Transat A.T. Inc. · TSX:TRZ
Transat A.T — Investor Presentation (March 2015)
39 slides from Transat A.T's investor presentation, March 2015
Slide 1: 2015-2017 Strategic Plan: Growth and Market Development
2015-2017 STRATEGIC PLAN: GROWTH AND MARKET DEVELOPMENT PLAN INCLUDES $100 MILLION IN COST REDUCTIONS AND NEW REVENUES Investors Presentation March 2015
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE CORPORATION. THESE FORWARD-LOOKING STATEMENTS, BY THEIR NATURE, NECESSARILY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE
Slide 3: Agenda
AGENDA 1. TRANSAT MARKET 4 2. KEY FINANCIAL INFORMATION WINTER 2015 7 SUMMER 2015 14 3. 2015-17 STRATEGIC PLAN 18 4. FINANCIAL POSITION 29 3
Slide 4: Distinct Winter and Summer Markets
DISTINCT WINTER AND SUMMER MARKETS 20% 10% 80% November 60% May to October to April 10% 20% South France Transatlantic 4
Slide 5: Sun Destinations Market
SUN DESTINATIONS MARKET CAPACITY AND MARKET SHARE (TRANSAT MARKETS) 1,400,000 +16% Winter 2014 Actual Market share – Winter 2015 Forecast 1,200,000 TOTAL SEATS Sun, Winter 2015 -6% WINTER 2014 8 1,000,000 +10% 3,580,000 23 800,000 16 +23% 600,000 % TOTAL SEATS 21 400,000 +50% WINTER 2015 32 200,000
Slide 6: Transatlantic Market
TRANSATLANTIC MARKET (TRANSAT ROUTES, SUMMER 2014) Netherlands 46 Total sales: % 54 39% European passengers 860,000 seat Ireland France and UK: Belgium 50% of passengers UK 39 39% of sales % Germany Switzerland In foreign currency 61 55 % 45 France Italy Greece Sales in Canada Spain Sales in Europe
Slide 7: Key Financial Information – Winter
KEY FINANCIAL INFORMATION – WINTER 7
Slide 8: Key Financial Results: First Quarter 2015
KEY FINANCIAL RESULTS FIRST QUARTER 2015 1st quarter ended January 31 HIGHLIGHTS (vs. 2014) (in thousands of C$) 2015 2014 2015 vs. 2014 Prevented from improving our results : Actual Actual $ % • Drop in value of CAD (-16M YOY) • Decrease of fuel price (+ 1M YOY) REVENUES 788,581 847,222 (58,641) -6
Slide 9: CAD Depreciation
KEY FINANCIAL INFORMATION – WINTER CAD DEPRECIATION 1.28 1.26 1.24 Between January and October 2014 (10 months) Actual 1.22 1,27 Winter 2014-15 Summer 2015 USD/CAD spot rate : 1.08-1.12 1.20 hedging program start hedging program start 1.18 USD/CAD spot rate : 1.04 USD/CAD spot rate : 1.08 1.16 1.14
Slide 10: USD & Fuel Impact on Costs (2015 vs. 2014)
KEY FINANCIAL INFORMATION – WINTER USD & FUEL IMPACT ON COSTS (2015 VS. 2014) Fuel exposure Sun destinations (per passenger) • 15% of our costs on a sun Q1 Q2 Winter destination package Average selling price 2014(1) $1,370 $1,370 $1,370 • Mainly paid in USD • Fuel at airports did not go down as % Fu
Slide 11: USD and Fuel Variance on Costs Year-over-Year Since December
KEY FINANCIAL INFORMATION - WINTER USD AND FUEL VARIANCE ON COSTS YEAR-OVER-YEAR SINCE DECEMBER Sun destinations (per passenger) Since December Q1 Q2 Winter CAD vs USD : -10% Fuel (in USD) : -8%(2) Average selling price 2014(1) $1,370 $1,370 $1,370 Since December for Q1 As of March 9, 2015 Fuel / FX
Slide 12: Impact on Q2 Adjusted EBITDA incl. Hotels JV
KEY FINANCIAL INFORMATION – WINTER IMPACT ON Q2 ADJUSTED EBITDA INCL. HOTELS JV (AS OF MARCH 9, 2015) Sun destinations (Q2) • 75% of inventory sold Sun Destinations (in $M) • Prices up 1% • Measures taken will partially Q1 Q2 Winter offset the increase in cost due to: − USD & fuel variance: Adj. EBI
Slide 13: Key Financial Results: Second Quarter 2015
KEY FINANCIAL RESULTS SECOND QUARTER 2015 (AS OF MARCH 9, 2015) Sun destinations 2nd quarter ended April 30 2015 • Global capacity up 12% (in thousands of C$) 2014 2013 Avg. 2010-2014 • TRZ capacity down by 6% Outlook Actual Actual Actual • 75% of inventory sold REVENUES 1,118,620 1,106,824 1,119,87
Slide 14: Key Financial Information – Summer
KEY FINANCIAL INFORMATION – SUMMER 16 14
Slide 15: Anticipated Currencies & Fuel Impact on Costs
KEY FINANCIAL RESULTS ANTICIPATED CURRENCIES & FUEL IMPACT ON COSTS (2015 VS. 2014) Transatlantic Q3 Q4 Summer Average selling price 2014 (1) $870 $930 $900 % Fuel expense 31% 29% 30% % Other expenses in foreign currencies 24% 26% 25% 2015 average USD / EUR / GBP USD / EUR / GBP USD / EUR / GBP - FX
Slide 16: Impact on Adjusted EBITDA incl. Hotels JV
KEY FINANCIAL RESULTS IMPACT ON ADJUSTED EBITDA INCL. HOTELS JV (AS OF MARCH 9, 2015) Fuel prices decrease • Fuel represent 30% of our costs Q3 Q4 Summer on a flight to Europe (paid mainly in USD) • Fuel drop will have a positive Adj. EBITDA 2014 incl. hotels JV 48M 76M 124M impact on our costs Curr
Slide 17: Key Financial Results: Summer 2015
KEY FINANCIAL RESULTS SUMMER 2015 (AS OF MARCH 9, 2015) Too early to make forecast (vs. Summer season ended October 31 our 2nd best summer ever) (in thousands of C$) 2015 2014 2013 Avg. 2009-2014 Market price for fuel and Outlook Actual Actual Actual currencies to follow REVENUES 1,786,356 1,735,620
Slide 18: 2015-2017 Strategic Plan
2015-2017 STRATEGIC PLAN $100-million cost reduction and margin improvement program Improvement of the offering Evolution of our distribution strategy and ecosystem Market development and integration 18
Slide 19: Recap of the 2012-2014 Cost Reduction Plan
RECAP OF THE 2012-2014 COST REDUCTION PLAN (In millions of dollars) 2012: Achieved targeted costs reduction of $20M, mainly through headcount adjustments and general expenses. 55 2013: Achieved targeted costs reduction of $15M, stemming in part from new operational processes at Air Transat, includin
Slide 20: Cost and Margins Initiatives 2015-2017
COST AND MARGINS INITIATIVES 2015-2017 (In millions of dollars) 2015 2016 2017 100 COST REDUCTIONS (in millions) Narrow-body flexible fleet 18 20 20 Reduction in the number of flight attendants 2 5 6 75 Buy-on-Board (sun destinations) 3 3 3 Optimization of hotel costs (sun destinations) 2 9 12 Optim
Slide 21: Flexible Fleet
FLEXIBLE FLEET 2015 Narrow-body: $20.5M per year favorable impact (on the basis of current fleet) Wide-body: one aircraft outsourced to XL Airways, three grounded, in winter Plan calls for outsourcing two more during the winter and replacing them as needed with narrow-body 21
Slide 22: Fleet Strategy
FLEET STRATEGY AIR TRANSAT PROJECTED FLEET BY SEASON WIDE-BODY W15 S15 W16 S16 W17 S17 Air Transat Base Fleet 21 21 21 21 21 21 Less:Temporarily withdrawn(1) (6) - (6) - (6) - Less:Sub-Lease (1) - (2) - (3) - Total 14 21 13 21 12 21 1) Thanks to improved leasing terms, three A330s are withdrawn from
Slide 23: Connecting Flights Strategy
CONNECTING FLIGHTS STRATEGY Summer 2015: one weekly flight from Vancouver, Halifax and Quebec City to our Toronto or Montreal hubs Synchronized with a number of European destinations with return direct or open jaw 2016: similar strategy eyed on the European side 23
Slide 24: Densification of Airbus A330-300
DENSIFICATION OF 3 AIRBUS A330-300 30 additional seats in eco on three A330-300 From 345 to 375 seats No compromise on customer experience (same pitch) Dedicated to London and Paris from Toronto and Montreal on a yearly basis Investment of $2M, expected annual margin of $4.7M 24
Slide 25: Ancillary Revenues
ANCILLARY REVENUES (In millions of dollars) 58 60 55 49 Grow ancillary revenues to $60M by 2017 (on same basis as today) Introduction of the Datalex software to facilitate the sale of optional services New cargo agreement signed in 2014 2014 2015 2016 2017 25
Slide 26: Sun Destinations: Exclusivities and Collections
SUN DESTINATIONS: EXCLUSIVITIES AND COLLECTIONS Strategy of securing rooms and differentiating product through exclusive deals LUXURY Improved collections, in-sync with customer 21 resorts in 2015, 30 in 2017 expectations Grow Ocean Hotels from 2,200 to 5,000 rooms DISTINCTION 27 resorts in 2015, 40
Slide 27: Hotels 2005-2013
HOTELS 2005-2013 Number of travellers Value of US dollar to Mexico and Caribbean January 1, 2014 to January 31, 2015 (2005-2013) (thousands of visitors) 1.30 Americans in CAD 23,000 1.25 22,000 1.20 21,000 20,000 1.15 19,000 1.10 1.05 Canadians 5,000 1.00 4,000 0.95 2013-12-31 2014-01-31 2014-02-28
Slide 28: A Renewed Distribution Strategy and Ecosystem
A RENEWED DISTRIBUTION STRATEGY AND ECOSYSTEM Create a fully-integrated distribution ecosystem comprised of a new Transat Travel website, connected to our call centers and travel agencies Make online tools fully responsive to mobile devices Enhance offering with third-party products so as to nurture
Slide 29: Transat Travel
TRANSAT TRAVEL By 2017, we will have migrated our corporate travel agencies under the Transat Travel brand 59 Cumulative number of The brand change comes Transat Travel with a revamping of agencies agencies 34 Results so far are very positive: • More sales 14 • More new customers • More sales of Tra
Slide 30: Financial Position
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Slide 31: Financial Position as of January 31, 2015
FINANCIAL POSITION AS OF JANUARY 31, 2015 As at HIGHLIGHTS Free Cash: + $34M vs Jan 2014 (in thousands of C$, except ratios) Jan. 31, Jan. 31, 2015 vs. 2014 2015 2014 • Results of the last 12 months, working cap, net of Capex Actual Actual $ % • Improved conditions from card processors in Europe Fre
Slide 32: Annex
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Slide 33: Annex: Mark-to-Market
ANNEX: MARK-TO-MARKET FIRST QUARTER 2015 Fuel (P&L impact) Currency (B/S impact) TOTAL HIGHLIGHTS (in thousands of C$) MtM Quarterly variation MtM Quarterly variation MtM Quarterly variation Fuel and USD hedging – In January 31, 2014 (3,801) (3,227) 16,228 12,615 12,427 9,388 advance compared to our
Slide 34: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter Avg. 2004- (in thousands of CAD) 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 incl. hotels JV(1) 15,135 26,312 (14,255) 21,238 25,731 112,871 EBITDA incl. hotels JV(1) (23,288) (1
Slide 35: Annex: Summer Financial Results
ANNEX: SUMMER FINANCIAL RESULTS (5-YEAR HISTORICAL) Summer Avg. 2009- (in thousands of CAD) 2014 2013 2012 2011 2010 2014 REVENUES 1,786,357 1,735,620 1,672,497 1,742,904 1,645,929 1,687,053 EBITDAR incl. hotels JV(1) 172,023 175,280 123,066 81,465 154,310 132,144 EBITDA incl. hotels JV(1) 123,817 1
Slide 36: Annex: Annual Financial Results
ANNEX: ANNUAL FINANCIAL RESULTS (5-YEAR HISTORICAL) Annual Avg. 2004- (in thousands of CAD) 2014 2013 2012 2011 2010 2014 REVENUES 3,752,198 3,648,158 3,714,219 3,654,167 3,498,877 3,230,889 EBITDAR incl. hotels JV(1) 187,158 201,592 108,811 102,703 180,041 169,190 EBITDA incl. hotels JV(1) 99,929 1
Slide 37: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at January 31 As at July 31 (in thousands of CAD) 2015 2014 2013 2012 2011 2014 2013 2012 2011 2010 Free cash + ABCP investment (fair value) 393,631 359,596 247,877 291,234 274,009 497,072 389,337 318,692 385,777 286,960 Cash in trust or otherwise res
Slide 38: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at April 30 As at October 31 (in thousands of CAD) 2014 2013 2012 2011 2010 2014 2013 2012 2011 2010 Free cash + ABCP investment (fair value) 404,554 336,148 349,457 356,430 281,340 308,887 265,818 198,525 260,327 252,973 Cash in trust or otherwise re
Slide 39: Thank You
THANK YOU 2015-2017 STRATEGIC PLAN: GROWTH AND MARKET DEVELOPMENT PLAN INCLUDES $100 MILLION IN COST REDUCTIONS AND NEW REVENUES