Kenya Airways Plc · NSEKE:KQ
Kenya Airways — FY2010 Earnings Presentation
34 slides from Kenya Airways's earnings presentation, Dec 14, 2010
Slide 1: Business and Financial Review, Year Ended 31st March 2010
Business and Financial Review Year Ended 31st March 2010
Slide 2: Agenda
Agenda • Global Economy • Industry Performance • KQ Business Review • Financial Results • The Next Year • Q&A • Chairman’s Remarks
Slide 3: Global Economy
Global Economy Global Economic recovery picks up but at a slow pace -High growth concentrated in Latin America, Middle East and Asia -The cyclical upturn in 2010 will not regain pre-Great Recession trend-line in the West Consumer debt pressure continue to falter Economic recovery in the west Source:
Slide 4: Global Economy
Global Economy GDP grow th rate Africa: Sub-Sahara World Middle East (%) 10 8 (6.8%) 6 (5.9%) 4 (4.8%) 2 0 -2 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 Robust GDP growth in Sub-Saharan Africa over last 10 years Source: IMF
Slide 5: Airline Industry
Airline Industry Aviation industry in recovery after the Economic recession in 2008. Airlines globally expected to make US$ 9.4bn loss in prior year Outlook for 2010 – loss reduction to US$2.8bn Traffic and yields still weaker than pre-recession in 2008 - Revenues will remain weak in 2010 Source: IA
Slide 6: Industry Statistics Dec YTD (2009 vs. 2008)
Industry Statistics Dec YTD (2009 vs. 2008) RPK% ASK% PLF % FTK% ATK% Growth Growth Growth Growth Africa (6.8) (3.3) 69.9 (11.2) (3.3) Asia/Pacific (5.6) (6.3) 73.9 (9.2) (11.0) Europe (5.0) (4.4) 76.4 (16.1) (10.7) Middle East 11.2 13.6 73.3 3.9 6.8 North America 0.3 1.7 73.0 (4.0) 1.4 Latin Americ
Slide 7: Key Activities over the Past one Year
Key Activities over the Past one Year
Slide 8: Communication System
Communication System Name: VSAT-Very Small Aperture Terminal (made up of a small satellite earth stations and antenna) Aims: - To deliver network connectivity in 42 sites based on 20 African countries - increase the airline network capacity and availability - Rolled out Mar 09 to be completed by Mar
Slide 9: Systems
Systems • E-Ticketing Compliance achieved 98.2% • OASES Phase 2 – Process improvement and Integration with other systems in progress - Base maintenance - Shop Floor data capture • Integrated Cargo Control Rolled out in Jun 2009 Maintenance Control system • Business Intelligence tool - TM1 Phase 1 –
Slide 10: Systems- Cont.
Systems- Cont. Hub Control Centre (HCC) Projects- Complete • Potential to improve :- Departures, Connectivity Communication Baggage Handling Staff Admin Operations Control Centre (OCC) SABRE System – has taken over from AIMS system • Project in progress , potential to improve:- Crew Schedules Moveme
Slide 11: The Enterprise Resource Planning (ERP) Software Package
The Enterprise Resource Planning (ERP) Software Package Named: i-Pride Aims to integrate many business areas of the enterprise Phase 1 Complete Finance Human Resource Supply Chain Phase 2 in progress Ground Support Equipment - Rolled out 3rd June 09 Project & Facilities Management ERP System roll ou
Slide 12: Corporate Social Responsibility
Corporate Social Responsibility CSR Broken down into 3 major categories Education – KShs 20m 7 schools (completed) 3 schools (in progress) Water- KShs 6m 2 projects completed 1 project in progress Environment – KShs 18m Plant a future initiative Others Tickets for 48 patients – KShs 1.9m Uganda Land
Slide 13: Fleet in Service
Fleet in Service Seats 2010 2009 Wide body Boeing 777-200 322 4 4 Boeing 767-300 216 7 6 MD 11 (2 months) 294 1 Narrow body Boeing 737-800 145 5 5 Boeing 737-700 116 4 4 Boeing 737-300 116 4 4 Embraer 170 72 3 3 Saab 340 35 2 Total Fleet 28 28
Slide 14: Network
Network Routes launched in the year Brazzaville Malabo Libreville Bangui Gaborone Kisangani N’Dola New Frequencies Triple daily to Jo’burg, Kigali Additional flights to Lagos, Accra, Bujumbura, Douala, Dubai, Addis, Free Town, Harare, Lusaka
Slide 15: People Development
People Development • World Class Operations (WCO) - 3,964 trained • Bullet Proof – Over 3,000 staff completed • Presentation Skills – 181 staff completed • KQ Managers 1 & 2 – Over 200 managers completed
Slide 16: Average Training Hours per Employee
Average Training Hours per Employee
Slide 17: Challenges Faced
Challenges Faced Industrial Action • Two day strike action - 14th and 15th August, 2009 • Various allowances already agreed with engineers and cabin crew. • Signing of the Cabin Crew Fleet Agreement done on 30th of April 2010 • Job review analysts trained and evaluation process to be completed by Ju
Slide 18: Challenges Faced
Challenges Faced Fleet Modernisation • Challenges of old B767’s and delay of B787-8 Options - (i) Extend current leases - (ii) Acquire newer vintage B767’s till B787 delivery -(iii) Look at the A330’s • Review of narrow bodies - B737’s and Embraers - Continue to acquire narrow body aircraft
Slide 19: Financial Review
Financial Review Alex Mbugua Group Finance Director
Slide 20: Passenger Numbers
Passenger Numbers 300 280 260 240 220 200 180 160 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar CY PY
Slide 21: Consolidated Income Statement
Consolidated Income Statement KShs Mil. 2010 2009 Var. Var. % Turnover 71,829 70,743 71,829 (1,086) (1.5) Direct operating costs (44,376) (47,792) (47,792) 3,416 7.1 Fleet ownership costs (9,102) (7,994) (1,108) (13.9) Gross profit 17,265 16,043 1,096 18.5 Overheads (12,001) (15,426) (12,001) (3,425
Slide 22: Five Year Turnover Trend
Five Year Turnover Trend 75,000 70,000 65,000 60,000 55,000 50,000 45,000 40,000 35,000 30,000 2006 2007 2008 2009 2010 PAX CARGO OTHER
Slide 23: Fair value gains/(losses) on fuel derivatives
Fair value gains/(losses) on fuel derivatives MARK TO MARKET VALUATION 31-Mar-10 Hedged M2M M2M Counter - Party Fuel Volumes USD KShs Total Counterparties 1,171,313 (76) (6,129) MARK TO MARKET VALUATION 31-Mar-09 Hedged M2M M2M Counter - Party Fuel Volumes USD KShs Total Counterparties 450,000 0.15
Slide 24: Stock Market Performance
Stock Market Performance 110% 100% 90% Kenya Airways (-12%) 80% British Airways (-39%) 70% 60% Lufthansa (-41%) 50% World Airline Index (-43%) 40% Air France KLM (-61%) 30% 20% Jan-08 M ay-08 Sep-08 Jan-09 M ay-09 Sep-09 Jan-10 M ay-10 Source: Bloomberg
Slide 25: Benchmark on 2009/10 Results
Benchmark on 2009/10 Results BA EK LH KLM/AF KQ Turnover (USD mil) 12,355 11,812 30,371 28,621 923 Op Margin% (2.9%) 8.2% 0.6% (7.8%) 2.6% Net margin% (5.3%) 8.3% (0.5%) (7.3%) 2.9%
Slide 26: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position KShs Mil ACTUAL ACTUAL Var to Var % to ASSETS Mar-10 Mar-09 Actual Actual Aircraft 44,866 46,817 (1,951) (4.2%) Properties, Plant & Equip 4,990 4,234 756 17.9% Intangible assets 899 550 349 63.5% Leasehold Land 1,641 1,662 (21) (1.3%) Aircraft deposits 2,
Slide 27: Consolidated Statement of Financial Position
Consolidated Statement of Financial Position KShs Mil ACTUAL ACTUAL Var to Var % to EQUITY AND LIABILITIES Mar-10 Mar-09 Actual Actual Capital 2,308 2,308 - 0.0% Revenue Reserves 17,641 16,069 1,572 9.8% Hedge Reserve (26) (1,201) 1,175 (97.8%) 19,923 17,176 2,747 16.0% Minority interests 50 - Total
Slide 28: Consolidated Statement of Cash Flows
Consolidated Statement of Cash Flows Year to date Actual Actual Var to Var % to KShs Mil Mar-10 Mar-09 Actual Actual Profit before tax 2,671 (5,664) 8,335 (147.2%) Depreciation & Amortisation 4,632 3,917 715 18.3% Interest expense 1,485 1,594 (109) (6.8%) Movt. In MTM (6,140) 7,532 (13,672) (181.5%)
Slide 29: Dividend
Dividend Proposed dividend at 1/- per share = KShs 462m
Slide 30: The Next One Year
The Next One Year &® Kenya Airways YB)
Slide 31: Major Initiatives
Major Initiatives Target Date Network and Fleet Expansion on going - 2 E170’s - 2 E190’s - 2 B737-300’s Stringent cost control Mar 11 Simulator within Pride Centre Sep 10 Integrated Ops & Maint. Control Syst. (IOCS &MCS) on going People & Systems development on going World Class Operations (WCO) on
Slide 32: Major Initiatives
Major Initiatives Target date Electronic Flight Bag Jun 2010 IFE Upgrade On going Pros – Revenue Management System On going Call Centre Upgrade On going Internet Booking Engine On going TM1 Phase II Mar 11 Altea to replace Corda On going Kisumu Airport (KCAA)
Slide 33: Major Challenges for KQ
Major Challenges for KQ • Volatile Fuel Prices • B787-8 Delay • Aero-politics • JKIA infrastructure constraints • Lamu and malindi Airport • E-ticketing compliance • High costs of system implementation
Slide 34: Q&A
Q&A &® Kenya Airways %