Aeroflot · RUS:AFLT
Aeroflot — Q1 2019 Earnings Presentation
42 slides from Aeroflot's earnings presentation, May 31, 2019
Slide 1: Aeroflot Group Q1 2019 IFRS Results
AEROFLOT GROUP Q 1 2 0 1 9 I F R S R E S U LT S 31 May 2019 Speakers: Andrey Chikhanchin – Deputy CEO for Commerce and Finance Andrey Panov – Deputy CEO for Strategy and Marketing Ivan Batanov – Head of Revenue Management
Slide 2: Disclaimer
Disclaimer This document has been prepared by PJSC “Aeroflot” (the “Company”). By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following. This document does not constitute or form part of any advertisement of securities, any offer or i
Slide 3: Aeroflot Group Q1 2019 Highlights
Aeroflot Group Q1 2019 Highlights + 16.2 % + 17.5 % + 5.5 % + 23.3 % 3.56 138 bn 3.37 112 bn 12.8 mln 43.0 bn 11.0 mln 36.6 bn PAX ASK Blended Yield (RUB) Revenue (RUB) Q1 2018 Q1 2019 • In Q1 2019, Aeroflot Group has continued operational development via expanding capacity on the back of opportunit
Slide 4: Market Update and Operating Results
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 4
Slide 5: Competitive Dynamics
Competitive Dynamics Passenger Traffic: Market vs Aeroflot Group Change in Airlines’ Passenger Numbers Russian Air Transportation Market (million PAX) mln PAX, Q1 2019 International Routes Change in PAX million incl. PAX of Russian and Foreign Carriers and intl. transit PAX Domestic Routes +1.8 10.7
Slide 6: Aeroflot Group Multi-Brand Strategy
Aeroflot Group Multi-Brand Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth • Q1 2019 +14.3% • Flagship carrier Moscow • Premium product (4 Stars) (Sheremetyevo) 8.5 • High income and middle class 7.4 Premium 8.5 66.2% • Hub and spoke model Q1 2018 Q1 2019 • Scheduled network
Slide 7: Aeroflot Airline Domestic and International Transit
Aeroflot Airline Domestic and International Transit Growing Connectivity of Aeroflot Airline’s Flights1 ... … Results into a Flexible Approach to Transit Flows Average weekly frequency per route – Aeroflot airline Considerable share of transit of Aeroflot airline in Sheremetyevo Growth 19.1x 21.2x 2
Slide 8: Pobeda Airline: Acceleration of Growth
Pobeda Airline: Acceleration of Growth Overview of Pobeda Pobeda’s Network (Summer 2019) • Operating from Vnukovo airport (3rd Moscow airport by PAX) Petrozavodsk Network Surgut • Network comprising 108 routes (62 unique for the Group) Helsinki 14 Saint Petersburg Kirov Perm • 28 Boeing 737-800 NG (
Slide 9: Network and Schedule Overview
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 9
Slide 10: Aeroflot Group Network
Aeroflot Group Network # of Flights Evolution by Region1 Geographic Network (Q1 2019, y-o-y) Murmansk Salekhard Arkhangelsk Russia 6.7 % Saint Petersburg Syktyvkar Surgut New Urengoy Khanty Mansiysk Yakutsk Nizhnekamsk Nizhnevartovsk Perm Magadan Nizhny Novgorod Tyumen Ekaterinburg Kemerovo MOSCOW S
Slide 11: Aeroflot Group Scheduled Flights Revenue Units
Aeroflot Group Scheduled Flights Revenue Units Q1 Yield (PAX Revenue / RPK) Q1 RASK (PAX Revenue / ASK) RUB RUB 1.9% 1.6% 4.9% 4.4% 3.74 8.9% 2.84 3.67 2.80 2.77 9.7% 3.60 2.66 2.65 3.39 3.43 2.44 3.09 Domestic International Total Domestic International Total % Y-o-Y increase 2018 2019 Note: Data pr
Slide 12: Fleet Overview
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 12
Slide 13: Aeroflot Group Fleet Breakdown
Aeroflot Group Fleet Breakdown Aeroflot Group Fleet Overview Breakdown by Aircraft 1 Operated by Total as of Total as of Change vs. Aircraft Type Aeroflot Subsidiaries 31-Mar-19 31-Dec-18 31-Dec-18 Wide-body 16% Wide-body 41 19 60 58 2 Airbus A330 22 - 22 22 - Narrow- body Boeing 777 19 10 29 27 2 (
Slide 14: Fleet Expansion Strategy
Fleet Expansion Strategy Delivery/Phase-out Schedule1 Aeroflot Group Fleet as at Year-end2 Number of aircraft Type of Q1 2019 Fleet as at FY 2019E 1 31.03.2019 aircraft Delivery Phase out Delivery Phase out Wide-body (long-haul) 2 - 60 2 (3) ~520 A-330 - - 22 - (3) B-777 2 - 29 2 - B-747 - - 9 - - N
Slide 15: Financial Performance
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 15
Slide 16: Financial Highlights: Q1 2019
Financial Highlights: Q1 2019 Q1 2018 Q1 2018 RUB mln Q1 2018 Difference Q1 20192 Change reported1 restated2 (where applicable) restated2 10,985 10,985 0 Passenger Traffic (mln PAX) 10,985 12,764 16.2% 111,942 111,942 0 Revenue 111,942 138,041 23.3% 96,896 96,896 0 PAX Traffic Revenue 96,896 119,255
Slide 17: Revenue Growth Decomposition
Revenue Growth Decomposition Revenue by Key Factors Revenue by Business Segments RUB mln RUB mln 23.3% 23.3% 14.2% + 6.7% + 1.6% + 0.9% 19.9% + 0.1% + 0.4% + 3.0% 138,041 3,345 138,041 7,453 1,750 1,055 22,284 75 395 15,840 Currency effect on 111,942 Domestic 111,942 other revenue, Depreciation of y
Slide 18: Operating Costs
Operating Costs Q1 2018 Q1 2018 Operating Expense Q1 2018 2 Change Change % of Total OpEx Difference (RUB mln If not stated otherwise) restated2 Q1 2019 reported1 restated2 y-o-y ex. FX (Q1 2019) 34,042 34,042 0 Fuel 34,042 43,700 28.4% 22.0% 30.4% 89,495 81,095 (8,400) Opex (ex. Fuel) 81,095 100,24
Slide 19: Group Unit Costs
Group Unit Costs Q1 2018 Q1 2018 Q1 2018 Difference Operating Expense per ASK (CASK), RUB Q1 20192 Change reported1 restated2 restated2 0.93 0.93 0.00 Fuel 0.93 1.02 9.2% 2.44 2.21 (0.23) Opex (ex. Fuel): 2.21 2.33 5.2% 0.60 0.60 0.00 Aircraft and Passenger Servicing 0.60 0.67 12.1% 0.11 0.57 0.46 D
Slide 20: Fuel Cost Management
Fuel Cost Management Aeroflot Airline Jet Fuel Price Fuel Consumption per ASK (thousand RUB per tonne of jet fuel) (gr/ASK) (0.4)% 50.0 22.6 22.5 45.0 43.8 Q1 2018 Q1 2019 Comments 8% 11% 12% • Efficient fuel procurement: 1-year supply contracts in 40.0 39.6 airports across Russia • Majority of fuel
Slide 21: EBITDA Evolution
EBITDA Evolution (RUB mln) Total effect on revenue Total effect on costs ∑=26,099 RUB mln ∑=(22,349) RUB mln Net volume and price effect Net FX effect Net volume and price effect ∑=18,645 RUB mln ∑=2,402 RUB mln ∑=(17,298) RUB mln 7,453 (5,051) (7,492) 1,055 1,750 15,840 (1,358) (5,951) (295) (1,385
Slide 22: Pobeda Financial Results
Pobeda Financial Results 1 Increasing PAX Traffic RASK dynamics Pobeda Statement of Profit and Loss (Standalone) Million passengers RUB Q1 2018 RUB mln Q1 20192 Change 2.0 2.09 restated2 1.94 1.4 Revenue 5,079 8,351 64.4% Q1 2018 Q1 2019 Q1 2018 Q1 2019 Operating Expenses (5,991) (9,938) 65.9% PAX u
Slide 23: Leverage and Liquidity
Leverage and Liquidity Debt Profile1 Net Debt / EBITDA (management accounting) RUB mln 31-Dec-2018 31-Mar-2019 Change 5.2 4.5 Borrowings 3,486 15,071 4.3x Lease Liabilities 661,182 630,388 (4.7)% 31-Dec-2018 31-Mar-2019 Source: management accounting. Q1 2019 EBITDA used in the calculation is based o
Slide 24: Adoption of IFRS 16
Adoption of IFRS 16 • New accounting standard IFRS 16 is applicable from 2019 onwards. • Aeroflot group utilizes full retrospective approach when implementing IFRS 16. • Lease liabilities are recognized in the financial accounts at the present value of the contractually agreed lease payments for lea
Slide 25: Appendix
1. Market Update and Operating Results 2. Network and Schedule Overview 3. Fleet Overview 4. Financial Performance 5. Appendix 25
Slide 26: Russian Air Transportation Market: Room for Growth
Russian Air Transportation Market: Room for Growth Russian Total Passenger Traffic Growth, mln PAX(1) Trips per Capita (2) Despite fast growth of the recent years, Total CAGR 5.2% Russian airline industry still has International – 1.0% | Domestic – 10.4% 10.7% promising growth prospects 3.73 137.0 C
Slide 27: Market Return to Growth
Market Return to Growth Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in PAX traffic y-o-y, % Change in ASK y-o-y, % 12.9% 12.2% 8.5% 10.7% 10.0% 30.2 % 15.3 % 14.4 % 10.8% 10.9 % 10.5% 10.6 % 18.6 % 9.9% 9.4% 16.9 % 9.1% 7.9 % 13.8% 11.9% 10.6% 11.0
Slide 28: Operating Data – Q4 & 12M 2018
Operating Data – Q4 & 12M 2018 Aeroflot airline Aeroflot Group Indicator Unit Q4 Q4 12M 12M Q4 Q4 12M 12M Y-o-Y Y-o-Y Y-o-Y Y-o-Y 2017 2018 2017 2018 2017 2018 2017 2018 Passenger Traffic th PAX 8,056 8,992 11.6% 32,845 35,762 8.9% 11,789 13,462 14.2% 50,129 55,710 11.1% International Routes th PAX
Slide 29: Operating Data – Q1 2019
Operating Data – Q1 2019 Aeroflot airline Aeroflot Group Indicator Unit Q1 2018 Q1 2019 Y-o-Y Q1 2018 Q1 2019 Y-o-Y Passenger Traffic th PAX 7,394 8,453 14.3% 10,985 12,764 16.2% International Routes th PAX 3,899 4,380 12.3% 4,888 5,731 17.2% Domestic Routes th PAX 3,495 4,073 16.5% 6,097 7,033 15.4
Slide 30: Key Operating Data of Subsidiary Airlines – Q1 2019
Key Operating Data of Subsidiary Airlines – Q1 2019 Rossiya Airline Pobeda Airline Aurora Airline Indicator Unit Q1 2019 Y-o-Y Q1 2019 Y-o-Y Q1 2019 Y-o-Y Passenger Traffic th PAX 1,940 4.2% 2,040 45.5% 332 1.5% International Routes th PAX 678 11.1% 580 94.5% 93 16.4% Domestic Routes th PAX 1,262 0.
Slide 31: Q1 2019 Operating Data by Region (Scheduled Routes)
Q1 2019 Operating Data by Region (Scheduled Routes) Americas Russia CIS 26.7 % 19.9 % 23.8 % 15.1 % 15.8 % 16.6 % 9.8 p.p. (0.5) p.p. (1.8) p.p. (13.0)% (11.7)% (21.7)% Passengers RPK ASK PLF Passengers RPK ASK PLF Passengers RPK ASK PLF carried carried carried Performance of North and Central Ameri
Slide 32: Infrastructure Expansion to Support Future Growth
Infrastructure Expansion to Support Future Growth New Terminal B Highlights New infrastructure objects launched in 2018 Capacity – 20 mln PAX (4,200 PAX per hour) Size – 110 thd sqm New technologies implemented in the new terminal Connected to terminal E via interteminal tunnels Terminal B Interterm
Slide 33: Aeroflot Group Fleet Evolution
Aeroflot Group Fleet Evolution Aeroflot Group Fleet in Operation 1 Average Age of the Fleet 2 Aircraft Average Age 4.4 Hainan Airlines 5.0 7.0 Wizz Air 5.2 6.4 6.5 6.2 6.2 6,3 Sichuan Airlines 5.4 366 371 Spirit Airlines 5.6 325 289 Etihad Airways 5.7 251 247 Shandong Airlines 5.8 Xiamen Airlines 5.
Slide 34: Traffic Revenue Analysis
Traffic Revenue Analysis Traffic Revenue Breakdown by Type Revenue from Scheduled Passengers (RUB mln)1 Q1 2019 Q1 2019, % of sch. Region Q1 2018 Q1 2019 Y-o-Y Sheduled revenue Passenger Flights 91.9% Russia 33,959 43,133 27.0% 38.0% Europe 25,352 29,479 16.3% 26.0% Asia 17,465 23,605 35.2% 20.8% Ca
Slide 35: Aeroflot Group Blended Flights Revenue Units
Aeroflot Group Blended Flights Revenue Units Q1 Yield (Scheduled + Charter PAX Revenue / RPK) Q1 RASK (Scheduled + Charter PAX Revenue / ASK) RUB RUB 2.2% 4.7% 3.0% 2.82 5.5% 9.1% 9.8% 2.76 2.77 3.64 2.69 3.54 3.56 2.65 3.42 3.37 2.46 3.11 Domestic International Total Domestic International Total %
Slide 36: Headcount Overview
Headcount Overview Aeroflot Group Headcount by Category Other non-airline Flight crew 31-Mar-2018 31-Mar-2019 % personnel 10.5% 13.0% Cabin crew 11,661 12,494 7.1 % Other airline Airport services 7,064 6,446 (8.7)% personnel Technical maintenance and repair 4,914 5,391 9.7 % 13.1% Cabin crew Flight
Slide 37: Operating and Free Cash Flows
Operating and Free Cash Flows (RUB mln) Billion RUB Q1 2019 Million RUB Q1 2019 Other adjustments before working capital changes, incl. (1.6) Working capital changes and income tax, incl. 22,815 Change in provisions (1.5) Change in accounts receivable and prepayments (6,901) Effect from revenue hedg
Slide 38: Net Income Evolution
Net Income Evolution (RUB mln) 3,345 (28,802) 22,754 (10,414) (15,746) (437) (4,609) 2,088 42 276 12 Restated Net Traffic Revenue Other Revenue Operating Finance Income Finance Costs Hedging Result Revaluation of Taxation Other Net Income Q1 Income Q1 2018 Expenses Equity 2019 Investments and other
Slide 39: Introduction of IFRS 16
Introduction of IFRS 16 Significant changes are expected in Operating lease and Maintenance lines of PnL PnL statement 2018 2019 Explanation Operating lease expenses $$$ $$$ • Redistribution of Lease and Maintenance expenses to D&A and Finance costs due to reflecting aircraft and other leased assets
Slide 40: Board of Directors
Board of Directors Corporate Governance Board of Directors Personnel and Audit Strategy Name Remuneration Committee Committee Committee General Meeting of Audit Committee Shareholders (3 members) Evgeny Ditrich Chairman Vitaly Saveliev Personnel and Remuneration Board of Directors Mikhail Poluboyari
Slide 41: Aeroflot Group Structure
Aeroflot Group Structure PJSC Aeroflot(1) Airlines Ancillary Companies JSC Rossiya Airlines 75%-1 sh. CJSC Aeromar 51% On-board sales/catering LLC Aeroflot-Finance LLC Pobeda Airlines 100% 100% Financial services JSC Sherotel JSC Aurora Airlines 51% 100% Hotel services Aeroflot Aviation School 100%
Slide 42: Investor Relations Contacts
Investor Relations Contacts Address: 119002, Russia, Moscow, Arbat St. 10 E-mail: ir@aeroflot.ru Website: www.aeroflot.ru