ASEAN Airline Takes Wing Third Quarter 2009 Results 20 November 2009
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Key Highlights for Third Quarter Strong third quarter results given challenging operating environment – core operating profit RM34 million, reversal from RM82 million loss in Q3-2008 – third quarter is our weakest quarter – consumer sentiment impacted by A-H1N1 and challenging global economy Raised RM505 million capital – issued 380 million shares @ 16% of issued paid up capital – reduced net gearing level to 2.6 times (previously a major concern by investors) Indonesia has turned the corner, produced profits of RM21 million – the power of the associates is unveiled – with more Airbus A320, cost structure will improve and so will profits Issues with MAHB settled – paid off disputed amount to MAHB – lower airport fees announced, significant savings for AirAsia Ancillary income strong growth trajectory 2
Malaysia: Third Quarter in a Snapshot Quarter Ended: 30 September RM'000 unless othe rwise stated Revenue EBITDAR Core Operating Profit Profit after Tax
Jul-Sep 2009 739,668 234,611 33,834 130,072
Jul-Sep 2008 (restated) 707,909 101,687 (81,580) (470,570)
Change y-o-y 4% 131% n/a n/a
Disciplined, profitable growth – revenue growth of 4% driven by 19% passenger growth Lowest cost airline in the world at 3.21* US cents / ASK Maintaining strong growth trajectory – high capacity growth matched by demand, constant load factor of 75% – yield reduction (-7%) is significantly lower than other notable airlines which are
* Change in Cost / ASK computation. Refer to Bursa announcement for further clarification
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Indonesia: Third Quarter in a Snapshot Indonesia has turned the corner, net profit of IDR59 billion (RM21 million) Platform for sustained profitability has been established Indonesia AirAsia Cost / ASK
New Route Strategy is Producing Profits
Indonesia Cost / ASK (US cents)
Indonesia Margin Spread (RASK - CASK)
6.00 5.0 6
0 .16
0.20
5.2 7
0 .0 8
0.00
5.00 4 .16
4 .0 5 3 .6 5
4.00
3 .8 4
3 .2 5
-0.20
Q12008
Q22008
Q3-2008 0 .11
Q42008
Q12009
Q22009
Q32009
- 0 .2 5
-0.40
- 0 .4 4
3.00
Stable cost 2.00
-0.60 -0.80
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Airbus A320 replacement into fleet is – enhancing efficiency – increasing capacity – lowering operational cost
-1.00
- 0 .76 - 0 .8 8
Streamline capacity in the second quarter 2009
Access to international routes has significantly improved operations – improved the RASK vs. CASK spread – Australia and Singapore routes are high yielding and high loads 4
Thailand: Third Quarter in a Snapshot Thailand is headed towards the right direction New Route Strategy is Producing Profits
Thailand AirAsia Cost / ASK
Thailand Load Factor
Thailand Cost / ASK (US cents) 6.00
5.4 6
5.6 4
5.52
79 .1%
80.0% 78 . 2 %
77. 5% 74 .6 %
5.00 4 .14
4 .15
4 .13
75.0%
73 .9 %
71.5%
4.00
6 9 .4 % 70.0%
3.00
Stable cost 65.0%
2.00 Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Airbus A320 replacement into fleet is – enhancing efficiency – Increasing capacity – lowering operational cost
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Underlying demand is positive – underlying demand is positive, but it is due to low fare stimulation – AirAsia ideally positioned to capture huge upside when market turns 5
AirAsia X: Third Quarter in a Snapshot The long haul, low cost model is proven successful Revenue (RM million)
Passengers Carried
Passenger Carried and Load Factor PAX 400,000
69%
300,000
19 5,79 4
200,000
77%
Load Factor 69%
Revenue (RM million) 8
0 %
7
0 %
6
0 %
2 8 8 ,0 4 4
175,000
2 17,73 1 200,000
14 9 ,10 4 150,000
14 6 ,19 6
12 8 ,8 9 0
100,000
0
Q1-2009
Q2-2009
Q3-2009
Strong level of acceptance of AAX services as seen by high passenger growth and load factors Upgrading fleet with new seats – extra comfort at better value
5
0 %
4
0 %
125,000
100,000 Q1-2009
Q2-2009
Q3-2009
Kept cash balance in tact despite financing three aircraft during the period Fourth quarter looking positive with strong loads and high yields 6
Strong Ancillary Income Growth AirAsia Ancillary Income Growth
Ancillary Income Target
Ancillary Income (RM million) Spend / pax 140
27.0 130
23.1 22.1
100 80
12.0 13.3
15.2 15.1 15.7
26
31
17.8
37
42
41
30. 0
25. 0
91 70
40 20
Target
52
35. 0
29.0
120
60
Actual
36.2
95
40
36 29
20. 0
74
15. 0
50
10. 0
5. 0
0
0. 0
Q1
Q2
Q3
2007
Q4
Q1
Q2
Q3
2008
Q4
Q1
Q2
Q3
Q3-2009
2010
2011
2009
Ancillary income growth ahead of expectations Relatively stable profits as it is seasonally insensitive Further growth potential at limited additional cost 7
Balance Sheet Cash Rich Net Gearing (Net Debt/ Equity) Fuel Hedge Unwinding
3.8 3.1
3.7
3.5
Capital Raising 2.6
1.9 1.6
Q1- Q2- Q3- Q4- Q1- Q2- Q32008 2008 2008 2008 2009 2009 2009
Raised RM505 million capital – issued 380 million shares @ 16% of issued paid up capital – reduced net gearing level to 2.6 times (previously a major concern by investors)
5-Day free seats campaign generated approximately RM200 million – “free seats” halo generates revenue for ancillary sources 8
The Real “Gearing” is Low Malaysia Gearing on a Standalone Basis Shareholders Equity Net debt Aircraft debt related to Thailand and Indonesia Debt specific for Malaysia Net Gearing
RM million 2,587 6,688 (2,028) 4,668 1.80
As the associates take on aircraft into their balance sheet – Thailand and Indonesia will eventually take on assets to their balance sheet – will form an asset light structure AirAsia Berhad
Intrinsic gearing for AirAsia is low, and will reduce going forward – strong cash growth supported by cash from operations – Capex for Malaysian operations will be relatively “low” in the next two years 9
Route Network Constantly Growing AirAsia Group Route Network
AirAsia Group Routes 129 104 65
75
52 26 11
6 2002
2003
2004
2005
2006
2007
2008 NOW
Note: Years represent calendar year end, “Now” as of 20 Nov ’09 Number of routes includes AirAsia X services
Expanding the Hub Network
Penang (established in July) - ideally suited to link China & India
Surabaya (established August) - ideally suited to link China & India
Phuket (established in November) - strong tourist appeal
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India Beckons 1.1 billion people US$3.1 trillion economy ± 20 potential airports
Amritsar
– Kuala Lumpur to Trichy (2x day) is AirAsia’s top ten profitable route
Launched
Delhi
– Kuala Lumpur to Kolkata – Kuala Lumpur to Kochi – Kuala Lumpur to Trivandrum Kolkata
Hyderabad Chennai Bangalore Kochi Trichy Trivandrum
Existing
Coming up – Kuala Lumpur to Chennai – Penang to Chennai – Kuala Lumpur to Bangalore – Kuala Lumpur to Hyderabad – Kuala Lumpur to Mumbai – Kuala Lumpur to Delhi
Prospects – Bangkok to Delhi – Bangkok to Kolkata – Bangkok to Amritsar
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Realigned Fleet Schedule to Achieve Optimal Growth and Operational Requirements Capacity (ASK) Growth Projection
AirAsia Group Net Fleet Size Boeing 737-300
Malaysia
Thailand
Indonesia
Airbus A320
23% 20% 19
12
173
175
149
56
2008
2009E
86
2010E
12%
11%
125 70
9%
101
2011E
2012E
2013E
2014E
21%
2015E
2010
2011
Deferred an additional eight aircraft for 2011 deliveries – to address airport infrastructure constraints at Kuala Lumpur LCCT – total of 16 aircraft deferred for 2010 & 2011 deliveries
Boeing 737-300 aircraft are 100% phased out by 2010 One of the youngest Airbus fleet (1 year 11 months)
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Best Airline in Asia Pacific – AGAIN
AirAsia and AirAsia X jointly won the coveted “Airline of the Year” awarded by Centre for Asia Pacific Aviation – first airline to win this award back-to-back (2008 & 2009) World’s best low cost carrier, awarded by Skytrax 13
Result Commentary - Third Quarter 2009
Capacity Rollout Matches Demand Capacity Rollout (ASK million) +13%
5,449
4,833
Q3-2008
Revenue / ASK (sen) Average fare drop is offset by higher ancillary income contribution Average stage length reduced by 6%
Q3-2008
14.2
Load Factor (%)
-11% 12.6
75.4%
75.4%
Q3-2008
Q3-2009
Q3-2008
Q3-2009
The operations can sustain the rapid capacity growth 15
Result Commentary - 9 Months 2009
Summary of 9 Months Result 9 Months Ended: 30 September
Jan-Sep 2009
Jan-Sep 2008
∆ (%)
2,010,134 977,331 328,233
1,802,148 447,198 (59,348)
12% 119% n/a
EBITDAR Margin Core Operating Profit Margin
48.6% 16.3%
24.8% -3.3%
23.9 p.p.t n/a
Revenue / ASK (sen) Cost / ASK (sen) Load factor
12.48 10.59 73.4%
14.11 13.07 74.3%
-12% -19% -0.9 p.p.t
Revenue (RM’000) EBITDAR (RM’000) Core Operating Profit (RM’000)
Strong core operating profit performance of RM328 million – industry leading margins of 16.3%
Strong ancillary income growth offsetting impact of lower fares Lower cost underpinning high profitability Stable load factors despite significant capacity addition and new routes 17
Outlook
Demand Remains Robust % Total seats sold as of 18 November 75%
2009 67%
2008 45%
43% 32% 26%
24% 19%
Nov
Dec
Jan
Feb
2009
2008
∆%
Seats sold in first quarter
3,147,609
2,611,556
21%
Seats sold in second quarter
3,519,486
2,835,671
24%
Seats sold in third quarter
3,590,744
3,018,395
19%
AirAsia Berhad
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Summary Challenging environment, but AirAsia is well placed to take advantage – airports are offering attractive deals in return for growth – other airlines are not introducing new routes, thus making it easier for AirAsia to expand
Managing risk – hedged approximately 20% of Q4-2009 fuel requirements – fixed swap of US$74.98 per barrel (Jet Kerosene) – monitoring the market for hedges beyond 2009
New routes are performing exceptionally well Passenger growth very robust across the Group – Malaysia is enjoying good loads and support for new routes – Indonesia’s load is robust with high yields – Thailand’s passenger numbers are robust, yields improving
Fuel surcharge will be imposed if high oil prices persists Cash position is growing from strength to strength 20
Appendix
Fleet Composition (30 September 2009)
Number of Aircraft
Total
Airbus A320 Boeing 737
Malaysia
47
45
2*
Thailand
18
10
8
Indonesia
16
9
8
Group Total
82
64
18
* Boeing 737-300 is awaiting to be sold off, these aircraft are not used for operations
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Cost Breakdown –Third Quarter Cost Breakdown (US cents / ASK) Staff Costs Fuel and Oil User & Station Charges Maintenance and Overhaul Aircraft Lease Rental Depreciation & Amortisation Sales & Marketing Others Cost / ASK Cost / ASK - excluding fuel
Jul-Sep 2009 0.36 1.37 0.29 0.15 0.15 0.43 0.17 0.30 3.21 1.84
Jul-Sep 2008 (restated) 0.36 2.73 0.23 0.12 0.13 0.44 0.14 0.17 4.34 1.61
Change y-o-y 0% -50% 23% 23% 13% -2% 15% 70% -26% 15%
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Cost Breakdown – 9 months Cost Breakdown (US cents / ASK) Staff Costs Fuel and Oil User & Station Charges Maintenance and Overhaul Aircraft Lease Rental Depreciation & Amortisation Sales & Marketing Others Cost / ASK Cost / ASK - excluding fuel
Jan-Sep 2009 0.33 1.15 0.23 0.16 0.16 0.41 0.26 0.13 2.83 1.69
Jan-Sep 2008 (restated) 0.36 2.38 0.15 0.14 0.15 0.44 0.16 0.14 3.92 1.54
Change y-o-y -9% -52% 55% 19% 5% -7% 66% -5% -28% 10%
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