Now Everyone Can Fly Fourth Quarter & Full Year Results 26 th August 2005

Transcription

1 2005 Fourth Quarter & Full Year Results 26 th August 2005

2 Disclaimer Information contained in our presentation is intended solely for your personal reference and is strictly confidential. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. In addition, the information contains projections and forward-looking statements that reflect the company s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the company s assumptions are correct. Actual results may differ materially from those projected. This presentation is strictly not to be distributed without the explicit consent of Company management under any circumstance. 1

3 Agenda 1. Highlight & Events 2. Results Commentary 3. Cost Management 4. Manchester United Sponsorship 5. Outlook Question & Answers 2

4 CONFIDENTIAL 1. Highlight & Events

5 Key Features NPAT of RM112m for FY05 capacity, fuel and deferred tax; but profits still grew by 128% YoY profit growth superior to any other listed carrier in Asia-Pacific Passenger numbers grew 55%, our foot print doubled and our revenue grew by 70% Encouraging performance by the associates Group fleet rose from 17 to 27 aircraft AirAsia sponsors Manchester United, 1 st August amazing marketing potential LCC terminal construction progressing ahead of schedule expect to commence operations by end of first quarter

6 Reconciliation and deferred tax Profit item RM '000 Profit as per IPO 159,882 add/(subtract) aircraft shortage (77,545) lower related opex 70,462 higher fuel charges (15,405) 137,394 additional deferred tax (4,612) other costs (1,612) associate company variance (19,523) FY05 NPAT 111,647 Aircraft and fuel had the greatest profit impact Deferred tax only calculated in the final quarter But for its inclusion, AirAsia would have hit RM126 million mean analyst estimates Cash element amounts to <RM1 million 5

7 Doubled Number of Routes in 2005 Period Jan 2002 Sep 2002 Dec 2002 Mar 2003 Jun 2003 Sep 2003 Dec 2003 Mar 2004 Jun 2004 Aug 2004 Sep 2004 Dec 2004 Jun 2005 Destinations Served* * Excludes Kuala Lumpur and Bangkok as destinations We fly to more destinations in SE. Asia than MAS or SIA. We have domestic operations in three markets, a feat not easily duplicated by any airline. 6

8 Consistent passenger growth Passengers Flown by AirAsia Group ( 000) CAGR 106% pa 2, % growth (2005 vs. 2004) 6,289 1,481 1,354 1,561 1,630 1, M ar-2001 Jun-2002 Jun-2003 Jun Q 2Q 3Q 4Q 2005 There is no stopping the LCC phenomenon 7

9 Load factor as expectation ASK & RPK (million) and Load Factor (%) AirAsia Group ASK (Malaysia) ASK (Associates) Load Factor % 76% 74% 72% 70% 68% 66% 64% 62% Not just any kind of growth, but HIGH QUALITY GROWTH 8

10 Profitability linked to fleet development Aircraft Expansion Indonesia Thailand Malaysia Mar-01 Jun-02 Jun-03 Jun-04 Mar-05 Jun-05 NOW Dec-05 E Slight shortage of originally stated number of aircraft - merely a delay in rollout 9

11 Impact of aircraft deployment delays Capacity loss Capacity loss 25.0 Actual vs. Forecasted Average # Aircraft 8,000 Actual vs. Forecast Capacity (million ASK) 20.0 Shortfall = 15.4% 7,000 6,000 Shortfall = 11.8% ,000 4, , ,000 1,000 - Q1 Q2 Q3 Q Actual Forecast We are 3.0 aircraft short of forecast Resulting capacity loss equates to 869 million ASK (12% shortfall) - Q1 Q2 Q3 Q Actual Forecast 10

12 CONFIDENTIAL 2. Results Commentary

13 Operational Statistics Strong passenger growth 44% growth for Q42005 vs. Q % growth for FY2005 vs. FY2004 Effective capacity growth 76% growth for Q42005 vs. Q % growth for FY2005 vs. FY2004 Superior cost control 8% improvement yoy for Q4 2.40/ASK US cents 10% improvement yoy FY /ASK US cents Improving fares and yield holding up value despite longer trip length 19% improvement in fares for Q4 to RM150 9% improvement in fares for FY2005 to RM143 Load factor as per Management s expectations 12

14 Operational Statistics Q4 Operational Statistics Q Q (%) Average Load factor 76% 78% # Passengers 1,203, ,247 44% Average fare (RM) % RPK (mn) % ASK (mn) % Rev/RPK (US cents) % Cost/ASK (US cents) (8%) # aircraft (beginning) # aircraft (end) Average # aircraft % 13

15 Operational Statistics FY2005 Operational Statistics FY2005 FY2004 (%) Average Load factor 75% 77% # Passengers 4,414,069 2,838,822 55% Average fare (RM) % RPK (mn) % ASK (mn) % Rev/RPK (US cents) (4%) Cost/ASK (US cents) (10%) # aircraft (beginning) 13 7 # aircraft (end) Average # aircraft % 14

16 Thailand takes off Thailand Statistics 2005 Q4 Q3 Q2 Q1 Average Load factor 73% 68% 69% 77% 84% # Passengers 1,603, , , , ,340 Average fare (RM) RPK (mn) ASK (mn) Rev / RPK (US cents) Cost / ASK (US cents) # aircraft (end) Within a year, we are the market leaders in Thailand Improving average fare and yields Cost control on track with expectations 15

17 Profitability (RM 000) Q Q FY2005 FY2004 qoq (%) yoy Revenue 199, , , ,690 76% 70% EBITDAR 46,206 24, , ,402 86% 77% EBITDA 33,135 13, ,819 72, % 110% EBIT 25,566 8, ,103 61, % 106 Profit before tax 26,184 7, ,478 58, % 116% Net Income 16,108 (1,953) 111,635 49,067 na 128% ASK (million) % 82% Profit before tax soared 271% growth for Q42005 vs. Q % growth for FY2005 vs. FY2004 Effective capacity growth growth in capacity did not undermine profitability margin 16

18 Balance Sheet Balance Sheet (RM million) Post IPO Note: (*) For the 15 months ended June 30, 2002 (*) Mar-01 Jun-02 Jun-03 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 SHR Equity Net Debt Consistently building shareholder value 17

19 Cash Generating Machine Cashflow from Operating Activities (RM million) Mar-00 Mar-01 Jun-02 Jun-03 Jun-04 Jun-05 (*) -146 Note: (*) For the 15 months ended June 30, 2002 Normalized CFO is RM113m. RM259m is paid for aircraft and fuel deposits. Therefore CFO is superficially depressed at RM146m 18

20 CONFIDENTIAL 3. Cost Management

21 Cost Management Cost / ASK (US cents) 3.40 Cost / ASK Non Fuel Cost Q1 Q2 Q3 Q Malaysian Operations Superior cost containment despite fuel price impact 20

22 Operating Expenses Operating Expenses (RM 000) FY2005 FY2004 % Revenue Revenue 666, ,690 Staff Cost (78,960) (65,724) Fuel and Oil (266,610) (102,708) User & Station Charges (29,383) (9,579) Maintenance & Overhaul (77,347) (73,778) Others (9,781) (25,499) EBITDAR 204, , Cost of aircraft (51,350) (42,790) EBITDA 152,819 72, Depreciation & Amortisation (26,716) (11,294) EBIT 126,103 61, Net Income 111,635 58,

23 Cost / ASK what changed from last year to this year? 2.22 (2005) vs (2004) {10% improvement} (US cents) Cost per Change Reasons ASK (%) Staff cost Improved productivity Good Bad Maintenance & Overhaul Economies of scale benefits Other costs Effective marketing Cost of aircraft Higher aircraft utilization rate Fuel and Oil Fuel price spiking User & Station Charges More international routes Depreciation & Amortization Purchased some aircraft Total Cost per ASK % 22

24 Peer Comparison: the numbers speak for themselves *Jetstar numbers are EBIT, taxed at Qantas parent marginal rate, # Nok Air figures are for three quarters annualised AirAsia has the best unit cost in the region and in the industry 23

25 Peer Comparison Cost/ASK (ex fuel) 7 Cost /ASK (ex fuel) vs. Stage Length EJ 6 5 COST / ASK GOL RY SW AT WJ JB Stage length (km) The true fitness measure for cost efficiency 24

26 Fuel Hedge FY2006 WTI Crude Oil Capped Swap for FY Fixed price of US$40/bbl but capped at US$52/bbl - Discount of US$ 12 / bbl for WTI above US$ 52 /bbl - 1HFY06 fully covered, 2HFY06 50% covered - Refining margin (crack) is open to spot market - Insurance cover in place at US$70/bbl for WTI AirAsia never pays >US$58/bbl Formula = Crude oil (with hedging mechanism) + crack Eg 1: WTI = $55 / bbl, crack = $10 / bbl AirAsia pays = ($55 / bbl - $12 / bbl) + $10 / bbl = $ 53 / bbl Eg 2: WTI = $52 / bbl, crack = $5 / bbl AirAsia pays = $40 / bbl + $5 / bbl = $ 45 / bbl 25

27 Fuel Surcharge International 30% AirAsia Flight Schedule (July 2005) Peninsular Malaysia 24% Fuel surcharge started 14 July Peninsular Malaysia RM 5 East Malaysia RM 15 International RM 25 East Malaysia 46% Total Sectors = 900 / week with 19 aircraft Demand not expected to fall off experience in Thailand shows demand did not fall after s/c MAS domestic traffic remains calm in May despite s/c Recovery of $ 8~10 / bbl fuel equivalent 26

28 Fuel Surcharge Impact 100% MAS Domestic Load Factor 80% 60% 40% Fuel Surcharge Imp lemented 20% Tunami Sentiment to travel recovers 0% Jan Feb Mar A pr May Jun Jul A ug Sep O ct Nov Dec No fall-off of load factors since fuel surcharge implemented in May indication that market is able to absorb fuel surcharge 27

29 Impact of Ringgit revaluation Major cost beneficiary (>70% total cost are US$ denominated) Fuel requirements (crude & refining margins) Aircraft cost (lease rates, capital payments for Airbus A320) Aircraft spare parts and consumables Landing charges for some international destinations are US$ linked Some vendor contracts are US$ denominated Revenue stream is independent of USD (c70% of revenue is RM based) other revenue stream is from independent currencies (Thai Baht, Indonesian Ruppiah, Philippine Peso) only US$ linked currency is Macau Pataca (c1% of revenue) 28

30 CONFIDENTIAL 5. Manchester United Sponsorship

31 Manchester United Sponsorship 30

32 Even football superstars fly with AirAsia Teaming up with the World s highest profile football team Sponsorship for one year; commencing Aug 2005 global advertising and sponsorship activity, above and below the line AirAsia & Manchester United will work together in promotional events Second Airbus A320 delivery will be painted with Manchester United colours 31

33 Why sponsor a football team? The BEST advertising vehicle Football is the world s favourite sport (men & women) English Premier League is the World s favourite league * 183 countries broadcast EPL TV coverage every week * 570 million worldwide home reach * Over 1000 hours of EPL coverage broadcast worldwide each week * Established mature audience as an unrivalled resource * 93 million+ viewers per week in China alone * 12 million+ viewers in Malaysia How does this benefit AirAsia? will elevate our brand worldwide generate additional revenue from sales of merchandising & marketing strengthens brand presence in Malaysia, Thailand, Indonesia, China, etc capture European tourists that is flying to the region and make them use AirAsia as the preferred traveling medium 32

34 CONFIDENTIAL 6. Outlook

35 Malaysia Going Strong Appetite for travel remains robust Response to new routes & frequency very encouraging Waiting for Government s directive to rationalize domestic route significant upside potential from a new improved schedule (reduction of excess capacity and create separation in departure times) this will hasten AirAsia s expansion within Malaysia potential for MAS to rationalize domestic operations should be within the year! Malaysia Airlines (MAS) increased fuel surcharge on 15 Jun for regional travel, second time this year this has expanded the price gap between MAS and AirAsia 34

36 Thailand turnaround achieved Competition is immobile, average fares improving Fuel surcharge implemented; market responded neutrally Launch pad for new routes to PRC and Indo-China 35

37 Indonesia Start-up losses kept at a minimum Tremendous support seen by exceptionally high load factor (proof that the model has appeal in Indonesia) Operating with two aircraft, will have five aircraft by end 2005 Application of name change to Indonesia AirAsia submitted; awaiting approval from the authority Fragmented market, huge potential to take advantage of 36

38 Ancillary Income Progress Ancillary Income as % Revenue Q1 Q2 Q3 Q4 Go Holiday developing more hotel selections and locations Advertising aircraft body advertising, web portal / banners / links, in-flight advertising Snack Attack refreshed menu and food selection Cargo cargo in aircraft belly, great potential with larger fleet size Car Rental launched Go Car March 29 -referral commissions for every car rented via our website Insurance travel & health for our customers Credit Card strong support from Malaysia, Singapore & Thailand 37

39 Expansion Strategy Increasing frequency to existing destinations introduced late night and early morning flights (KUL-BKI, KUL-KCH) Introduce new connectivity from existing airports introduced JHB-MYY Working to introduce new destinations in 2005 maiden flight to China from Bangkok in April, first LCC in China maiden flight to Philippines in April venturing into new countries (Indo-China, Brunei) 38

40 AirAsia - Concluding Remarks Numbers missed, but FY05 s performance was significant given the obstacles we had to face and compared with our peers Fuel remains an issue, but hedge, surcharge, insurance should mitigate this We have far more control over our fleet growth Sticking to our knitting FY06 is a year of bedding down the expansion in the network while continuing to manage our unit costs lower 39