Transat A.T. Inc. · TSX:TRZ
Transat A.T — Q4 2019 Earnings Presentation
35 slides from Transat A.T's earnings presentation, December 2019
Slide 1: Results for fourth quarter and year-end 2019
Results for fourth quarter and year-end 2019 Improved fourth quarter adjusted results to the same extent as third quarter and improved our annual adjusted results as well Continue to expect the deal to close in Q2/20 (calendar), subject to regulatory approvals INVESTOR’S PRESENTATION DECEMBER 2019
Slide 2: Caution regarding forward-looking statements / non-IFRS financial measures
Caution regarding forward-looking statements / non-IFRS financial measures This presentation contains certain forward-looking statements regarding the Corporation's expectation that travel reservations will follow the trends. In making these statements, the Corporation has assumed that the trends in
Slide 3: Table of contents
Table of contents SECTION PAGE 1 Recent developments and business model 5 2 Financial performance and outlook 8 3 Financial profile 15 4 2018-2022 Strategic plan 17 APPENDIX A1 Capacity breakdown 23 A2 Historical financial results and position 26 A3 Change in accounting policies and non-IFRS measure
Slide 4: Recent Developments & Business Model
Recent Developments & Business Model
Slide 5: M&A timeline / regulatory approvals update
M&A timeline / regulatory approvals update Late 2018 July 23, 2019 TRZ announces the mailing of its August 23, 2019 Following an approach by AC in fall circular in connection with the special TRZ shareholders approved the +13% spread vs. 2018, TRZ and AC started discussing a possible combination and
Slide 6: Passenger distribution and highlights
Skytrax Best Leisure Airline in the World Services-at- Transat value chain Tour Hotel Airline Distributor destination operator provider provider Hotel division ON HOLD FOR THE TIME BEING Sales & Airline Holiday experiences Winter Summer distribution and highlights (November to April) (May to October
Slide 7: Financial Performance & Outlook
Financial Performance & Outlook
Slide 8: Transatlantic capacity breakdown | Summer 2019
Transatlantic capacity breakdown │Summer 2019 (1) Summer 2018 (Final) Summer 2019 (Final) 2.50 +3% Total seats 10 2.25 in the market 5 2.00 5 42 Summer 2018 6 1.75 % (millions of seats) 1.50 5,135,000 11 1.25 +2% 1.00 Total seats 20 0.75 +4% in the market Air Canada Transat 0.50 Air France - KLM Luf
Slide 9: Fourth quarter financial performance
Fourth quarter financial performance Q4 Highlights (vs. 2018) 4th quarter results ended October 31 ➢ Transatlantic industry capacity up by 5% (in millions of C$, except per share amounts) 2019 vs. 2018 ➢ Q4 2018 restated – IFRS 9 and IFRS 15 impact 2019 2018 (2) (Restated) $ % ✓ Revenues: +$0.6M ✓ A
Slide 10: Summer financial performance
Summer financial performance S2 Highlights (vs. 2018) Q3 Q4 Summer ➢ Transatlantic industry capacity up by 5% Adj. EBITDA 2018 (1) 5M 36M 41M ➢ S2 2018 restated – IFRS 9 and IFRS 15 impact ✓ Revenues: -$31.4M IFRS 15 restatement (3M) (4M) (7M) ✓ Adjusted EBITDA: -$7.2M ✓ Adjusted net income (loss):-
Slide 11: Annual financial performance
Annual financial performance FY19 Highlights (vs. 2018) S1 S2 FY ➢ Transatlantic industry capacity up by 5% ➢ FY 2018 restated – IFRS 9 and IFRS 15 impact Adj. EBITDA 2018 (1) (25M) 41M 16M ✓ Revenues: -$143.6M ✓ Adjusted EBITDA: +$0.7M IFRS 15 restatement 8M (7M) 1M ✓ Adjusted net income (loss):+$0
Slide 12: Sun destinations capacity breakdown | Winter 2019-20
Sun destinations capacity breakdown │Winter 2019-20 (1) (Based on scheduled and chartered flight deployed) Winter 2019 (Final) 1.50 +5% Winter 2020 (Forecast) Total seats 4 +7% in the market 27 1.25 22 +7% +4% Winter 2019 1.00 % 4,697,000 (millions of seats) 0.75 23 25 Total seats 0.50 In the market
Slide 13: Winter financial outlook
Winter financial outlook Winter Highlights (vs. 2019) Q1 Q2 Winter ➢ Sun destination industry capacity up by 5% ➢ Sun destination program Adj. EBITDA 2019 (1) (38M) 3M (35M) ✓ Transat capacity up by 7% explained by: • Better utilization of our aircraft throughout the season ∆ FX / Fuel on costs on s
Slide 14: Financial Profile
Financial Profile
Slide 15: Current financial position
Current financial position Highlights Explanation of free cash variation ➢ Free cash: $565M vs. $584M (restated) = ∆ -$19M explained by ✓ IFRS 15: 2018 impact of ($10M) ✓ Monetary profitability attributable to : 1 (10) 13 6 • LTM adjusted EBITDA of $38M (7) 2 (41) • LTM net interest income of $20M 2
Slide 16: 2018-2022 Strategic Plan
2018-2022 Strategic Plan
Slide 17: 2018-2022 cost-reduction and margin-improvement initiatives
2018-2022 cost-reduction and margin-improvement initiatives Cumulative impact Fleet and network Revenue management 1 2 and ancillary revenues (cost-reduction and margin-improvement initiatives) ▪ Fleet adapted to our two leisure markets ▪ Revenue culture ✓ 17 new A321neo and neo LRs: Reduce cost vs
Slide 18: Fleet and network optimization
Fleet and network optimization 100% Airbus fleet by 2022 Strengthening our position (Cockpit commonality and mixed-fleet flying) in our markets Optimized crew scheduling Increase network robustness and depth Reduced maintenance and training costs Adding point-to-point frequencies and new destination
Slide 19: Ancillary revenues
Ancillary revenues Optimizing ancillary contribution (Airline and other) $98M FY2017A ($22/pax) $108M FY2018A ($22/pax) $162M FY2019A ($31/pax) $185M FY2020E ($32/pax) $195M FY2021E ($33/pax) $205M FY2022E $150M ($34/pax) ➢ As at October 31, 2019: +38% vs. 2018 $/pax ➢ Ancillary revenues include sea
Slide 20: Optimizing our distribution and extending our digital footprint
Optimizing our distribution and extending our digital footprint Direct-sales evolution Data and digital strategy Flights Packages 15% 1 Creating a fully integrated centralized customer file accessible to all points of contact FY2017 47% 50% 17% Direct Web, call 68% centre and wholly-owned 2 Launchin
Slide 21: Hotel development strategy (on hold for the time being)
Hotel development strategy (ON HOLD FOR THE TIME BEING) ORIGINAL INVESTMENT PLAN BREAKDOWN (1) A total investment of ~US$750M required to establish a presence of 5,000 rooms in Transat’s major markets by end of 2024 with a mix of fully-owned (3,000 rooms) and strictly managed (2,000 rooms) Mexico •
Slide 22: A1 Capacity Breakdown
A1 Capacity Breakdown
Slide 23: Sun destinations capacity breakdown by destination and origin – Winter 2019/20
Sun destinations capacity breakdown by destination and origin – Winter 2019/20 TRZ – Origins Global Market Overview 14 Quebec 4.9M seats between Canada and Mexico, Dominican Republic, 3 Cuba, Jamaica, Caribbean and C&S America Ontario One of the largest sun and beach markets in the world % 45 Atlant
Slide 24: Transatlantic capacity breakdown by destination and origin – Summer 2019
Transatlantic capacity breakdown by destination and origin – Summer 2019 TRZ – Origins Global Market Overview 11 5.4M seats between Canada and Europe (including United Quebec Kingdom) Europe: Largest tourism market in the world % 49 Ontario Transat Strategy 40 Western Similar capacity to previous ye
Slide 25: A2 Historical Financial Results and Position
A2 Historical Financial Results and Position
Slide 26: 5-year historical financial results
5-year historical financial results (Results from continuing operations excluding Jonview and Ocean Hotels) (1) 2018 (in millions of C$) 2014 2015 2016 2017 2019 (Restated) (2) Revenues 1,663.6 1,547.0 1,598.8 1,552.9 1,515.5 1,545,0 Adjusted EBITDAR 18.2 33.2 30.9 33.6 46.9 44.2 Adjusted EBITDA (20
Slide 27: 5-year historical winter financial position
5-year historical winter financial position (continuing operations) As at January 31 As at April 30 (in thousands of C$) 2015 2016 2017 2018 (1) (2) 2019 (2) 2015 2016 2017 2018 (1) (2) 2019 (2) Free cash 371,160 427,541 454,827 749,342 620,445 427,880 440,559 566,288 903,300 796,322 Cash in trust o
Slide 28: 5-year historical summer financial position
5-year historical summer financial position (continuing operations) As at July 31 As at October 31 (in thousands of C$) 2015 2016 2017 2018 (1) (2) 2019 (2) 2015 2016 2017 (1) 2018 (1) (2) 2019 (2) Free cash (2) 486,970 470,065 580,739 867,247 723,843 313,987 363,664 593,582 593,654 564,844 Cash in
Slide 29: A3 Change in Accounting Policies and Non-IFRS Measures
A3 Change in Accounting Policies and Non-IFRS Measures
Slide 30: IFRS 9 and IFRS 15 change in accounting policies
IFRS 9 (Financial instruments) and IFRS 15 (Revenue from contracts with customers) Change in accounting policies Summary of accounting policies ➢ Transat adopted IFRS 9, Financial Instruments, and IFRS 15, Revenue from Contracts with Customers, on Service type Old accounting policy (IAS 18) New acco
Slide 31: IFRS 9 and 15 financial impact
IFRS 9 and 15 financial impact Impact on profit & loss Q1-2018 Q2-2018 S1-2018 (in millions of C$) Before IFRS Adjustments After IFRS Before IFRS Adjustments After IFRS Before IFRS Adjustments After IFRS Revenue 725.8 (77.4) 648.4 902,0 (34.8) 867.2 1,627.8 (112.2) 1,515.5 Adjusted EBITDA (31.0) 2.3
Slide 32: Non-IFRS financial measures
Non-IFRS financial measures Non-IFRS financial measures included in this presentation are not defined under IFRS. Therefore, It is likely that the non-IFRS financial measures used by the Corporation will not be comparable to similar measures reported by other issuers or those used by financial analy
Slide 33: A4 Executive Team
A4 Executive Team
Slide 34: Experienced and results-driven executive team
Experienced and results-driven executive team Jordi Solé was appointed President of Transat’s hotel division in 2018. Since 2001, he Jean-Marc Eustache was the principal architect of the 1987 creation of Transat A.T. has overseen the operations of resorts belonging to several major international hot
Slide 35: Results for fourth quarter and year-end 2019
Results for fourth quarter and year-end 2019 Improved fourth quarter adjusted results to the same extent as third quarter and improved our annual adjusted results as well Continue to expect the deal to close in Q2/20 (calendar), subject to regulatory approvals INVESTOR’S PRESENTATION DECEMBER 2019