Capital A Berhad · MYX:CAPITALA
Capital A Berhad — AirAsia — Q3 FY2005 Earnings Presentation
40 slides from Capital A Berhad's earnings presentation, May 25, 2005
Slide 1: Now Everyone Can Fly – 2005 Third Quarter Results
“Now Everyone Can Fly” 2005 Third Quarter Results 25th th May 2005
Slide 2: Disclaimer
Disclaimer Now Everyone Can Fly Information contained in our presentation is intended solely for your personal reference and is strictly confidential. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the c
Slide 3: Agenda
Agenda Now Everyone Can Fly 1. Highlight & Events 2. Results Commentary – Third Quarter 2005 3. Cost Management 4. Airbus Updates 5. Outlook Question & Answers 2
Slide 4: 1. Highlight & Events
CONFIDENTIAL Now Everyone Can Fly 1. Highlight & Events
Slide 5: Strong growth trajectory despite tough market conditions
Strong growth trajectory despite tough market conditions Now Everyone Can Fly Q3FY05 passenger numbers up 52% YoY – not even slow season or a Tsunami gets in the way of growth Profits up 152% – major growth on Q3FY04, despite a 48% rise in jet fuel prices Loads and fares levels improve – unit
Slide 6: Other developments
Other developments Now Everyone Can Fly Encouraging debut performance in Indonesia – carried 119,992 passengers with only two aircraft Profitability in Thailand – first profitable quarter (turnaround achieved despite tsunami & terrorist attacks) 100 Airbus Order Concluded – guarantees continuo
Slide 7: Three routes added in the Network
Three routes added in the Network Now Everyone Can Fly Destinations Period Served* Jan 2002 6 Sep 2002 7 Dec 2002 8 Mar 2003 10 Jun 2003 11 Sep 2003 13 Dec 2003 15 Mar 2004 20 Jun 2004 26 Aug 2004 28 Sep 2004 33 Dec 2004 48 Apr 2005 51 * Excludes Kuala Lumpur and Bangkok as destinations We fly to mo
Slide 8: Growth, Growth, Growth
Growth, Growth, Growth Now Everyone Can Fly Passengers Flown by AirAsia Group (‘000) 4,545 2,839 1,561 1,630 1,481 1,354 611 291 M ar-2001 Jun-2002 Jun-2003 Jun-2004 1Q-2005 2Q-2005 3Q-2005 2005(ytd) Î There is no stopping the LCC phenomenon 7
Slide 9: New routes, rather than falling demand impact loads
New routes, rather than falling demand impact loads Now Everyone Can Fly ASK, RPK and Load Factor (%) AirAsia Group 7000 78% ASK (Malaysia) ASK (Associates) 76% 6000 Load Factor 74% 5000 72% 4000 70% 3000 68% 2000 66% 1000 64% 0 62% 2002 2003 2004 2005 (ytd) Not just any kind of growth, but HIGH QUA
Slide 10: Profitability linked to fleet development
Profitability linked to fleet development Now Everyone Can Fly Aircraft Expansion Indonesia Thailand Malaysia 2 2 6 6 4 20 18 13 7 2 3 Jun-02 Jun-03 Jun-04 Mar-01 Mar-05 NOW Slight shortage of originally stated number of aircraft - merely a delay in rollout; confident of acquiring 40 aircraft by y
Slide 11: Impact of aircraft deployment delays - YTD
Impact of aircraft deployment delays - YTD Now Everyone Can Fly Average # aircraft Capacity loss Actual ASK lost Forecast ASK 588 28.0 77 24.43 22.8 21.95 2189 2348 Quarter 2 Quarter 3 Quarter 2 Quarter 3 We are 3.57 aircraft short of forecast Resulting capacity loss equates to 665 million ASK (
Slide 12: Cost Management
Cost Management Now Everyone Can Fly Cost / ASK (US cents) Cost / ASK Non Fuel Cost 3.40 2.35 2.90 1.96 2.50 1.71 2.18 2.13 2.12 1.20 1.03 1.00 2002 2003 2004 Q1 2005 Q2 2005 Q3 2005 Malaysian Operations Superior cost containment despite fuel price impact 11
Slide 13: What about Profit Margins?
What about Profit Margins? Now Everyone Can Fly Profitability Air Ryan Easy Virgin Jet South AVERAGE Margin% (latest) Asia air Jet Blue Blue West EBITDAR 35 37 17 24 18 16 24.3 EBIT 24 17 5 11 7 6 11.6 Net Income 25 12 4 8 2 5 9.2 Source: AirAsia; Bloomberg; latest company reports The numbers speaks
Slide 14: People, People, People
People, People, People Now Everyone Can Fly Timothy Ross Independent Director Research Analyst for UBS - 14 years experience in the financial industry - experience spanning, Asia Pacific, Europe and the USA Highly experienced & well regarded in the airline industry - voted #1 in Institutional In
Slide 15: 2. Third Quarter Results Commentary
CONFIDENTIAL Now Everyone Can Fly 2. Third Quarter Results Commentary
Slide 16: Operational Statistics
Operational Statistics Now Everyone Can Fly Passenger volumes increased by 52% YoY Superior capacity growth YoY (ASK increased by 71%, RPK increased by 72%) Load factor improved by 2% point; stronger demand by the traveling public Superior cost containment. Cost savings via economies of scal
Slide 17: Operational Statistics
Operational Statistics Now Everyone Can Fly Operational Statistics Q3 -2005 Q3 -2004 ∆ y-o-y Average Load factor 72% 70% # Passengers 1,099,596 722,150 52% Average fare (RM) 143 129 11% RPK (mn) 1187 689 72% ASK (mn) 1650 965 71% Rev/RPK (US cents) 3.63 3.78 (4%) Cost/ASK (US cents) 2.12 2.10 1% # a
Slide 18: Thailand takes off
Thailand takes off Now Everyone Can Fly Thailand Statistics Q3 -2005 Q2 -2005 Q1 -2005 Q4 -2004 Average Load factor 69% 77% 84% 74% # Passengers 410,005 434,865 369,340 230,831 Average fare (RM) 120 115 99 99 Cost / ASK (US cents) 2.50 2.57 3.14 2.83 RPK (mn) 351 409 314 182 ASK (mn) 508 544 371 247
Slide 19: Financial Highlights – Q3 2005
Financial Highlights – Q3 2005 Now Everyone Can Fly Year End : June Q3 2005 Q3 2004 ∆ Figures in RM ‘000, unless otherwise stated Revenue 163,911 98,134 67% EBITDAR 57,332 31,694 81% EBITDA 46,999 21,076 123% EBIT 39,315 17,210 128% Share of Associates (1,106) Net Income 40,611 16,172 152% ASK (mill
Slide 20: Performance Indicator
Performance Indicator Now Everyone Can Fly Figures in % Q3 2005 Q2 2005 Q3 2004 FY 2004 EBITDAR Margin 35 38 32 29 EBIT Margin 24 26 18 16 Net Income Margin 25 25 17 15 Consistent EBITDAR margin improvement Profitability intact despite losses in Indonesia and fuel price spike 19
Slide 21: Balance Sheet
Balance Sheet Now Everyone Can Fly Balance Sheet (RM’ million) 899 938 Post IPO 150 161 60 3 35 49 46 29 17 -105 -436 -582 (*) Mar-01 Jun-02 Jun-03 Jun-04 Sep-04 Dec-04 Mar-05 Note: (*) For the 15 months ended June 30, 2002 SHR Equity Net Debt Consistently building shareholder value 20
Slide 22: Cash Generating Machine
Cash Generating Machine Now Everyone Can Fly Cashflow from Operating Activities (RM’ million) 157 -12 29 -19 -3 15 Mar-00 Mar-01 (*) Jun-02 Jun-03 Jun-04 YTD-05 -18 Note: (*) For the 15 months ended June 30, 2002 “Normalized CFO” is RM157m. RM175m is paid for aircraft and fuel deposits. Therefore CF
Slide 23: 3. Cost Management
CONFIDENTIAL Now Everyone Can Fly 3. Cost Management
Slide 24: Operating Expenses - YTD
Operating Expenses - YTD Now Everyone Can Fly Operating Expenses (RM ‘000) 9 months - 2005 % Revenue Revenue 466,741 − Staff Cost (53,935) 11.6 − Fuel and Oil (183,826) 39.4 − User & Station Charges (23,467) 5.0 − Maintenance & Overhaul (41,511) 8.9 − Others (5,419) 1.2 EBITDAR 158,583 34.0 - Cost o
Slide 25: Cost / ASK – what changed from last year to this year?
Cost / ASK – what changed from last year to this year? Now Everyone Can Fly 9months-2005 : 2.11 vs. 9months-2004 : 2.32 (9% improvement) (US cents) Cost per Change Reasons ASK (%) Staff cost 0.31 -29.7 Improved productivity Maintenance & Overhaul 0.25 -44.1 Economies of Scale Good Other costs 0.06 -
Slide 26: Cost Management – more than just managing fuel price
Cost Management – more than just managing fuel price Now Everyone Can Fly Cost / ASK versus Singapore Jet Kerosene Cost / ASK 70 Jet Kerosene ($/bbl) 60 3.40 50 2.90 2.50 40 2.08 2.13 2.12 2.11 30 20 10 0 2002 2003 2004 1Q 2005 2Q 2005 3Q 2005 YTD Malaysian Operations We dealt with escalating fuel p
Slide 27: Fuel Hedge FY2006
Fuel Hedge FY2006 Now Everyone Can Fly WTI Crude Oil Capped Swap for FY2006 - Fixed price of USD40/bbl but capped at US$52/bbl - Discount of US$ 12 / bbl for WTI above US$ 52 /bbl - 1HFY06 fully covered, 2HFY06 50% covered WTI Call Option (Insurance cover) for FY2006 - Strike price of US$ 70/bbl
Slide 28: Rationale for crude oil instead of jet fuel
Rationale for crude oil instead of jet fuel Now Everyone Can Fly Rationale for using crude oil instead of jet fuel - Expect crack to dip after recent premium to crude price - Average crack past 5 years is close to US$4 as oppose to current US$15 Refining margin (Crack) 25 20 15 US$ / bbl 10 LT-ave
Slide 29: 4. Airbus Updates
CONFIDENTIAL Now Everyone Can Fly 4. Airbus Updates
Slide 30: Secured 100 Airbus A320
Secured 100 Airbus A320 Now Everyone Can Fly Purchase agreement with Airbus concluded on 25th March 2005. (60 firm orders with options to purchase an additional 40) Maiden delivery of two aircraft expected December 2005 Boeing 737-300 aircrafts will be phased out sequentially. AirAsia will event
Slide 31: Why buy 100 aircraft?
Why buy 100 aircraft? Now Everyone Can Fly Indonesia was not part of the initial deal - Indonesia’s requirement alone is huge - AWAIR’s operations for the past three months demonstrates just that (strong demand and great load factor) - many domestic routes that haven’t been served Route Network
Slide 32: 5. Outlook
CONFIDENTIAL Now Everyone Can Fly 5. Outlook
Slide 33: Malaysia – Going Strong
Malaysia – Going Strong Now Everyone Can Fly Shortage of planes restricts initial growth forecast Sentiment for travel muted in January & early February due to Tsunami tragedy. Recovery in air travel during mid-February Malaysia Airlines (MAS) implementing Fuel Surcharge on local Routes - Peni
Slide 34: Thailand – Turnaround Achieved
Thailand – Turnaround Achieved Now Everyone Can Fly ThaiAirAsia reached break-even - despite Tsunami tragedy - despite poor sentiment to travel - despite operating with lower number of aircraft Shortage of planes restricts initial growth forecast Competition is rationalizing, average fares imp
Slide 35: Indonesia – Jewel in the Crown
Indonesia – Jewel in the Crown Now Everyone Can Fly Start-up losses kept at a minimum Tremendous support evident in exceptionally high load factor (proof that the model works in Indonesia) Operating with two aircraft, will have six aircraft by end 2005 Application for name change to “Indones
Slide 36: Ancillary Income Progress
Ancillary Income Progress Now Everyone Can Fly Go Holiday – AirAsia’s holiday package option - customers increasingly comfortable with Go-Holiday - developing other opportunities (insurance; travel & health) Advertising – paying homage to our strong brand - aircraft body advertising - web portal
Slide 37: Prospectus profit estimate
Prospectus profit estimate Now Everyone Can Fly Will miss the Initial Public Offering forecast Aircraft availability culprits - average aircraft for FY2005 is 16.28 as oppose to planned 19.93 Thailand - lower number of aircraft in operation - tsunami disaster and civil unrest dent sentiment for
Slide 38: Expansion Strategy
Expansion Strategy Now Everyone Can Fly Increasing frequency to existing destinations - expand popular routes (KL-Bangkok, KL-Jakarta, Bangkok-Singapore) Introduce new connectivity from existing airports - introducing Senai-Sibu, commencing 25 May Use new airlines (Thailand & Indonesia) to cap
Slide 39: AirAsia - Concluding Remarks
AirAsia - Concluding Remarks Now Everyone Can Fly Well positioned for growth - excellent reputation and service level. - domestic operations in 3 countries (unlikely to be replicated) - diverse route network (51 routes to date) - strong business model (working exactly the way it should) Southeas
Slide 40: Thank You – Question & Answer
Thank You – Question & Answer Now Everyone Can Fly 39