Capital A Berhad · MYX:CAPITALA
Capital A Berhad — AirAsia Berhad — Q4 2008 Earnings Presentation
40 slides from Capital A Berhad's earnings presentation, Feb 27, 2009
Slide 1: October-December Quarter 2008 Results
October-December Quarter 2008 Results 27 February 2008
Slide 2: Disclaimer
Disclaimer Information contained in our presentation is intended solely for your reference. Such information is subject to change without notice, notice, its accuracy is not guaranteed and it may not contain all material information concerning the Company. Neither we nor our advisors make any repres
Slide 3: Most airlines experienced the "Triple Squeeze"
Most airlines experienced the “Triple Squeeze” Falling Demand Reduction in Fuel Surcharges
Slide 4: A Tale of Two Cities
“A Tale of Two Cities” Cities” AirAsia Expanding from all sides Sustained Strong Demand No Fuel No more Surcharge hedges Equals increase We pay spot in demand and fuel price load factor Source: Happy AirAsia Customer 3
Slide 5: A Tale of Two Cities: Passengers Carried
“A Tale of Two Cities” Cities” AirAsia Passenger Carried ‘000 2008 21% 2007 3342 24% 3018 20% 2836 2758 21% 2612 2360 2440 2160 Q1 Q2 Q3 Q4 AirAsia continues to enjoy Other airlines are experiencing strong passenger growth sharp fall in demand – 22% passenger growth in 2008 to – Asia Pacific passeng
Slide 6: Key Highlights for Oct-Dec Quarter
Key Highlights for Oct- Oct-Dec Quarter Delivered operating profit in a very tough environment – EBITDAR growth of 39% over the same period last year – operating profit growth of 106% over the same period last year Contrarian approach, keeping the growth intact – introduced 32 routes in 2008 – Group
Slide 7: Consistently Gaining Market Share
Consistently Gaining Market Share Domestic Malaysia Market Share Thailand Market Share Indonesia Market Share 60% 10% 50% 58% 50% 8% 52% 8% 40% 7% 40% 40% 41% 30% 34% 6% 30% 28% 4% 28% 4% 25% 20% 22% 20% 2% 20% 17% 10% 10% 2% 12% 0% 0% 0% 2002 2003 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 2
Slide 8: The Unsung Hero – Our Network
The Unsung Hero – Our Network Period # Routes Served Jan 2002 6 Jun 2003 11 Jun 2004 26 Jun 2005 52 Jun 2006 65 Jun 2007 75 NOW 110 Latest Route KL – Tiruchirappalli Upcoming Routes KL – Dhaka KL – Yangon Jakarta – Singapore Bali – Singapore 37 unique routes 7
Slide 9: Results Commentary
Results Commentary
Slide 10: Q4 2008: Revenue Growth Components
Q4 2008: Revenue Growth Components Year- Year-Over- Over-Year % Change + 28% 32% 21% 7% 4% Revenue Volume Price Ancillary FY 2008 37% 22% 11% 4% Strong passenger growth demand Price increase from effective yield management Consistent ancillary income growth 9
Slide 11: Strong Passenger Growth
Strong Passenger Growth Passenger Carried ‘000 2008 2007 21% 3342 Continued strong passenger 24% 3018 growth momentum 20% 21% 2612 2836 2758 – 22% passenger growth in 2008 to 11.8 2360 2440 million passengers 2160 – more people switching from full service carriers to AirAsia (others are shrinking wh
Slide 12: Higher Average Fare & Yields
Higher Average Fare & Yields Average Fare (RM) 2008 2007 7% 229 Consistent average fare increase 214 – competitors have increased fares 11% 204 substantially 16% 198 10% 12% 195 189 184 – introduction of more international 171 170 174 flights which commands higher fares – strong passenger demand for
Slide 13: Driving Growth from Ancillary Income
Driving Growth from Ancillary Income Strong growth from ancillary income – fantastic support to our new products and initiatives (checked baggage, food, etc) Re- Re -branding Go- Go- Holiday to Red2go Travel 3Sixty @ in in--flight magazine New products stream, monetizing existing assets – assigned s
Slide 14: Driving High Profit Margins via Ancillary Income
Driving High Profit Margins via Ancillary Income RM million 23.1 90 22.1 24. 0 23. 0 80 Spend / pax 22. 0 21. 0 20. 0 70 17.8 73.8 19. 0 18. 0 15.7 69.7 60 15.2 15.1 17. 0 16. 0 13.3 15. 0 50 12.0 14. 0 50.3 13. 0 12. 0 40 11. 0 41.5 40.9 10. 0 37.0 30 9. 0 31.4 8. 0 7. 0 20 25.9 6. 0 5. 0 4. 0 10 3
Slide 15: Capturing New Markets
Capturing New Markets AirAsia Corporate (launched early 2008) – many corporations signing up with AirAsia corporate travel – down trading is prevalent (blue chip companies crossing over to AirAsia) – we have set up a team to attract and manage more corporate clients Government warrants (launched ear
Slide 16: Cost / ASK – year on year Comparison
Cost / ASK – year on year Comparison Cost Breakdown Oct- Oct-Dec Oct- Oct-Dec ∆ (%) Reason (US cents / ASK) 2008 2007 Staff Costs 0.27 0.35 (22%) Productivity gains Fuel and Oil 1.84 1.77 4% Higher jet fuel price User & Station Charges 0.35 0.21 67% More international routes bias Maintenance and Ove
Slide 17: Exceptional Losses
Exceptional Losses long--term gains Short term pain for long – total unwinding cost of RM426 million – this restructuring will save the Group a substantial amount of money over the entire period of the contract Unwind fuel hedging contracts – we have no more fuel hedges, purchasing fuel at spot Unwi
Slide 18: Summary of 2008 Financials
Summary of 2008 Financials Figures in RM'000 Q1-2008 Q2-2008 Q3-2008 Q4-2008 2008 Revenue 535,321 608,352 658,475 838,324 2,640,472 EBITDAR 130,745 151,442 69,248 356,798 708,233 Profit before taxation 110,174 (46,901) (504,327) (221,301) (662,355) add back Forex (gain) / loss (86,166) 76,885 212,51
Slide 19: Updates on Associates
Updates on Associates
Slide 20: Updates on Associates
Updates on Associates Thai updates – operating profit THB84 million (RM8.8 million) – 15% lower passenger YoY (lowered capacity deployment to manage the challenging operating environment in Thailand) – yields are 23% higher YoY with 75% load factor – Thailand now has eight new Airbus A320 aircraft –
Slide 21: Managing the Crisis
Managing the Crisis
Slide 22: AirAsia's Method to Manage this Crisis
AirAsia’ AirAsia’s Method to Manage this Crisis Unprecedented levels of volatility make planning extremely difficult (Fuel, Interest Rates, Liquidity Levels, Forex) Forex ) Positioning for very competitive landscape Costs and efficiencies will be paramount Brand must be positive in consumer minds Pr
Slide 23: Quality Against Economic Recession
Quality Against Economic Recession Assigned Seating - ability to choose any seat of your preference - Charge a nominal fee The only airline in the Brand new fleet world to offer such - Malaysia is 100% equipped As Good as guarantee with brand new Airbus A320 Full Service - One of the youngest fleet
Slide 24: 2009 Outlook
2009 Outlook
Slide 25: No Slow Down in Demand
No Slow Down in Demand 70% % Total seats sold as of 25 February 67% 2009 2008 45% 43% 20% 18% 13% 12% Feb March April May Cut off date 25 February 2009 2008 (%) Seats sold 1,841,684 1,536,459 20% Forward booking trend is consistent to last year Continuing with our promotional campaigns to maintain h
Slide 26: 2009 Aircraft Deliveries
2009 Aircraft Deliveries Airbus A320 Delivery Schedule # Aircraft Quarter 1 (Jan – Mar) 3 Quarter 2 (Apr – Jun) 1 Quarter 3 (Jun – Sep) 4 Quarter 4 (Oct – Dec) 6 Total Airbus A320 Delivery 14 Taking delivery of 14 Airbus A320 aircraft Returning/Selling 9 Boeing 737-300 aircraft Net addition of 5 air
Slide 27: Profitable Route Expansion Plan
Profitable Route Expansion Plan Will launch at least 15 new routes in 2009 – combination of new routes and cross linking existing bases Emphasis on Singapore – increasing frequency for Kuala-Lumpur to Singapore (currently 7x daily) – increasing flights to Kota Kinabalu, Kuching – new flights to Pena
Slide 28: Performance of Recently Launched Routes
Performance of Recently Launched Routes Kuala Lumpur to Tiruchirappali (% tickets sold as of 25 Feb ‘ 09) Dec’08 Jan’09 Feb’09 Mar’09 Apr’09 May’09 90% 92% 90% 79% 56% 49% Final Load Factor Strong Demand for new Routes % tickets sold as of 25 Feb 2009 Route Launch Date Mar Apr May KL – Dhaka Mar 77%
Slide 29: Sustained Passenger Growth
Sustained Passenger Growth Passengers Flown by AirAsia and AirAsia Associates (‘000) 2 2 ,0 0 0 18 ,3 4 9 CAGR (2008:2001) 51% 15 ,3 3 5 12 ,10 7 7 ,3 7 0 4 ,8 6 8 2 ,0 9 4 1,0 4 1 2002 2003 2004 2005 2006 2007 2008 2009F Benefiting from slower economic growth – people switching for better value pro
Slide 30: Secured Funding Requirements for Aircraft Purchase
Secured Funding Requirements for Aircraft Purchase Secured funding arrangements for the next 37 aircraft – these are for 2009 and 2010 aircraft deliveries – Facility from Major Banking Institutions in place European Export Credit Agencies (ECA) backing as a guarantor – Helps to secure attractive int
Slide 31: Management Guidance 2009
Management Guidance 2009 Management Guidance for 2009 Notes Passenger carried 13.5 million − Frequency addition (AirAsia Berhad) Berhad) − Launch of new routes Rev / ASK Stable − stable ticket price from increased number of international flights − Some routes will mature − Strong growth from ancilla
Slide 32: Summary
Summary Challenging market, but positive for LCC – fuel price has receded to attractive levels – more people switching to LCC as first choice of travel – passengers looking for value, LCC is the best value proposition Competitive environment has improved – competitors have reduced capacity and cance
Slide 33: Appendix
Appendix
Slide 34: Fleet Composition
Fleet Composition Operational Aircraft Count Dec 2008 Malaysia 44 Thailand 16 Indonesia 15* Group Total 75 Aircraft Type # Airbus A320 56 # Boeing 737-300 19 * Includes 3 Boeing 737-300 that is awaiting to be sold off 33
Slide 35: Financial Data – Fourth Quarter
Financial Data – Fourth Quarter Quarter Ended: 31 December Oct-Dec Oct-Dec ∆ (%) RM'000 2008 2007 Ticket Sales 764,503 591,267 29% Ancillary Income 73,821 41,526 78% Revenue 838,324 632,792 32% Exceptional item gain / (loss) (425,668) 0 n/a EBITDAR 356,798 256,829 39% Operating Profit 193,610 94,208
Slide 36: Operating Data – Fourth Quarter
Operating Data – Fourth Quarter Oct-Dec Oct-Dec Quarter Ended: 31 December ∆ (%) 2008 2007 Passengers Carried 3,342,436 2,757,967 21% ASK (million) 5,006 4,274 17% RPK (million) 3,800 3,223 18% Seat Load Factor 78.4% 77.8% 0.6 ppt Average Fare (RM) 229 214 7% Rev / ASK (sen) 16.75 14.81 13% Rev / AS
Slide 37: Operating Data – Fourth Quarter
Operating Data – Fourth Quarter Oct-Dec Oct-Dec Quarter Ended: 31 December ∆ (%) 2008 2007 Average fare (RM) 228.7 214.4 7% Ancillary Income / pax (RM) 22.1 15.1 47% Unit Revenue / pax (RM) 250.8 229.4 9% Fuel consumed ( barrels) 887,259 748,596 19% Unit fuel price ($/barrel) 103.5 100.9 3% Average
Slide 38: Financial Data – Full Year 2008
Financial Data – Full Year 2008 Full Year Ended: 31 December Jan-Dec Jan-Dec ∆ (%) RM'000 2008 2007 Ticket Sales 2,405,661 1,786,812 35% Ancillary Income 234,812 135,900 73% Revenue 2,640,472 1,922,712 37% Exceptional item gain / (loss) (640,948) 73,988 n/a EBITDAR 708,233 671,018 6% Operating Profi
Slide 39: Operating Data – Full Year 2008
Operating Data – Full Year 2008 Jan-Dec Jan-Dec Full Year Ended: 31 December ∆ (%) 2008 2007 Passengers Carried 11,808,058 9,717,480 22% ASK (million) 18,717 14,536 29% RPK (million) 13,485 11,136 21% Seat Load Factor 75.4% 78.6% -3.2 ppt Average Fare (RM) 204 184 11% Rev / ASK (sen) 14.11 13.23 7%
Slide 40: Operating Data – Full Year 2008
Operating Data – Full Year 2008 Jan-Dec Jan-Dec Full Year Ended: 31 December ∆ (%) 2008 2007 Average fare (RM) 203.7 183.9 11% Ancillary Income / pax (RM) 19.9 14.0 42% Unit Revenue / pax (RM) 223.6 197.9 13% Fuel consumed ( barrels) 3,254,201 2,637,839 23% Unit fuel price ($/barrel) 127.9 87.2 47%