership with Alibaba Group  Partnership unlocks access to the more than

  41. Slide 41: Transformation

    TRANSFORMATION Slide 41

  42. Slide 42: Transforming Customer Experience: SilkAir Integration

    Transforming INTEGRATION Customer Experience OF SILKAIR IS IN PROGRESS  Set up dedicated Project Management Office (PMO) in SIA to oversee entire SilkAir integration programme – 12 workstreams established to drive integration activities, including product/service definition, operational alignment,

  43. Slide 43: Transforming Our Customer Experience

    TRANSFORMING Transforming OUR Experience Customer CUSTOMER EXPERIENCE  Understanding our customers better Segment by cabin/ travel 6 personas and >24 segments for purpose different purposes - F/J/Y, Business vs Leisure - Deeper understanding of value drivers, customer lifetime value, emotions, etc

  44. Slide 44: Transforming Our Revenue Generation

    TRANSFORMING OUR REVENUE GENERATION  Improving our speed-to-market – Fares filed within 1-day, expanded 25% – For new flights, fares filed Fares filed from all stations in days progressively over weeks  Improving our (marketing) accuracy – ~20% improvement in email conversion rate  Strengthening

  45. Slide 45: Transformation Is Also Yielding Results Across Other Areas

    TRANSFORMATION IS ALSO YIELDING RESULTS ACROSS OTHER AREAS OF THE ORGANISATION …  Reinforcing Operational Excellence – Improving productivity (e.g ~50% improvement in inflight waste reduction, ~5% productivity gain from better crew planning efficiency, ~20% improvement in call handling time) – Redu

  46. Slide 46: Our Transformation Efforts Will Continue

    OUR TRANSFORMATION Transforming EFFORTS WILL Customer Experience CONTINUE Back to #1 WORKING TOWARDS….  Two airline brands, working together  Personalised, great & effortless experience for every customer  Single view of operations  Digital leader in travel experience & aviation industry  Flatt

  47. Slide 47: Thank You

    THANK YOU Slide 47

Singapore Airlines — H1 FY2018-19 Earnings Presentation on 6ix