Transat A.T. Inc. · TSX:TRZ
Transat A.T — Investor Presentation (June 2014)
32 slides from Transat A.T's investor presentation, June 2014
Slide 1: Transat Investors' Presentation June 2014
IN LINE WITH PLAN TO DELIVER EFFICIENCY GAINS OF $75M IN 2015 TAKING INTO ACCOUNT A WEAKER CAD: WINTER 2014 BETTER THAN ANTICIPATED, SUMMER EXPECTED TO BE SATISFACTORY TRANSAT INVESTORS’ PRESENTATION JUNE 2014
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 1. TRANSAT MARKET 2. KEY FINANCIAL INFORMATION • WINTER 2014 • SUMMER 2014 3. FINANCIAL POSITION 4. COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES 5. FLEET STRATEGY 6. UP-SELLING STRATEGY 7. STRUCTURE AND ORGANIZATION 8. ROAD MAP 3
Slide 4: Transat Markets
TRANSAT MARKETS 2 SEASONS, 3 MARKETS 25 Sun 10 65 % 80 % Transatlantic 10 10 France 4
Slide 5: Key Financial Information - Winter
KEY FINANCIAL INFORMATION - WINTER 5
Slide 6: Key Financial Information - Winter: USD Impact on Costs
KEY FINANCIAL INFORMATION - WINTER VARIANCE SINCE MID-DECEMBER – USD IMPACT ON COSTS Sun destinations Q1 Q2 Winter Average selling price 2013 (1) $1,300 $1,300 $1,300 % in foreign currency (USD) (2) 65% 65% 65% As of December 12, 2013 2014 average rate 1.02 1.03 1.03 2013 average rate 1.00 1.00 1.00
Slide 7: Key Financial Information - Winter: Variance Since Mid-December
KEY FINANCIAL INFORMATION - WINTER VARIANCE SINCE MID-DECEMBER - SECOND QUARTER 2014 As at Dec 12, As at April 30, Variance since 2013 2014 Dec 12 Price 5.0% 3.5% -1.5% % Load Factor -2.0% -0.3% +1.7% Impact before FX +3.0% +3.2% +0.2% FX Impact (USD) -1.8% -3.8% -2.0% Net Impact on EBITDA +1.2% -0.
Slide 8: Key Financial Information - Winter: Impact on Adjusted EBITDA
KEY FINANCIAL INFORMATION - WINTER IMPACT ON ADJUSTED EBITDA HIGHLIGHTS (vs. 2013) Q1 Q2 Winter Prevented from improving our results due to a weaker CAD (-$22M YOY) Adjusted EBITDA 2013 (21M) 3M (18M) Sun destinations • Capacity decreased by 3% • Price up by 3.5% (vs. 5%(1)) ∆ FOREIGN CURRENCY (USD)
Slide 9: Sun Destinations Market: Capacity and Market Share
SUN DESTINATIONS MARKET CAPACITY AND MARKET SHARE 1 200 000 +7% Winter 2013 Market share – +0% Winter 2014 TOTAL Sun, Winter 2014 1 000 000 WINTER 2013 800 000 +4% 3,465,000 600 000 +4% % 400 000 TOTAL WINTER 2014 -2% 200 000 3,580,000 0 +3% Other 9 *Based on Transat estimates
Slide 10: Transat Sun Destinations
TRANSAT SUN DESTINATIONS OUTBOUND FROM CANADA Winter 2014: 990,000 travellers (excluding Florida) Destination of travellers Mexico 4 18 6 5 Dom. Rep. 3 33 Cuba % 45 25 % Caribbean 33 Jamaica 28 Central America 10
Slide 11: Sun Destinations: A Distinctive Experience
SUN DESTINATIONS A DISTINCTIVE EXPERIENCE Exclusive hotels Transat Holidays Collections 1 EXCLUSIVE HOTELS ROOM NIGHTS TRANSAT HOLIDAYS DISTINCTION 11 23 Meals and discovery 27 resorts in 2014 with all the comforts 19 exclusive hotels % % ROOM NIGHTS MARGIN NOLITOURS LUXURY Exciting packages 15 reso
Slide 12: Key Financial Information - Summer
KEY FINANCIAL INFORMATION - SUMMER 12
Slide 13: Key Financial Information - Summer: Currency Impact on Costs
KEY FINANCIAL INFORMATION - SUMMER YEAR OVER YEAR VARIANCE - CURRENCY IMPACT ON COSTS Transatlantic Q3 Q4 Summer Average selling price 2013 $850 $930 $890 % in foreign currency (USD, EUR, GBP) 55% 55% 55% As of June 12, 2014 2014 average rate 1.09 / 1.48 / 1.76 1.09 / 1.48 / 1.77 1.09 / 1.48 / 1.77
Slide 14: Transatlantic Market: Capacity and Market Share
TRANSATLANTIC MARKET CAPACITY AND MARKET SHARE (Transat Markets) 1 800 000 +17% Summer 2013 Actual Market share – 1 600 000 Summer 2014 Forecast TOTAL Transatlantic, SUMMER 2013 Summer 2013 1 400 000 1 200 000 3,776,000 1 000 000 0% 800 000 600 000 +6% TOTAL % +35% SUMMER 2014 -6% 400 000 4,173,000
Slide 15: Key Financial Information - Summer: Impact on Adjusted EBITDA
KEY FINANCIAL INFORMATION - SUMMER IMPACT ON ADJUSTED EBITDA (AS AT JUNE 12, 2014) Transatlantic Q3 Q4 Summer • Capacity is similar • 65% of inventory sold • Load factor down by 2.4% Adj. EBITDA 2013 54M 81M 135M • Prices up by 4.3% • Cost up by 4.4% ∆ Foreign currency (USD, EUR, GBP) (21M) (18M) (3
Slide 16: Transatlantic Market - Summer
TRANSATLANTIC MARKET - SUMMER (TRANSAT MARKETS IN 2013) Netherlands 49 38% % 51 European passengers Ireland Close to 50% UK & France passengers Belgium 38% UK Germany In foreign currency % 56 France Switzerland % 44 Italy Greece Portugal Spain Turkey Sales made in Canada 16 Sales made in Europe
Slide 17: Transatlantic Market: Air and Land
TRANSATLANTIC MARKET: AIR AND LAND PRODUCT AND CUSTOMER EXPERIENCE Europe: largest tourism market in the world SUMMER Transat (more than 50% of travellers inbound & outbound) CAPACITY Air France 3.8M seats in summer 2013 between Canada and Europe British Airways 2013 Air Canada Other TRANSAT STRATEG
Slide 18: Transatlantic Market: Air and Land
TRANSATLANTIC MARKET: AIR AND LAND PRODUCT AND CUSTOMER EXPERIENCE EACH YEAR, TRANSAT SELLS: More than 100,000 tours to destinations all around the world (40% in Canada or Europe), with an average margin of over 10% More than 200,000 room nights in Europe, to Canadian travellers More than 325,000 ro
Slide 19: Transat France
TRANSAT FRANCE MARKET CONDITIONS AND TRANSAT POSITION Demand still weak due to economic conditions Tunisia (which used to be the biggest market in the summer) shows positive signs Transat doing better than its peers Profitable in 2013 (and expects to remain profitable in 2014) VACANCES TRANSAT LOOK
Slide 20: Financial Position as at April 30, 2014
FINANCIAL POSITION AS AT APRIL 30, 2014 As at HIGHLIGHTS April 30, April 30, 2014 vs. 2013 Free Cash of $405M (in thousands of C$, except ratios) 2014 2013 • Increase of $68M YoY Actual Actual $ % • Equivalent to $150M liquidity Free cash 404,554 336,148 68,406 20.4% reserves in low season (fall) Ca
Slide 21: Initiatives - Costs & Margins
INITIATIVES - COSTS & MARGINS 2012: Achieved targeted cost reductions of $20M, mainly through headcount TARGETS and general expenses. 2013: Achieved targeted cost reductions of $15M, stemming in part from new operational processes at Air Transat, including the removal of one FA on A330s. 2014: Plan
Slide 22: Fleet Strategy
FLEET STRATEGY AIR TRANSAT WIDE-BODY W13 S13 W14 S14 W15 S15 Air Transat Base Fleet 21 21 21 21 21 21 Less:Temporarily withdrawn (1) - - (4) - (6) - Less:Sub-Lease (1) - (1) - (1) - Total 20 21 16 21 14 21 1) As announced in July, we signed an agreement for the renewal of six A330 with improved term
Slide 23: Fleet Strategy
FLEET STRATEGY AIR TRANSAT BEFORE IN WINTER 2015 Transat used a mix of wide-body aircraft Transat will migrate towards a fleet of variable (operated by Air Transat) and depending on the size for both wide-body and narrow-body in season, a variable number of narrow-body order to adjust the mix of air
Slide 24: Up-Selling Strategy
UP-SELLING STRATEGY AIR TRANSAT ANCILLARY REVENUES Revised terms and conditions: more flexibility for a fee (2012) IN DOLLARS / PASSENGER New cabin configuration contributed to an increase in the selling 50 16 price of Club seats 45 42,9 43,5 40 38,8 14 New search engine for selling tours on airtran
Slide 25: Structure and Organization
STRUCTURE AND ORGANIZATION Jean-Marc Eustache Simplified structure President and Chief Executive Officer in Canada Jean-François Lemay Annick Guérard Patrice Caradec Air Transat Transat Tours Canada Transat France Transat Discoveries and Vacances Tours Mont-Royal now under Transat Tours Canada Forma
Slide 26: Road Map for 2015 and Beyond
ROAD MAP FOR 2015 AND BEYOND • Winter (Sun market): − Sharp and rapid decrease of CAD during key booking period hurt profitability (market will quickly integrate higher prices to offset the cost increase) − Winter 2015: Full, favorable impact of internalized narrow-body fleet (plus expected reductio
Slide 27: Annex: CAD Depreciation
ANNEX : CAD DEPRECIATION USD/CAD HISTORICAL LINE CHART 1,14 1st quarter 2014 results release 1,12 Spot rate :1.11 (▲ +5%) Q2 2014 – Inventory sold: 70% Summer 2014 – Inventory sold: 27% 1,10 1,08 4th quarter 2013 results release Spot rate :1.06 Winter 2013-14 – Inventory sold: 44% Summer 2014 – Inve
Slide 28: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter Avg. 2004- (in thousands of C$) 2014 2013 2012 2011 2010 2008 REVENUES 1,965,842 1,912,538 2,041,722 1,911,263 1,852,948 1,482,107 EBITDAR(1) 11,197 22,688 (16,594) 26,440 23,386 110,072 EBITDA(1) (27,826) (18,287) (58,065) (5,470) (4,211) 8
Slide 29: Annex: Summer Financial Results
ANNEX: SUMMER FINANCIAL RESULTS (5-YEAR HISTORICAL) Summer Avg. 2009- (in thousands of C$) 2013 2012 2011 2010 2009 2013 REVENUES 1,735,620 1,672,497 1,746,901 1,645,929 1,539,010 1,667,991 EBITDAR(1) 175,228 121,910 78,907 157,145 90,128 124,664 EBITDA(1) 134,933 75,020 41,967 131,793 62,763 87,992
Slide 30: Annex: Annual Financial Results
ANNEX: ANNUAL FINANCIAL RESULTS (5-YEAR HISTORICAL) Annual Avg. 2004- (in thousands of C$) 2013 2012 2011 2010 2009 2013 REVENUES 3,648,158 3,714,219 3,568,164 3,498,877 3,545,341 3,179,158 EBITDAR(1) 197,916 105,316 105,347 180,531 147,682 165,689 EBITDA(1) 116,646 16,955 36,497 127,582 93,395 104,
Slide 31: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at April 30 As at October 31 (in thousands of C$) 2014 2013 2012 2011 2010 2013 2012 2011 2010 2009 Free cash + ABCP investment (fair value) 404,554 336,148 349,457 356,431 281,340 265,818 198,525 260,327 252,973 251,953 Cash in trust or otherwise res
Slide 32: Thank You
IN LINE WITH PLAN TO DELIVER EFFICIENCY GAINS OF $75M IN 2015 TAKING INTO ACCOUNT A WEAKER CAD: WINTER 2014 BETTER THAN ANTICIPATED, SUMMER EXPECTED TO BE SATISFACTORY THANK YOU!