Interim Management Report First Half Results 2010/11. Analysts presentation October 29, 2010

Transcription

1 Interim Management Report First Half Results 2010/11 Analysts presentation October 29, 2010

2 Disclaimer Certain information included in these statements is forward-looking and involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward looking statements. Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions and the Company's plans and objectives for future operations, including, without limitation, discussions of the Company's Business Plan programs, expected future revenues, financing plans and expected expenditures and divestments. All forward-looking statements in this report are based upon information known to the Company on the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. It is not reasonably possible to itemise all of the many factors and specific events that could cause the Company's forward looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of an airline operating in the global economy.

3 Martin Broughton Chairman

4 Keith Williams Chief Financial Officer

5 On flightpath to recovery A half of two quarters First quarter Cost driven recovery Hit by volcanic ash and disruption Second quarter Revenue improvement Driven by yield recovery Continuing cost control Back to profitability

6 Cost becoming a cost and revenue recovery m 400 Operating Profit + 387m 300 m vly Q2 Revenue Net costs +4 Op Profit m vly Q1 0 Revenue m Q1 2009/ /11 Q2 Net costs -68 Op Profit +22

7 ...built on strong second quarter yields % change VLY PASSENGER BUSINESS RPKs ASKs Seat Factor (pts) Yield/RPK constant exchange 3 months ended September 30, 2010 Yield/RPK

8 Yield/RPK % vly Looking at passenger yield performance in detail Q1 09/10 Q2 09/10 Q1 10/11 Q2 10/11 Reported yield Underlying yield

9 Volume (PSJs) Still fare mix opportunity in longhaul Longhaul Premium Volume by Fare Type Q Q Q Q Q Q Q Q Q Q Q Q Q Flexible Fares Leisure / Redemption

10 Volume (PSJs) and some opportunity in shorthaul. Shorthaul Premium Volume by Fare Type Q Q Q Q Q Q Q Q Q Q Q Q Q Flexible Fares Leisure / Redemption

11 A similar yield story in Cargo % change VLY CARGO BUSINESS CTKS ATKS Yield/CTK constant exchange 3 months ended September 30, Yield/CTK

12 Headline numbers second quarter Jul - Sep m Better/ (worse) vly Turnover 2, % Fuel costs 665 (5.2)% Non fuel costs 1, % Operating profit 370 nm Operating margin 14.7% 15.5pts EBITDAR % Pre-tax profit 322 nm Period ended September 30, 2010

13 Headline numbers first half Apr - Sep m Better/ (worse) vly Turnover 4, % Fuel costs 1,257 (2.4)% Non fuel costs 2, % Operating profit 298 nm Operating margin 6.7% 9.4pts EBITDAR % Pre-tax profit 158 nm Period ended September 30, 2010

14 Revenue continues to grow m Apr-Sep vly Jul-Sep vly Passenger 3, % 2, % Cargo % % Other 219 (15.1)% % 4, % 2, % Period ended September 30, 2010

15 Q2 Costs held despite exchange. 3 months July to September 2010 m % vly Employee costs up Restructuring 0 nm Engineering & other aircraft up Landing & en route charges up Handling, catering etc flat Selling costs down Other costs (inc. retranslation) down TOTAL COSTS (excl. fuel) 1, down Fuel & oil up REPORTED TOTAL COSTS 2, up Period ended September 30, 2010

16 First Half Costs down 6 months April to September 2010 m % vly Employee costs 1, down Restructuring 0 nm Engineering & other aircraft up Landing & en route charges down Handling, catering etc down Selling costs up Other costs (inc. retranslation) down TOTAL COSTS (excl. fuel) 2, down Fuel & oil 1, up REPORTED TOTAL COSTS 4, down Period ended September 30, 2010

17 $/bbl Price Paid by BA A solid hedging position for the year. Hedging Q1 Q2 Q3 Q4 11/ % Cover FY 1011 BA Price Market Price $1 oil = +/- 5m cost (approx) $/bbl Crude Price

18 With fuel cost increase as anticipated. m First Half: + 29m vly m H2 Volume +80 Price (net of hedging) +70 Exchange +20 Total Q1 Q2 Q3 Q4 2009/ /11

19 A reminder of winter capacity ASK VLY% 10 Tactical cancellations and disruption in winter base 5 0 3% underlying (5) (10) Winter 09/10 Full Year 09/10 Winter 10/11 Full Year 10/11

20 Capacity outlook for summer 2011 ASKs VLY% ER th JFK service Tokyo (Haneda) San Diego & Buenos Aires direct increased flying to Caribbean 5 Underlying increase 4-5% 0 (5) LHR longhaul LGW longhaul Shorthaul Total Underlying increase Disruption in base

21 Cash and net debt continuing to improve. Cash generated from operations 554m (up 468m vly) Cash balance increased to 1,857 million m 2,500 2,000 General facilities Cash 1,500 1, Mar-09 Sep-09 Mar-10 Sep-10 Net debt reduced to 2,047 million

22 Yields should continue positive over the winter % Yield/RPK vly Q1 Q2 Winter 2009/ /11

23 despite tax increase of approx. 1.5% of yield domestic/up to 2000 miles UK Air Passenger Duty - economy miles miles over 6000 miles 1994 Oct-10 Nov-10

24 Looking forward OPPORTUNITIES Joint Business with AA/IB New routes Underlying economic growth RISKS APD Competitor capacity UK consumer confidence

25

26 Willie Walsh Chief Executive Officer

27 Delivering on our agenda Merger with Iberia Joint Business Pension Recovery Plan Restoring Profitability Structural cost base T5 transformation Investing for the future

28 Our merger

29 Iberia timetable Publication of key documents October 26 Shareholder meetings November 29 Closing January 2011

30 Our Joint Business

31 Why is the Joint Business necessary? Star and SkyTeam alliance members with broad-based immunity protections have a distinct advantage over AA, BA and IB ATI necessary to strengthen oneworld and sustain BA s competitive position at LHR Joint Business structure enhances relationships, global reach and the ability to coordinate, schedule and market the network ATI/Joint Business brings substantial benefits to our customers

32 Our customer vision: how they benefit Access to broader network via extensive codeshare Superior customer experience and service integration Greater convenience through coordinated schedules Corporate customers benefit from joint sales agreements across larger network Frequent flyer programme consistency

33 New timings give greater choice ORD >>> LHR - Departure Times Pre-ATI BA = Blue AA = Orange Post-ATI BA = Blue AA = Orange 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 0:00 Local Time 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 0:00 Local Time ORD >>> LHR - Arrival Times Pre-ATI BA = Blue AA = Orange Post-ATI BA = Blue AA = Orange 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 0:00 Local Time 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 0:00 Local Time

34 Five exciting new Joint Business routes Delivering profitable growth & improved customer choice New York JFK Budapest 7pw Chicago Helsinki 7pw London LHR San Diego 7pw MIA BCN Madrid Los Angeles 4pw Barcelona Miami 7pw

35 Pension recovery plan Agreement reached with pension trustees Approved by Pensions Regulator Contributions to remain at 330m in real terms Benefit changes introduced for future service from October 1, 2010

36 Restoring profitability July - September Operating Result ( m)

37 Cost actions the key to profitability m H H Structural cost savings Non Fuel Non Fuel Fuel Fuel Non operating costs Revenue Costs Revenue Costs Since Revenue Flat Fuel up 28% Non-fuel Flat, after annualised savings of 400m

38 Structural changes Management reduction December 2008 Engineering efficiencies June 2009 Flight crew efficiencies October 2009 Cabin crew changes November 2009 Passenger service efficiencies Agreed August 2010

39 T5 Transformation

40 Aug-06 Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Step change in departure punctuality 100% Mainline departures on time performance 90% Post-T5 Opening 80% 70% 60% 50% Pre-T5 Opening

41 Shortlanded Bags / 1000 Pax Heathrow baggage regularly beating target LHR Overall Shortlanded Baggage Performance Shortlanded Bags / 1000 Pax Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2006/7 2007/8 2008/9 2009/ /11 Target

42 Investing for the future

43 Start of an exciting new chapter

44

45 Q & A

46