Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (January 2010)
31 slides from Transat A.t's investor presentation, Jan 27, 2010
Slide 1: January 27th, 2010
o a i=) N = =] nn N > -— Janua
Slide 2: Forward-looking Statements
Forward-looking Statements This presentation contains certain forward-looking statements with respect to the Corporation. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the
Slide 3: Agenda
Agenda Introduction to Transat Vision and strategy Review by market Destination and airlift strategy Financial Review Summary and outlook Appendix: Valuation metrics 3
Slide 4: A vertically-integrated holiday travel tour operator
A vertically-integrated holiday travel tour operator ACCOMODATION CRUISE DESTINATION AIRLINES COMPANIES SERVICES TRANSAT OUTGOING & INCOMING TOUR OPERATORS WIDE RANGE OF PACKAGED PRODUCTS, AIRLINE SEATS, FIT TRAVEL INTERNATIONAL MULTI-CHANNEL DISTRIBUTION NETWORK TRAVEL AGENCIES • INTERNET & CALL CE
Slide 5: A vertically-integrated holiday travel tour operator
A vertically-integrated holiday travel tour operator Among the largest tour operators worldwide by revenue and number of travellers Main source markets: Canada, United Kingdom, France, and other European countries Nearly 3 million travellers/year, going to more than 60 destination countries Largest
Slide 6: Our Vision for 2014
Our Vision for 2014 To be a leader in the Americas with a solid competitive position in several European countries 6
Slide 7: Strategies for the 2009-2011 period
Strategies for the 2009-2011 period 1 Focus on product differentiation 2 Optimize input costs (airlift, hotels, …) 3 Increase control over distribution of our sales 4 Open new outgoing markets (Americas and south-Europe) 5 Invest in technologies (inventory & yield, distribution) 6 Capitalize on our
Slide 8: Canada to Sun destinations: Overview
Canada to Sun destinations: Overview Growth market: Commoditized market with positive growth pattern (last year: 2.7 million packages sold; + 13% for Mexico/Caribbean; + 17% for Transat) Highly competitive market, showing signs of consolidation in the tour operator segment, marked by intensified
Slide 9: Canada to Sun Destinations: Market
Canada to Sun Destinations: Market Market share based on deployed capacity at end of season - (all inclusive packages, Mexico/Caribbean, winter) Sunwing 18% Signature (TUI) 9.5% Transat Sunwing Signature(TUI) AVC TMR Others Sunquest (TCG) WesJet 9
Slide 10: Canada to sun destinations: Strategy
Canada to sun destinations: Strategy Canjet 5-year agreement Enhanced ability to expand and contract capacity in a very cost-competitive way Hotel costs and commitments Adjusted product mix vs. demand for winter 2009-2010 Increased purchasing power due to lower demand from other countries Dist
Slide 11: Transatlantic Market: Overview
Transatlantic Market: Overview Europe, especially France and UK, remains the number one regional market for international tourism (incoming and outgoing) New liberalization agreements could bring challenges and growth opportunities Easy for travellers to compare rates; fair proportion of air-only an
Slide 12: Transatlantic Market: Market
Transatlantic Market: Market 2006 2009 UK Transat Air Canada Air India British Airways MyTravel Zoom Airlines Other FRANCE Transat Air Canada Air France Zoom Airlines Other 12
Slide 13: Transatlantic Market: Strategy
Transatlantic Market: Strategy Unique value proposition to the traveller: Only player with a point-to-point strategy between 9 Canadian and 34 European destinations Offering uniquely suited to the leisure traveller (no connection, possibility of open jaws, etc.) Only major tour operator with a
Slide 14: Outgoing market from France: Overview
Outgoing market from France: Overview Fragmented market, with market consolidating 5 tour operators represent 61% of the market, vs. ten 5 years ago Nearly 250 tour operators share the remaining 30% Large players growing their market share International travel has recorded slow growth (1.4% CA
Slide 15: Tour operators: Distribution
Outgoing market from France: Market Tour operators: Distribution: $5.7 B market 4,750 travel agencies in France Transat Thomas Cook AFAT Selectour Tourcom Kuoni FRAM TUI + Havas + CWT Other Club Med TUI/NF Thomas Cook/Jet Tours Other 15
Slide 16: Outgoing market from France: Strategy
Outgoing market from France: Strategy Added efficiency and lower costs through: Creation of Transat France in 2009 Use of an Air Transat aircraft for long-haul during winter 2010 (XL Airways) Well-adapted, broad portfolio of products, most notably growing number of Clubs Lookéa (35 in summer 200
Slide 17: Destination Strategy
Destination Strategy Pursue vertical integration in high-margin destination services in high-potential markets Already present in Florida, Dominican Republic, Mexico, and Greece Potential in Southern Europe, North Africa Add outgoing tour operator from countries where we fly from Canada Mexico
Slide 18: Airlift capacity management
Airlift capacity management More holistic, supply-driven approach, with embedded flexibility (third party suppliers, access to a mixed fleet) Objectives: Ability to expand and contract depending on demand fluctuations or external events, per market Priority: have the most efficient aircraft for
Slide 19: Historical Performance
Financial Review Historical Performance Revenues Profitability (in billions of $) (in millions of $) Adjusted margin Adjusted income after taxes (1) Before impact of fuel hedge accounting, ABCP revaluation, repurchase of preferred shares and restructuring costs (2) Restated for new accounting polici
Slide 20: Statement of income & cash flow
Financial Review Statement of income & cash flow Q4 Year 2009 2008(2) Variance 2009 2008(2) Variance Revenues 720 790 -9% 3,545 3,513 1% Margin 35.6 23.2 53% 42.2 71.6 -41% Net income(1) 17.8 10.1 76% 33.7 55.4 -39% EPS diluted(1) 0.51 0.31 65% 1.01 1.67 -40% $ flow - Operations (99.4) (104.9) -5% 4
Slide 21: Statement of income & cash flow
Financial Review Statement of income & cash flow Winter Summer 2009 2008(2) Variance 2009 2008(2) Variance Revenues 2 006 1 863 8% 1 539 1 650 -7% Margin 30.6 90.0 -66% 62.8 37.8 66% Net income(1) 8.9 43.2 -79% 24.8 12.2 103% EPS diluted(1) 0.27 1.28 -79% 0.73 0.38 95% $ flow - Operations 113.6 169.
Slide 22: Statement of income
Financial Review Statement of income Main variances 2009 vs. 2008 Direct costs: Salaries: Aircraft Other Interest maintenance: operating income: Canjet agreement Annual salary and lower fuel increases and expenses: Renegotiated $10 million lower costs 2009 bonus contracts, leases as interest r
Slide 23: Strengthening our balance sheet
Financial Review Strengthening our balance sheet Share issue in September 2009 Share offering (4.9 million shares at $13.00) Proceeds of $63.5 million ($60.5 million, net of fees) Proceeds to be used for general corporate purposes: • Working capital needs • Capital expenditures • Possible futu
Slide 24: Cash and Balance Sheet
Financial Review Cash and Balance Sheet (at Oct 31) 2009 2008 Cash ABCP Cash ABCP $ and investments 181 71 145 86 Drawn credit line (17) (61) (39) (61) Other debt (33) (50) Net $ 131 10 56 25 Highlights Cash flow from operations 45 Proceeds from share issue improved net Share issue (repurchase) 62 c
Slide 25: Summary of 2009
Summary of 2009 Despite challenging environment, flu, etc. Maintain market share Increase control over distribution of our sales Pursue IT strategic projects Reduce costs through contracts and processes Globally, a solid performance 25
Slide 26: Outlook for 2010
Financial Review Outlook for 2010 Reservations from Canada to sun for winter 2010 Currently lower than record volumes recorded last year Transat adjusted capacity in the first quarter to protect its load factors Capacity currently aligned with last year’s volumes for second quarter • Taking in
Slide 27: Strategies for the 2009-2011 period
Strategies for the 2009-2011 period 1 Focus on product differentiation 2 Optimize input costs (airlift, hotels, …) 3 Increase control over distribution of our sales 4 Open new outgoing markets (Americas and south-Europe) 5 Invest in technologies (inventory & yield, distribution) 6 Capitalize on our
Slide 28: Appendix
Financial Review Appendix 28
Slide 29: Valuation Metrics
Financial Review Valuation Metrics (in C$ millions, unless otherwise noted) Margins (LTM) Adjusted Share Equity Enterprise Adj. EV / Enterprise EV / EBITDA P/E Ratio EBITDAR EBITDA Price Value Value EBITDAR(1) Value 09-Dec-09 2009A 2010E(2) 2009A 2010E(2) 2009A 2010E(2) Tour Operators TUI Travel PLC
Slide 30: Capital structure
Financial Review Capital structure (in C$ millions, unless otherwise noted) Capital Structure ($) Capital Structure ($) Adjusted Short Long Market Adj. Market Total Cash Net Term Term Leases Other Leases Cash Other EV Cap EV Cap Debt Debt(1) Debt Debt Closest Comparables TUI Travel PLC $693 $8,869 $
Slide 31: Leverage & Cash Considerations
Financial Review Leverage & Cash Considerations Adj. Net Adj. Net Adj. Cash/ Cash/LTM Cash/Adj. Adj. Debt/ Debt/ Debt/ Debt/LTM Market Cap. Sales Debt(1) Adj. EV(1) LTM Adj. EV(1) EBITDAR(1) EBITDAR(1) 2009A 2009A Closest Comparables TUI Travel PLC (as of June 30, 09) 14% 3% 7% 72% 66% 4.6x 3.9x Tho