Wizz Air Holdings Plc · LSE:WIZZ
Wizz Air — FY2015 Earnings Presentation
45 slides from Wizz Air's earnings presentation, May 27, 2015
Slide 1: Full Year F15 Results
Full Year F15 Results May 27, 2015
Slide 2: Introduction
INTRODUCTION József Váradi Chief Executive Officer 2
Slide 3: Business Highlights for F15
BUSINESS HIGHLIGHTS FOR F15 • Record profitability and margin expansion in F15 • 18% passenger growth to 16.5m passengers • Excellent operational performance • Increasing our cost advantage • Building on our strong market leadership in CEE • Continued focus on customer experience • IPO raising €150m
Slide 4: Update Since the IPO
UPDATE SINCE THE IPO • Fleet increased to 59 aircraft • Continued network growth and diversification • Further rationalization in Ukraine • Fresh new brand for the next decade • Introduction of fully allocated seating • New “Plus Fare” category • Launched pilot academies 4
Slide 5: Financial Performance
FINANCIAL PERFORMANCE Mike Powell Chief Financial Officer 5
Slide 6: Financial Highlights
FINANCIAL HIGHLIGHTS 2015 2014 Change Revenue (€ m) 1,227 1,012 + 21% Net profit for the year (€ m), (IFRS) 183 88 + 109% Underlying net profit after tax* (€ m) 146 87 + 67% CASK* (€ cents) 3.61 3.72 - 3.0% RASK (€ cents) 4.19 4.15 + 1.1% Ancillary revenue per pax (€) 26.3 25.4 + 3.7% Load Factor (%
Slide 7: Record Profit and Margin Expansion
RECORD PROFIT AND MARGIN EXPANSION ASKs (bn) RPKs (bn) Load Factor RASK (€ cent) +20% +21% +1 ppt +1.1% Revenues (€m) CASK (€ cent)* EBITDAR (€m) & Margin* Net Income (€m) & Margin* +21% (3.0%) +41% +67% 146 1,227 1,012 341 3.72 3.61 241 87 27.8% 11.9% 23.9% 8.6% Source: Company information. * Exclu
Slide 8: Strong Revenue Growth
STRONG REVENUE GROWTH Revenue Development Innovative revenue generation driven by: €m 1,227 • F15 passenger volumes +18% • Ticket revenue per pax €48.2 (+1.8%) • Ancillary revenue per pax €26.3 (+3.7%) 1,012 433 • Total revenue per pax €74.5 (+2.5%) 851 • Average stage length +2.6% 353 766 274 214 R
Slide 9: Diverse Revenue Mix
DIVERSE REVENUE MIX Western Europe CEE 16.3% 12.3% UK Romania 9.6% 11.5% Italy Poland 5.3% 7.7% Germany Hungary 4.7% 3.8% Spain Bulgaria 3.8% 3.0% Sweden Ukraine 3.4% 2.3% Norway Lithuania 2.8% 1.5% Netherl. Macedonia 1.7% Israel 1.3% France 1.7% 1.1% Belgium Serbia Other(1) 1.8% 1.0% Czech R. 51% 0
Slide 10: Ancillary Revenue Growth
ANCILLARY REVENUE GROWTH Load Factor and Volume Growth 19 Revenue Breakdown per Passenger (€) F10 F11 F12 F13 F14 F15 Ticket 41.5 43.0 49.1 46.8 47.3 48.2 +16 % Ancillary 14.5 16.8 19.0 22.2 25.4 26.3 +81 % Total 56.0 59.8 68.1 69.1 72.7 74.5 +33 % Source: Company Information 10
Slide 11: Disciplined Cost Management
DISCIPLINED COST MANAGEMENT CASK* and CASK* ex-fuel Development CASK reduction driven by: € cent • Total CASK -3.0% 3.88 • Fuel CASK -8.4% 3.74 3.72 3.61 3.51 • CASK ex-fuel +0.5% 3.25 • Fuel initiatives to support CASK reduction 1.58 1.19 1.49 1.48 1.36 • Active airport mix management 0.95 • Other
Slide 12: CASK – Key Drivers
CASK – KEY DRIVERS € cent € cent % 2015 2014 change Staff costs 0.28 0.28 (0.2%) Fuel costs 1.36 1.48 (8.4%) Distribution and marketing 0.06 0.07 (8.4%) Maintenance, materials and repairs 0.21 0.20 6.6% Aircraft rentals 0.47 0.46 1.6% Airport, handling and en-route charges 1.02 1.03 (0.9%) Depreciat
Slide 13: EBITDAR Margin of 27.8%
EBITDAR MARGIN OF 27.8% €m EBITDAR* Growth Strong EBITDAR improvement: 18% 19% 19% 24% 28% Margin • Volume growth • Rising unit revenues (RASK +1.1%) 341 • Lower unit costs (-3.0% total, +0.5% ex-fuel CASK) EBITDAR* Bridge 241 €m 341 158 146 215 241 105 36 (36) (14) (47) (18) F11 F12 F13 F14 F15 EBI
Slide 14: Strong Cash Flow
STRONG CASH FLOW 500 450 (14 ) 11 400 149 34 (12) 350 300 (50 ) € millions 167 250 461 450 449 200 375 353 326 326 150 100 186 186 50 0 Opening Free Operating Depreciation Net Working CAPEX Net IPO Financial Others Closing Free Cash Profit / Capital Proceeds expenses, Cash Amortisation incl. taxes S
Slide 15: Summary Balance Sheet
SUMMARY BALANCE SHEET € million 2015 2014 Property, plant and equipment 247 222 Restricted cash1 74 42 Derivative financial instruments1 61 0 Trade and other receivables1 168 116 Cash and cash equivalents 449 186 Other assets1 23 19 Total assets 1,021 585 Equity 460 160 Trade and other payables 124
Slide 16: Liquidity and Leverage
LIQUIDITY AND LEVERAGE Cash as % of LTM Revenue Leverage* Cash and Cash Equivalents (€m) 36% 18% 12% 18% 14% 11% 16% 17% 13% Company information. *Leverage is defined as net debt adjusted to include capitalised operating lease obligations divided by earnings before interest tax depreciation, amortis
Slide 17: Hedge Programme
HEDGE PROGRAMME Jet Fuel US Dollar Hedge Coverage 69% 61% 51% 18% Average capped rate $821 $676 $1.30 $1.16 Average floor rate $801 $672 $1.26 $1.11 Zero cost collar instruments Fuel Caps Sensitivities (before hedges): • A $10 (per metric ton) movement price of jet fuel impacts F16 fuel bill by $6.3
Slide 18: Q4 Financial Highlights
Q4 FINANCIAL HIGHLIGHTS (€’000) Q4 2015 Q4 2014 Change Passenger ticket revenue 139,373 124,003 + 12% Ancillary revenue 96,011 73,861 + 30% Total revenue 235,384 197,864 + 19% Fuel costs 83,214 82,003 + 1% Other expenses 157,864 130,969 +21% Total operating expenses 244,078 212,972 + 15% Operating P
Slide 19: Improved Winter Performance
IMPROVED WINTER PERFORMANCE H2 Operating profit* development Drivers • Disciplined capacity management • Benign competitive environment going into winter 2014/15 • Modest positive Easter effect • Relatively mild winter 2014/15 • Maturing winter ski/sun routes • H2 capacity growth 18% F11 F12 F13 F14
Slide 20: Outlook
OUTLOOK 2016 Financial Year Other Comments Capacity growth (ASKs) 17 % H1: 18 %, H2: 16%. Average stage length Unchanged Load Factor Modest improvement Fuel CASK -1.5% Assumes spot price of $625/MT Ex-fuel CASK 1.0% Assumes $/€1.10 Total CASK Unchanged Revenue per ASK Down low single digit Pass thro
Slide 21: Business Review
BUSINESS REVIEW József Váradi Chief Executive Officer 21
Slide 22: CEE – A Unique Opportunity for Growth
CEE – A UNIQUE OPPORTUNITY FOR GROWTH Large Addressable Market Weak Legacy Deregulation GDP Growth Carriers Growing Growing LCC Market Propensity to Air Share Travel kUTASI 22
Slide 23: Compelling Growth Prospects
COMPELLING GROWTH PROSPECTS Growing Propensity for Air Travel + Higher LCC Penetration Total Seats / Population LCC Penetration 1.6 40% 1.5 35% 30% 1.0 20% 20% 0.5 0.4 10% 0.0 0% CEE Western Europe CEE Western Europe Note: Western Europe defined as EU-15 plus Cyprus, Iceland, Malta, Norway and Switz
Slide 24: Strong Anticipated Economic Growth
STRONG ANTICIPATED ECONOMIC GROWTH GDP Growth Middle Class Proportion(1) CAGR 2014-2017 2014, as % of Population (2017E) GDP per Capita GDP per Capita Growth 2014, in US$ CAGR 2014-2017 7,536 (2017E) Source: IMF as of January 2015, EIU, Capstats. Note: CEE includes Poland, Hungary, Romania, Czech Re
Slide 25: Market Position
MARKET POSITION Number 1 Number 2 Number 3 LCC Market Carrier Carrier Carrier CEE Ryanair Easyjet Poland Ryanair Norwegian Romania Blue Air Ryanair Hungary Ryanair Easyjet Czech Republic Easyjet Wizz Air Ryanair Lithuania Ryanair Wizz Air Norwegian Bulgaria Wizz Air Easyjet Norwegian Latvia Ryanair
Slide 26: De-risked Growth Profile
DE-RISKED GROWTH PROFILE F15 Capacity Increasing Frequencies 67.1 % Joining Existing Airports 27.2 % New Airports 5.6 % New Destination Countries 0.1 % Source: Company Information 26
Slide 27: Summer 2015 vs. Summer 2014
SUMMER 2015 VS. SUMMER 2014 Base Country Sep’ Sep’ 16 New Destinations (# of Aircraft) 15 14 Poland 19 15 Romania 15 14 UK +3 Hungary 8 7 Latvia Bulgaria 5 4 Netherlands +2 Lithuania 4 3 Macedonia 3 2 Romania +2 Lithuania Latvia 2 1 Ukraine 1 2 Germany +1 Serbia 1 1 Czech Republic 1 1 Norway +1 Pola
Slide 28: Fleet Order Supporting Growth
FLEET ORDER SUPPORTING GROWTH F15 F16 F17 F18 Average Seat Count 180 183 190 194 Share with Winglets 36% 48% 55% 60% 88 78 67 55 Source: Company Information 28
Slide 29: Delivering Cost Leadership
DELIVERING COST LEADERSHIP CASK (€ cent) Challenges €3.72 €3.61 • Inflationary pressures Fuel costs • Infrastructure costs • US dollar strength Airport, handling, en-route Opportunities Aircraft rentals • Fleet development Depreciation & amortisation Maintenance, materials & repairs • Economies of s
Slide 30: Maximising Revenue Through Ancillary Income
MAXIMISING REVENUE THROUGH ANCILLARY INCOME Lowest Possible Ticket Prices + • Maximise Appeal to Drive Growth • Influence Customer Behaviour Large cabin baggage • Reduce Seasonality fees • Increase Share of Wallet • Leverage Brand 30
Slide 31: Even Better Customer Experience
EVEN BETTER CUSTOMER EXPERIENCE Recent changes Coming in F16 • New and exciting • Website upgrades destinations • Launch mobile site • Fully allocated • Lowest Fare Finder function seating • Wizz Tours package holidays available • “Plus Fare” categories in more countries throughout 2015 • Mobile enh
Slide 32: Wizz Brand World
WIZZ BRAND WORLD RRVANID PLUS MVANUFESTO BELIEVE THAT WE TRAVEL PROVIDES THAT CA NM, = & OTHE WORLD LTy ] RELIABLE U 5 WV VI \ That’s why, at WIZZ, we’re committed to making sure that everyone, everywhere can benefit from travel at the lowest prices possible and to setting high benchmarks in safety
Slide 33: Closing Comments
CLOSING COMMENTS • ULCC is the right model for our markets • Delivering substantial growth in revenue and profit • Dynamics of the market remain compelling • Market leader in CEE • Fleet plan supports our growth and cost goals • Well placed to deliver long term shareholder value 33
Slide 34: Thank You for Your Attention
THANK YOU FOR YOUR ATTENTION
Slide 35: Appendix
APPENDIX CONFIDENTIAL
Slide 36: Underlying Performance
UNDERLYING PERFORMANCE Operating Profit for Profit the year 2015 2014 2015 2014 Statutory (IFRS) profit measure 167.3 109.8 183.2 87.7 Exceptional items: Settlement received from card acquirer (6.3) (6.3) Cost of extending and revaluing convertible debt 2.5 Translation gain relating to closure of Wi
Slide 37: 2015 Quarterly Performance
2015 QUARTERLY PERFORMANCE Q1 F15 Q2 F15 Q3 F15 Q4 F15* Total Passenger ticket revenue 192,951 294,976 166,494 139,373 793,794 Ancillary revenue 102,201 137,171 98,106 96,011 433,490 Total revenue 295,153 432,148 264,600 235,384 1,227,284 Staff costs 18,346 20,463 21,246 21,793 81,848 Fuel costs 101
Slide 38: 2015 Quarterly Operational KPI
2015 QUARTERLY OPERATIONAL KPI CAPACITY Q1 F15 Q2 F15 Q3 F15 Q4 F15 Number of aircraft at end of period 52 54 55 55 Equivalent aircraft 48.98 52.97 53.81 54.37 Utilisation 13.21 13.79 11.58 11.71 Total block hours 58,882 67,228 57,323 57,278 Total flight hours 51,130 58,303 49,678 49,625 Revenue dep
Slide 39: Income Statement
INCOME STATEMENT 2015 2014* € million € million Passenger ticket revenue 793.8 658.7 Ancillary revenue 433.5 353.1 Total revenue 1,227.3 1,011.8 Staff costs (83.4) (68.3) Fuel costs (396.6) (360.6) Distribution and marketing (18.8) (10.9) Maintenance materials and repairs (62.0) (48.4) Aircraft rent
Slide 40: Balance Sheet
BALANCE SHEET € million ASSETS 2015 2014 Change Non-current assets 431.5 320.9 110.6 Property, plant and equipment 247.1 221.8 25.3 Restricted cash 70.4 38.6 31.8 Other non-current assets 114.0 60.5 53.5 Current assets 589.0 264.3 324.7 Restricted cash 3.2 3.8 (0.6) Cash and cash equivalents 448.6 1
Slide 41: Cash Flow
CASH FLOW 2015 2014* € million € million Profit before tax 191.7 95.4 Adjustments for: Depreciation 32.5 24.2 Amortisation 1.4 1.2 Financial income (44.2) (0.4) Financial expense 8.1 12.9 Loss on sale of property, plant and equipment - - Share based payment charges 0.2 0.1 Cash flows from operating
Slide 42: Selected KPI's
SELECTED KPI’S 2015 2014 CAPACITY Number of aircraft at end of period 55 46 Equivalent 52.53 44.4 Utilisation 12.6 12.4 Total block hours 240,711 200,991 Total flight 208,736 174,515 Revenue 105,627 90,293 Average departures per day per aircraft 5.51 5.57 Seat capacity 19,012,860 16,252,560 Average
Slide 43: Selected Financial KPI's
SELECTED FINANCIAL KPI’S 2015 2014 Yield (€ cents) 4.84 4.85 Average revenue per seat (€) 64.55 62.26 Average revenue per passenger 74.46 72.65 RASK (€ cents) 4.19 4.15 CASK (including exceptional item) (€ cents) 3.62 3.70 CASK (excluding exceptional item) (€ cents) 3.61 3.72 Ex-fuel CASK (including
Slide 44: Currency Breakdown
CURRENCY BREAKDOWN Revenues Revenues Operating Costs Source: Company Information 44 44
Slide 45: Disclaimer
DISCLAIMER This presentation has been prepared by Wizz Air Holdings Plc (the Company). By receiving this presentation and/or attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations. This presentation is intended