Transat A.T. Inc. · TSX:TRZ
Transat A.T — Investor Presentation (September 2014)
33 slides from Transat A.T's investor presentation, September 2014
Slide 1: Transat Investors' Presentation September 2014
DESPITE A SIGNIFICANT CAPACITY INCREASE IN THE MARKET: GOOD START FOR THE SUMMER SEASON TRANSAT INVESTORS’ PRESENTATION SEPTEMBER 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 p. 4 2. KEY FINANCIAL INFORMATION • SUMMER 2014 p. 5 • WINTER SEASON (HISTORICAL) p. 14 3. FINANCIAL POSITION p. 20 4. COST REDUCTION AND MARGIN p. 21 IMPROVEMENT INITIATIVES 5. FLEET STRATEGY p. 22 6. UP-SELLING STRATEGY p. 24 7. STRUCTURE AND ORGANIZATION p. 25 8. ROAD MAP
Slide 4: Transat Markets
TRANSAT MARKETS 3 MARKETS AND 2 DISTINCT SEASONS 25 Sun 10 65 % Transatlantic 80 % 10 10 France 4
Slide 5: Key Financial Information - Summer
KEY FINANCIAL INFORMATION - SUMMER 55
Slide 6: Currency & Fuel Impact on Costs (2014 vs. 2013)
KEY FINANCIAL INFORMATION - SUMMER CURRENCY & FUEL IMPACT ON COSTS (2014 VS. 2013) Transatlantic Q3 Q4 Summer Average selling price 2013 $850 $930 $890 % in foreign currency (USD, EUR, GBP) 55% 55% 55% 2014 average USD / EUR / GBP USD / EUR / GBP USD / EUR / GBP - FX Rate 1.09 / 1.47 / 1.75 1.09 / 1
Slide 7: Variance from Mid-June to Early Fourth Quarter 2014
KEY FINANCIAL INFORMATION - SUMMER VARIANCE FROM MID-JUNE TO EARLY FOURTH QUARTER 2014 As at Sept 12, As at June 12, Variance since 2014 2014 June 12 Price +1.0% +4.3% -3.3% % Load Factor -1.5% -2.4% +0.9% Impact before FX/Fuel -0.5% +1.9% -2.4% FX / Fuel Impact -3.8% -4.4% +0.6% Net Impact on EBITD
Slide 8: Transatlantic Market: Capacity and Market Share
TRANSATLANTIC MARKET CAPACITY AND MARKET SHARE ON TRANSAT ROUTES (2013-2014) 1,800,000 +15% Summer 2013 Actual Market share – 1,600,000 Summer 2014 Forecast TOTAL SEATS Transatlantic routes SUMMER 2013 Summer 2014 1,400,000 1,200,000 3,775,000 11 1,000,000 21 -1% 7 800,000 8 600,000 +6% TOTAL SEATS
Slide 9: Impact on Adjusted EBITDA
KEY FINANCIAL INFORMATION - SUMMER IMPACT ON ADJUSTED EBITDA (AS AT SEPTEMBER 11, 2014) Significant increase in global capacity (+10%) Q3 Q4 Summer Solid results in 3rd quarter Transatlantic – 4th quarter Adj. EBITDA 2013 54M 81M 135M • Capacity similar • 86% of inventory sold ∆ FX / Fuel on costs (
Slide 10: Transatlantic Market – Summer
TRANSATLANTIC MARKET – SUMMER (TRANSAT ROUTES, SUMMER 2013) Netherlands 49 38% % 51 European passengers Ireland Close to 50% UK & France passengers Belgium UK 38% Germany In foreign currency % 56 France Switzerland % 44 Italy Greece Sales in Canada Spain Sales in Europe Turkey Portugal 10
Slide 11: Transatlantic Market: Air and Land
TRANSATLANTIC MARKET: AIR AND LAND PRODUCT AND CUSTOMER EXPERIENCE 2% Europe: largest tourism market in the world 6% SUMMER 21% Transat (more than 50% of travellers inbound & outbound) 34% CAPACITY 22% 50% Air France 4.1M seats in summer 2014 between Canada and Europe 27% British Airways 2014 Air Ca
Slide 12: 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 13: 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 14: Key Financial Information – Winter
KEY FINANCIAL INFORMATION – WINTER 14
Slide 15: Sun Destinations Market
SUN DESTINATIONS MARKET CAPACITY AND MARKET SHARE (TRANSAT MARKETS) 1,200,000 +7% Winter 2013 Market share – +0% Winter 2014 TOTAL SEATS Sun, Winter 2014 1,000,000 WINTER 2013 800,000 +4% 3,465,000 600,000 +4% % 400,000 TOTAL SEATS WINTER 2014 -2% 200,000 3,580,000 0 +3% Other 15
Slide 16: Key Financial Information - Winter
KEY FINANCIAL INFORMATION - WINTER HISTORICAL FROM 2004 HIGHLIGHTS 120.0 96.3 Results driven by the sun market 100.0 82.5 85.3 80.0 Non-profitable in last 5 years 80.0 78.2 EBITDA Average period (2004-2009) : 76M Negative impact of FX in 2014 Average Period (2010-2014) : (14M) 60.0 • Good start up t
Slide 17: Transat Sun Destinations Outbound from Canada
TRANSAT SUN DESTINATIONS OUTBOUND FROM CANADA Winter 2014: 990,000 travellers (excluding Florida) 4 18 6 8 3 30 % 45 24 % 33 29 17
Slide 18: 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 Relaxation, discovery and 27 resorts in 2014 peace of mind % % 19 exclusive hotels ROOM NIGHTS MARGIN NOLITOURS LUXURY Exciting packages 15 resort
Slide 19: Key Financial Information – Others
KEY FINANCIAL INFORMATION – OTHERS 19
Slide 20: Financial Position
FINANCIAL POSITION AS AT JULY 31, 2014 As at HIGHLIGHTS July 31, July 31, (in thousands of C$, except ratios) 2014 vs. 2013 2014 Free cash of $497M ($108M 2013 Actual $ % increase YoY) Actual • Will decrease in the fall Free cash 497,072 389,337 107,735 27.7% (seasonality) Cash in trust or otherwise
Slide 21: Initiatives – Costs & Margins
INITIATIVES – COSTS & MARGINS 2012: Achieved targeted cost reductions of $20M, mainly through headcount and TARGETS general expenses. 2013: Achieved targeted cost reductions of $15M, stemming in part from new operational processes at Air Transat, including the removal of one FA on A330s. 2014: Will
Slide 22: Fleet Strategy
FLEET STRATEGY AIR TRANSAT WIDE-BODY W13 S13 W14 S14 W15 S15 Air Transat Base Fleet 21 21 21 21 21 21 Less:Temporarily withdrawn (1) - - (4) - (6) - Less:Sub-Lease (1) - (1) - (1) - Total 20 21 16 21 14 21 1) As announced in July, we signed an agreement for the renewal of six A330 with improved term
Slide 23: Fleet Strategy
FLEET STRATEGY AIR TRANSAT BEFORE IN WINTER 2015 Transat used a mix of wide-body aircraft Transat will migrate towards a fleet of variable (operated by Air Transat) and depending on the size for both wide-body and narrow-body in season, a variable number of narrow-body order to adjust the mix of air
Slide 24: Up-Selling Strategy
UP-SELLING STRATEGY AIR TRANSAT Airline Ancillary Revenues Revised terms and conditions: more flexibility for a fee (2012) Increase in the selling price of Club seats (new configuration) 50 48.0 16 45 42.9 43.5 New search engine for selling tours on airtransat.ca 14 38.8 40 12 Core business ancillar
Slide 25: Structure and Organization
STRUCTURE AND ORGANIZATION Jean-Marc Eustache President and Chief Executive Officer Simplified structure in Canada Jean-François Lemay Annick Guérard Patrice Caradec Air Transat Transat Tours Canada Transat France Transat Discoveries and Vacances Tours Mont-Royal now under Transat Tours Canada Forma
Slide 26: Road Map for 2015 and Beyond
ROAD MAP FOR 2015 AND BEYOND Summer (Transatlantic market): • Lowest cost producer among market leaders • Selling well on both sides of the Atlantic and offering a large array of leisure products Winter (Sun market): • Market will integrate higher prices to offset the cost increase due to the de
Slide 27: Annex
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Slide 28: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter Avg. 2004- (in thousands of C$) 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$) 2014 2013 2012 2011 2010 2013 2012 2011 2010 2009 Free cash + ABCP investment (fair value) 404,554 336,148 349,457 356,431 281,340 265,818 198,525 260,327 252,973 251,953 Cash in trust or otherwise res
Slide 32: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at January 31 As at July 31 (in thousands of C$) 2014 2013 2012 2011 2010 2014 2013 2012 2011 2010 Free cash + ABCP investment (fair value) 359,596 247,877 291,234 274,009 220,880 497,072 389,337 318,692 385,778 286,960 Cash in trust or otherwise rese
Slide 33: Good Start for the Summer Season – Thank You
DESPITE A SIGNIFICANT CAPACITY INCREASE IN THE MARKET: GOOD START FOR THE SUMMER SEASON THANK YOU!
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