Singapore Airlines Ltd. · SGX:C6L

Singapore Airlines — H1 FY2019-20 Earnings Presentation

44 slides from Singapore Airlines's earnings presentation, Nov 6, 2019

1. Slide 1: Analyst / Media Briefing 1H FY2019-20 Results

   ANALYST / MEDIA BRIEFING 1H FY2019-20 Results 6 November 2019

2. Slide 2: Group Financial Results

   Group Financial Results The copyright in this material is owned by Singapore Airlines Ltd. This material may not be modified, reproduced, distributed, republished or transmitted in whole or in part in any manner or by any means without prior permission of Singapore Airlines Ltd.

3. Slide 3: Key Takeaways – 1H FY19/20 Results

   Group Financial Results Key Takeaways – 1H FY19/20 Results Passenger traffic growth continues to support revenue improvements  SIA Pax: Captured strong demand, outstripping capacity growth to achieve record passenger load factor of 84.6% for the first half. RASK improved 2.4%.  SilkAir: Notwithsta

4. Slide 4: Q2 & 1H FY19/20 Financial Results

   Group Financial Results Q2 & 1H FY19/20 Q2 Q2 Better/ 1H 1H Better/ FY19/20 FY18/19 (Worse) FY19/20 FY18/19 (Worse) ($’m) ($’m) (%) ($’m) ($’m) (%) Total Revenue 4,222.3 4,062.1 3.9 8,324.5 7,906.6 5.3 Total Expenditure 4,009.2 3,829.2 (4.7) 7,911.4 7,480.6 (5.8) -- Net Fuel Cost 1,176.2 1,156.1 (1.

5. Slide 5: Group Operating Statistics

   Group Operating Statistics Pax traffic growth across all airlines; record Q2 and 1H PLF for the Group CAPACITY, CARRIAGE, AND PAX CARRIED Q2 Change 1H Change DISTRIBUTION (1H FY19/20) FY19/20 (%) FY19/20 (%) Pax Pax carriage (PKM ‘m) 28,314.9 8.2 54,943.2 8.6 Carried Capacity (ASK ‘m) 32,972.9 7.3 6

6. Slide 6: Revenue 1H FY19/20

   Group Revenue 1H FY19/20 Improvement led by strong pax flown revenue $M 4,400 4,341.5 4,222.3 4,200 4,102.2 1H FY19/20 4,062.1 4,075.1 $8,324.5M 4,000 Year-on-Year 3,844.5 $417.9M 3,800 (+5.3%) 3,600 Q1 Q2 Q3 Q4 Q1 Q2 FY18/19 FY18/19 FY18/19 FY18/19 FY19/20 FY19/20 The copyright in this material is

7. Slide 7: Revenue Breakdown 1H FY19/20

   Group Revenue Breakdown 1H FY19/20 Strong pax traffic growth drove improvements in RASK and revenue Flown Revenue RASK Yields Carriage/Load Capacity 1H FY19/20 y-o-y ($’m) y-o-y (%) y-o-y (%) y-o-y (%) y-o-y (%) SIA (Pax) +480.8 +2.4 +1.0 +8.6 +7.4 SilkAir +4.5 +1.2 -1.9 +2.8 -1.1 Scoot +28.8 -2.1 -

8. Slide 8: Expenditure 1H FY19/20

   Group Expenditure 1H FY19/20 Higher group cost due to expansion in operations $M 4,100 4,009.2 3,953.9 3,902.2 3,900 3,829.2 3,821.6 1H FY19/20 $7,911.4M 3,700 3,651.4 Year-on-Year $430.8M 3,500 (+5.8%) 3,300 Q1 Q2 Q3 Q4 Q1 Q2 FY18/19 FY18/19 FY18/19 FY18/19 FY19/20 FY19/20 The copyright in this mat

9. Slide 9: Expenditure Breakdown 1H FY19/20

   Group Expenditure Breakdown 1H FY19/20 Ex-fuel costs rose largely from expansion in operations 4.9% 7.4% CASK CASK ex-fuel 5.4% 5.4% 29.7% 1H FY19/20 y-o-y (%) y-o-y (%) 5.6% 6.0% SIA (Pax) +1.2 +1.9 SilkAir +2.4 +3.2 8.3% 19.2% Scoot +3.9 +5.9 13.5% ^ Includes commissions & incentives, and advertis

10. Slide 10: Expenditure – Fuel Cost 1H FY19/20

    Group Expenditure – Fuel Cost 1H FY19/20 Net fuel cost rose, primarily contributed by an increase in fuel volume consumed on capacity growth $M 2,400 +35.7 2,348.9 +118.5 2,300 +113.4 Stronger (+5.1%) 2,235.5 -248.4 USD against +207.6 SGD 2,200 Higher uplift 2,100 2,000 Lower Lower hedging 1,900 wei

11. Slide 11: Operating Profit 1H FY19/20

    Group Operating Profit 1H FY19/20 Gains from capacity and passenger traffic growth partially offset by weaker cargo revenue $M 500 400 387.6 1H FY19/20 $413.1M 300 253.5 232.9 200.0 213.1 193.1 200 Year-on-Year $12.9M (-3.0%) 100 0 Q1 Q2 Q3 Q4 Q1 Q2 FY18/19 FY18/19 FY18/19 FY18/19 FY19/20 FY19/20 Th

12. Slide 12: Operating Profit 1H FY19/20 Bridge

    Group Operating Profit 1H FY19/20 Gains from capacity and passenger traffic growth partially offset by weaker cargo revenue $M Largely: 1,000 +514.4 -137.8  Staff costs (+158.6)  Depreciation and leased aircraft charges (+85.0)  Landing, parking and overflying (+34.7) +34.4  Passenger and sales

13. Slide 13: Operating Results for the Main Companies in the Group

    Operating Results for the Main Companies in the Group 1H FY19/20 1H 1H Better/ Operating Profit /(Loss) FY19/20 FY18/19 (Worse) ($’m) ($’m) (%) SIA (Parent Airline Company) 465.0 418.2 +11.2 SilkAir (19.1) (2.8) n.m. Scoot (76.9) (10.0) n.m. SIAEC Group 37.3 21.5 +73.5 The copyright in this material

14. Slide 14: Change in SIA Parent Airline Operating Results

    Composition of Change in SIA (Parent Airline Company)’s Operating Results 1H FY19/20 Operating profit improved on strong revenue growth $M 1,000 +480.8 -137.8 800 -101.0 Other major items include: Lower cargo -139.6  Higher sales costs (-42.9) flown  Higher LPO (-31.8) 600 revenue Higher  Non-sch

15. Slide 15: Profit Attributable to Owners of the Parent 1H FY19/20

    Group Profit Attributable to Owners of the Parent 1H FY19/20 Improvement in First Half net profit $M 300 284.1 1H FY19/20 202.6 200 $205.6M 139.6 111.1 Year-on-Year 100 94.5 $9.6M (+4.9%) 56.4 0 Q1 Q2 Q3 Q4 Q1 Q2 FY18/19 FY18/19 FY18/19 FY18/19 FY19/20 FY19/20 The copyright in this material is owned

16. Slide 16: Profit Attributable to Owners Bridge

    Group Profit Attributable to Owners of the Parent 1H FY19/20 Improved results from associates and JVs, partially offset by lower operating profit and higher net finance charges $M 250 +19.0 -53.6 +36.2 +7.7 205.6 196.0 -12.9 Higher +13.2 200 share of +9.6 profits (+4.9%) Lower from JVs Lower Lower s

17. Slide 17: SIA Group Per Share Data

    SIA Group Per Share Data 1H FY19/20 1H FY18/19 EBITDA per share ($) 1.21 0.85 Basic earnings per share (¢) 17.4 16.6 Interim Dividend per share (¢) 8.0 8.0 As at 30 Sep’19 As at 31 Mar’19 Net Asset Value per share ($) 9.96 11.22 The copyright in this material is owned by Singapore Airlines Ltd. This

18. Slide 18: Key Coverage Ratios

    Key Coverage Ratios Ratios affected by the adoption of IFRS 16 Leases from 1 Apr’19 Leverage Interest coverage Total DebtR1 / Equity EBIT / Interest expense 1.00 10.0 0.74x 6.1x 0.50x 0.50 5.0 3.5x 0.00 0.0 As at 31 As at 30 1H 1H Mar'19 Sep'19 FY18/19 FY19/20 R1 Total debt: Borrowings + Lease Liabi

19. Slide 19: Additional Updates

    Additional Updates The copyright in this material is owned by Singapore Airlines Ltd. This material may not be modified, reproduced, distributed, republished or transmitted in whole or in part in any manner or by any means without prior permission of Singapore Airlines Ltd.

20. Slide 20: Capacity Growth

    Group Capacity Growth External events moderate growth in capacity for FY19/20 SIA Group passenger operations will grow at approx. 6% in FY19/20 Projected Capacity  SIA’s capacity growth driven by: (FY19/20 vs FY18/19) o Ultra long-haul operations to US SIA +7% o Cabin densification from fleet renew

21. Slide 21: Fleet Development

    Group Fleet Development SIA Group to operate 208 aircraft by end of FY19/20 Operating Fleet As at 30 Sep’19 In Out As at 31 Mar’20 777-200 4 -3 1 777-200ER 4 -1 3 777-300 5 5 777-300ER 27 27 A380-800 19 19 A330-330 12 -4 8 A350-900 41 +7 48 787-10 14 +1 15 747-400F 7 7 SIA Total 133 +8 -8 133 A319 2

22. Slide 22: Capital Expenditure

    Group Capital Expenditure Elevated capital expenditure to support fleet renewal and capacity growth Projected Capital FY19/20 FY20/21 FY21/22 FY22/23 FY23/24 FY24/25 Expenditure ($’m) Aircraft 5,400 5,600 5,400 4,500 3,800 3,700 Others 300 400 400 300 200 200 Total 5,700 6,000 5,800 4,800 4,000 3,90

23. Slide 23: Fuel Hedging Position

    Group Fuel Hedging Position As at 22 October 2019 2H FY19/20 Jet Fuel Brent Percentage hedged (%) 75 3 Average hedged price (USD/BBL) 76 54 FY20/21 Jet Fuel Brent Percentage hedged (%) 29 35 Average hedged price (USD/BBL) 77 58 FY21/22 – FY24/25 Jet Fuel Brent Percentage hedged (%) up to 50% - Avera

24. Slide 24: Strategic Developments

    STRATEGIC DEVELOPMENTS The copyright in this material is owned by Singapore Airlines Ltd. This material may not be modified, reproduced, distributed, republished or transmitted in whole or in part in any manner or by any means without prior permission of Singapore Airlines Ltd.

25. Slide 25: Key Strategies

    Key Strategies FSC Strengthening Premium Competition Positioning Participate and grow in all Group Portfolio travel segments Overcome limitations of Singapore Hub / New growth Multi-Hubs markets New Business Diversify Revenue Streams Opportunities The copyright in this material is owned by Singapore

26. Slide 26: Fleet renewal and capacity growth

    Key Strategies Strengthening Premium Positioning Fleet renewal and capacity growth Outstanding Aircraft Fleet size as aircraft type at 30 Sep’19 deliveries A350-900 41 26 787-10 14 33 777-9 0 20 Others 78 - 737 MAX 8 - 31* We are in the midst of a period of elevated capital Others 26 - expenditure,

27. Slide 27: Expansion of our non-stop US offering

    Key Strategies Strengthening Premium Positioning Enhancing our network – Expansion of our non-stop US offering Growth to US region since launch of ULR in Oct’18  Increase in weekly freq: +16x  Increase in pax numbers: +35%  Increase in market share: +4 ppt 21 ppt growth in SIN-US market share cou

28. Slide 28: Growing Deep Commercial Partnerships

    Key Strategies Strengthening Premium Positioning Growing Deep Commercial Partnerships Expand Network Reach * Enhancing value proposition for corporates * Strengthen FFP Offerings * Win-Win Outcome MORE TO COME The copyright in this material is owned by Singapore Airlines Ltd. This material may not b

29. Slide 29: SilkAir Integration

    Key Strategies Group Portfolio SilkAir Integration Integration remains on track  As at 1H FY19/20, 7 x SilkAir routes transferred to Scoot; another 10 to be completed by Jul’20  1 x SilkAir route (Busan) transferred to SIA Retained Boeing 737-800s will be similarly upgraded with the new narrow-bod

30. Slide 30: Group serves destinations in 37 countries and territories

    Key Strategies Group Portfolio The Group serves 137 destinations in 37 countries and territories China 27 Points India 13 Points Southeast Asia 43 Points Southwest Pacific 12 Points The copyright in this material is owned by Singapore Airlines Ltd. This material may not be modified, reproduced, dist

31. Slide 31: Vistara

    Key Strategies Multi-Hub – Investing in strategic markets to complement and strengthen SIN hub Vistara Expansion of fleet and network by over 50% each  34 destinations as at 4 Nov’19  4 international routes: Singapore, Bangkok, Dubai, Colombo  70% increase in weekly frequencies Fleet size to near

32. Slide 32: New revenue streams leveraging brand, data and competencies

    Key Strategies New Business Opportunities New revenue streams that leverage on brand, data and competencies Our core airline business Key objectives • Drive increased value to our customers • Accentuate our brand value • Develop new digital or technical capabilities for future growth • Revenue contr

33. Slide 33: Loyalty programme for the entire SIA Group

    Loyalty programme for the entire SIA Group Value and benefits to Strong revenue Quality membership our loyal customers growth base • Enhancement of programme • 18% YoY growth in FY18/19 to • We have been growing our benefits for EG, PPS, PPS SOL reach over $700M membership at steady pace to • Myraid

34. Slide 34: Omni-channel lifestyle travel retail brand

    Omni-channel lifestyle travel retail brand Leverage brand and Tap into growing Enhanced shopping customer base global travel retail experience • Leveraging SIA’s trusted brand • Global travel retail growing, yet • Dedicated team to grow the for curating the right product & airlines’ share, acting as

35. Slide 35: Transformation

    TRANSFORMATION The copyright in this material is owned by Singapore Airlines Ltd. This material may not be modified, reproduced, distributed, republished or transmitted in whole or in part in any manner or by any means without prior permission of Singapore Airlines Ltd. 35

36. Slide 36: What have we achieved?

    What have we achieved? We have delivered more to our customers More personalised and New products and services • Ongoing upgrade of T3 SilverKris & authentic experiences KrisFlyer Gold Lounges • 8 personalized marketing use cases • Upgrading SilkAir’s aircraft product & developed & more in the pipel

37. Slide 37: We have changed the way we work

    Transformation We have changed the way we work Effective tools to improve Reduced staff’s effort our everyday • >9,900 staff man days saved • 6 Apps developed for ground staff/ from simplification and automation crew & 100+ dashboards created for better decision making Built new capabilities Now mov

38. Slide 38: Operational excellence and productivity gains

    Transformation We have doubled-down on delivering operational excellence Operational excellence in Productivity gains Engineering • 7% increase in productivity • 14% reduction in engineering- in pilot and crew resource related flight delays planning • >500min delay time mitigated through predictive

39. Slide 39: Sustainability

    SUSTAINABILITY The copyright in this material is owned by Singapore Airlines Ltd. This material may not be modified, reproduced, distributed, republished or transmitted in whole or in part in any manner or by any means without prior permission of Singapore Airlines Ltd.

40. Slide 40: Investing in a modern and fuel efficient fleet

    Sustainability SIA has multiple initiatives in key areas We continue to invest in modern and fuel efficient fleet 6 yr 2 mths 25% to 30% One of the youngest More efficient new aircraft fleets in the world replacing older fleet Fuel Productivity of Medium- Fuel Productivity of Long- SIA Group Fleet S

41. Slide 41: We continue to do our part to protect the environment

    Sustainability SIA has multiple initiatives in key areas We continue to do our part to protect the environment 56M kg Fuel saved since FY15/16 from efficient operational measures eg:  Tailored water uplift  Optimised flight routings 320 tonnes CO2 emissions saved from world’s first green package f

42. Slide 42: Managing energy and resources onboard and within premises

    Sustainability SIA has multiple initiatives in key areas We manage our energy and resources onboard and within our premises Onboard Within Our Premises 3.8 M Single-use plastic (SUP) swizzle sticks & 820K SUP straws reduced ALH/STC/TSQ electricity to be 18% powered by solar panels Paper cups and pla

43. Slide 43: Engaging stakeholders and community efforts

    Sustainability SIA has multiple initiatives in key areas We engage our stakeholders and participate in community efforts Employees continue to give back to community passionately  Day camp organized by SIA Cabin Crew Club for Community Care with YWCA  Participation in Community Chest Fu Dai event

44. Slide 44: Thank you

    Thank you

Singapore Airlines — H1 FY2019-20 Earnings Presentation on 6ix