Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (June 2015)
40 slides from Transat A.t's investor presentation, June 2015
Slide 1: Better Results Than Anticipated, Good Start for Summer
BETTER RESULTS THAN ANTICIPATED GOOD START FOR SUMMER Investors Presentation June 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 MARKETS 4 2. KEY FINANCIAL INFORMATION a) WINTER 2015 7 b) SUMMER 2015 12 3. FINANCIAL POSITION 16 4. ANNEX a) FINANCIAL MARKET HIGHLIGHTS 18 b) HISTORICAL FINANCIAL RESULTS 23 c) STRATEGIC PLAN INITIATIVES 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 +17% Winter 2014 Market share – Winter 2015 1,200,000 TOTAL SEATS Sun, Winter 2015 -7% WINTER 2014 1,000,000 8 +10% 3,580,000 23 800,000 16 +22% 600,000 % TOTAL SEATS 21 400,000 +50% WINTER 2015 32 200,000 3,990,000 Transa
Slide 6: Transatlantic Market
TRANSATLANTIC MARKET (TRANSAT ROUTES, SUMMER 2015) Netherlands 46 Total sales: % 54 41% European passengers 830,000 seat Ireland France and UK: Belgium 50% of passengers UK 41 41% of sales 59 % France Germany Switzerland In foreign currency 55 % 45 Italy Greece Sales in Canada Spain Sales in Europe
Slide 7: Key Financial Information – Winter
KEY FINANCIAL INFORMATION – WINTER 7
Slide 8: Key Financial Information – Winter
KEY FINANCIAL INFORMATION – WINTER SECOND QUARTER RESULTS 2015 2ND quarter ended April 30 HIGHLIGHTS (vs. 2014) (in thousands of C$) 2015 2014 2015 vs. 2014 Results improved due to : Actual Actual $ % • Cost and margin initiatives REVENUES 1,018,498 1,118,824 (100,326) -9.0% • Slight increase of sel
Slide 9: USD & Fuel Impact on Costs (2015 vs. 2014)
KEY FINANCIAL INFORMATION – WINTER USD & FUEL IMPACT ON COSTS (2015 VS. 2014) HIGHLIGHTS – Q2 Sun destinations (per passenger) Fuel exposure Q1 Q2 Winter − 15% of our costs on a sun destination package Average selling price 2014(1) $1,370 $1,370 $1,370 − Mainly paid in USD % Fuel expenses 15% 15% 15
Slide 10: USD and Fuel Variance on Costs Year-over-Year Since March
KEY FINANCIAL INFORMATION – WINTER USD AND FUEL VARIANCE ON COSTS YEAR-OVER-YEAR SINCE MARCH Sun destinations (per passenger) Since March Q1 Q2 Winter (Average Market Price) CAD vs USD : +0.2% Average selling price 2014(1) $1,370 $1,370 $1,370 Fuel (in USD) : -0.3%(2) As of June 9, 2015 Fuel / FX Im
Slide 11: Impact on Q2 Adjusted EBITDA incl. Hotels JV
KEY FINANCIAL INFORMATION – WINTER IMPACT ON Q2 ADJUSTED EBITDA INCL. HOTELS JV Sun destinations (Q2) Q1 Q2 Winter • Measures taken more than offset the increase in costs Adj. EBITDA 2014 incl. hotels JV (24M) 0M (24M) due to: − USD & Fuel variance ∆ FX / Fuel on costs for sun − Annual indexation (1
Slide 12: Key Financial Information – Summer
KEY FINANCIAL INFORMATION – SUMMER 16 12
Slide 13: Summer Results 2015 (as of June 9, 2015)
KEY FINANCIAL INFORMATION – SUMMER SUMMER RESULTS 2015 (AS OF JUNE 9, 2015) Summer season ended October 31 Good start for summer (in thousands of C$) 2015 2014 2013 Avg. 2009-2014 Transatlantic destinations Outlook Actual Actual Actual • Capacity similar • 65% of inventory sold REVENUES 1,786,356 1,
Slide 14: Anticipated Currencies & Fuel Impact on Costs (2015 vs. 2014)
KEY FINANCIAL INFORMATION – SUMMER ANTICIPATED CURRENCIES & FUEL IMPACT ON COSTS (2015 VS. 2014) Transatlantic (per passenger) 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 / E
Slide 15: Impact on Adjusted EBITDA incl. Hotels JV
KEY FINANCIAL INFORMATION – SUMMER IMPACT ON ADJUSTED EBITDA INCL. HOTELS JV (AS OF JUNE 9, 2015) Fuel prices decrease • Fuel represents 30% of our costs on a Q3 Q4 Summer flight to Europe (paid mainly in USD) • Fuel drop will have a positive impact on our costs on transatlantic Adj. EBITDA 2014 inc
Slide 16: Financial Position
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Slide 17: Financial Position as of April 30, 2015
FINANCIAL POSITION AS OF APRIL 30, 2015 As at HIGHLIGHTS Apr. 30, Apr. 30, Free Cash: + $37M vs. April 2014 (in thousands of C$, except ratios) 2015 2014 2015 vs. 2014 • Results of the last 12 months, working cap, net of Capex Actual Actual $ % • Improved conditions from card processors in Europe Fr
Slide 18: Annex – Financial Market Highlights
ANNEX – FINANCIAL MARKET HIGHLIGHTS 18
Slide 19: Annex: USD/CAD Spot Rate
ANNEX: USD/CAD SPOT RATE SECOND QUARTER 2015 Support 1.30 1,28 1.28 1.26 Between January and 1.24 October 2014 (10 months) 1.22 Winter 2014-15 Summer 2015 USD/CAD spot rate : 1.08-1.12 hedging program start hedging program start 1.20 USD/CAD spot rate : 1.04 USD/CAD spot rate : 1.08 1.18 1.16 1.14 1
Slide 20: Annex: Jet Fuel Market Price (in USD)
ANNEX: JET FUEL MARKET PRICE (IN USD) SECOND QUARTER 2015 3.40 Between November 2012 to September 2014 3.20 Jet Fuel price : $US 2.80-3.00 3.00 2.80 2.60 Support $US / gallon 2.40 $US 1.40 Winter 2014-15 Summer 2015 2.20 hedging program start hedging program start Jet Fuel price: $US 2.80 Jet Fuel p
Slide 21: Annex: Jet Fuel Market Price (in CAD)
ANNEX: JET FUEL MARKET PRICE (IN CAD) SECOND QUARTER 2015 3.60 Between November 2012 to September 2014 3.40 Jet Fuel price : $CA 2.80-3.20 3.20 3.00 2.80 $CA / gallon 2.60 Support $CA 1.70 2.40 Winter 2014-15 Summer 2015 hedging program start hedging program start 2.20 Jet Fuel price: $CA 2.90 Jet F
Slide 22: Annex: Mark-to-Market Valuation
ANNEX: MARK-TO-MARKET VALUATION SECOND QUARTER 2015 Fuel (P&L impact) Currency (B/S impact) TOTAL HIGHLIGHTS (in thousands of C$) MtM Quarterly variation MtM Quarterly variation MtM Quarterly variation Fuel and USD hedging – In April 30, 2014 (2,064) 1,737 (4,062) (20,290) (6,126) (18,553) advance c
Slide 23: Annex – Historical Financial Results
ANNEX – HISTORICAL FINANCIAL RESULTS 23
Slide 24: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter Avg. 2004- (in thousands of CAD) 2015 2014 2013 2012 2011 2008 REVENUES 1,807,079 1,965,842 1,912,538 2,041,722 1,911,263 1,482,107 EBITDAR incl. hotels JV(1) 15,494 15,135 26,312 (14,255) 21,238 112,871 EBITDA incl. hotels JV(1) (32,357) (2
Slide 25: 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 26: 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 27: Annex: Winter Financial Position
ANNEX: WINTER FINANCIAL POSITION (5-YEAR HISTORICAL) As at January 31 As at April 30 (in thousands of CAD) 2015 2014 2013 2012 2011 2015 2014 2013 2012 2011 Free cash + ABCP investment (fair value) 393,631 359,596 247,877 291,234 274,009 441,536 404,554 336,148 349,457 356,430 Cash in trust or other
Slide 28: Annex: Summer Financial Position
ANNEX: SUMMER FINANCIAL POSITION (5-YEAR HISTORICAL) As at July 31 As at October 31 (in thousands of CAD) 2014 2013 2012 2011 2010 2014 2013 2012 2011 2010 Free cash + ABCP investment (fair value) 497,072 389,337 318,692 385,777 286,960 308,887 265,818 198,525 260,327 252,973 Cash in trust or otherw
Slide 29: Annex – Strategic Plan Initiatives
ANNEX – STRATEGIC PLAN INITIATIVES 29
Slide 30: 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 30
Slide 31: 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 32: 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 33: 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 34: 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 34
Slide 35: Densification of 3 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 35
Slide 36: 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 36
Slide 37: 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 38: 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 39: 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 agencies with a revamping of agencies 34 Results so far are very positive: • More sales 14 • More new customers • More sales of Tra
Slide 40: Thank You
THANK YOU BETTER RESULTS THAN ANTICIPATED AND GOOD START FOR SUMMER