Flybe /13 Half-year Results. Analyst and Investor Presentation

Transcription

1 Flybe /13 Half-year Results Analyst and Investor Presentation 8 November 2012

2 Agenda 2 Introduction Jim French, Chairman & CEO Financial Review Strategy Strategic Update Review & Business Review Update Outlook

3 H1 2012/13 - Overview Highlights g Building European business to reduce reliance on UK economy 38.6% of airline revenue from non-uk domestic flying (H1 2011/12: 32.1%) Further 12 E190s flying under contract for Finnair from Winter 2012/13 Launch of Making flying better and Manchester hub in UK New routes at East Midlands Fleet renewal and matching aircraft capacity to market needs Delivery of four E175 aircraft, further two in H2 2012/13 Disposed of two Q400s Four Q400s contract flying for Brussels Airlines in H2 2012/13 Challenging period Continuing weak economic backdrop Stubbornly high fuel prices Regulatory and infrastructure cost pressures Ever increasing APD Transition towards more transparent ancillary model Strategy remains on track Flybe at a Glance 52.6% UK Regions (1) market ktshare 29.1% share of UK domestic market 40m 4.0m Flybe UK passengers (H1 2011/12: 4.2m) 6.2m Flybe UK seats flown (H1 2011/12: 6.4m) (1) Including Loganair, excluding London airports 3

4 Flybe Europe s Largest Regional Airline 209 Routes 35 UK airports 71 European airports 20 Countries 3,500+ Staff 97 Aircraft Route map from Winter 2012/13, based on new contract flying agreement with Finnair 4

5 Agenda 5 Introduction Financial Review Andrew Knuckey, CFO Strategy Strategic Update Review & Business Review Update Outlook

6 Financial Highlights Revenue under management, including Flybe Finland, up 13.2% to 396.3m Group revenue stable at 340.8m Flybe UK passenger revenue per seat stable at Flybe UK costs per seat (at constant currency and fuel) up 5.0% to EBITDAR (1) down 23.9% to 46.7m Operating profit (2) of 1.1m vs. 16.7m in H1 2011/12 Loss before tax of (1.3)m vs. profit of 14.3m in H1 2011/12 Operating cash outflow of (4.8)m vs. inflow of 13.0m in H1 2011/12 Net debt (3) of (50.0)m vs. (29.7)m at March 2012 Net assets 85.4m vs. 89.4m at March 2012 Financials at a Glance 396.3m Revenue under management up 13.2% 46.7m EBITDAR 1.1m Operating profit 85.4m Net assets (1) EBITDAR comprises (loss)/profit before tax and adds back interest, depreciation (exc. maintenance assets), amortisation and aircraft rental charges (2) Operating profit before share of joint venture result (3) Net debt comprises total cash (including restricted cash) less borrowings 6

7 Group Divisional Revenues & EBITDAR H1 2012/13 H1 2011/12 Change m m Revenues Flybe UK (0.2)% Flybe Europe n/m Flybe Aviation Support (4.4)% Inter-segment tsales (9.3) (10.1) 1) 79% 7.9 Revenue under management % Less: Revenue from Flybe Europe joint venture (55.5) (8.6) n/m Group revenue (excluding investment income) (0.2)% EBITDAR Flybe UK (20.3)% Flybe Europe (0.5) (0.1) n/m Flybe Aviation Support (0.5) 0.9 n/m Group costs (1.8) (1.5) (20.0)% 0)% Group (23.9)% Flybe Finland only trading for one month in H1 2011/12 Growth in revenue under management di driven by Flybe Finland Group revenues stable at 340.8m EBITDAR down (23.9)% to 46.7m 7

8 Group - Divisional Results H1 2012/13 H1 2011/12 m m Flybe UK Flybe Europe (2.4) (0.6) Flybe Aviation Support (0.9) 0.4 Total Divisional results Group costs (1.8) (1.5) (Loss)/profit before tax (1.3) 14.3 Tax credit (Loss)/profit after tax (1.3) 14.6 (Loss)/profit before tax - reported (1.3) 14.3 Add back of revaluation gain on USD aircraft loans (0.7) - Underlying (loss)/profit before tax (2.0) 14.3 (Loss)/earnings per share (basic), pence (1.7) 19.4 Flybe Finland only trading for one month in H1 2011/12 BNDES USD loans on six E175 finance leases 8

9 Flybe UK - Divisional Results H1 2012/13 H1 2011/12 Change m m Revenue (0.2)% Fuel (68.6) 6) (55.9) (22.7)% Operating costs (exc fuel and aircraft ownership costs) (210.4) (211.1) 0.3 % EBITDAR (1) (20.3)% Margin % % (3.8)ppt Finance and ownership (45.7) (46.1) +0.9 % Divisional i i profit (76.2)% Margin +1.2 % +4.9 % (3.7)ppt EBITDAR margin down (3.8)ppt to 15.1% Fuel cost per seat, (26.7)% Other costs per seat, (3.5)% Other costs per seat at constant currency, (5.1)% Operating costs per total seats (exc fuel) increased by less than inflation vs. H1 2011/12 Despite macro-economic challenges and fuel costs up 22.7%, core Flybe UK (1) EBITDAR comprises PBT and adds back interest, depreciation (exc maintenance assets), amortisation and aircraft rental charges business generated a profit 9

10 Flybe UK - Revenue H1 2012/13 H1 2011/12 Change Passengers (m) (3.4)% Load factor (%) (0.6)ppt Seats (m) (2.6)% Sector length (km) (0.4)% Passenger revenue ( m) (2.5)% Passenger yield ( ) % Contract flying revenue ( m) n/m Revenue from other activities ( m) % Total revenue ( m) (0.2)% Passenger revenue per seat ( ) % Contract flying revenue from Brussels Airlines, also increase in charter revenue Load factor down (0.6)ppt, passengers down (3.4)% - impact of macroeconomic backdrop and Olympic effect Ticket yield increase offset by loss of debit card charges in ancillary revenue 10

11 Flybe UK Operating Cost per Seat Effective cost per tonne increased from $798 to $1, Effective USD rate moved from 1.58 to (0.82) Excluding costs relating to contract flying, broadly in line with H1 11/12 47 H1 2011/12 Operating cost per seat Foreign exchange H1 2011/12 Operating cost per seat at constant currency Fuel Net airport, en route charges and ground operations Aircraft rental charges, maintenance and currency operations depreciation Staff costs Marketing and distribution costs Other operating expenses H1 2012/13 Operating cost per seat 11

12 Flybe UK Impact of Fuel H1 2012/13 H1 2011/12 Change Fuel $ / metric tonne - Market rate 1,008 1, Effective price 1, (210) USD rate - Market rate $(0.04) - Effective price $0.03 Actual cost of fuel / metric tonne (121) 12

13 Flybe UK Hedging Positions Jtf Jet fuel 84% of anticipated requirement for half year to March 2013 hedged at $1,015 per tonne 59% of anticipated requirement for half year to September 2013 hedged at $980 per tonne US Dollar 87% of anticipated requirement for half year to March 2013 hedged at $ % of anticipated requirement for half year to September 2013 hedged at $1.58 Euro Small net exposure of < 20m, no formal hedging 13

14 Flybe Europe - Financial Results H1 2012/13 H1 2011/12 m m Revenue Fuel (11.3) (1.5) Operating costs (exc fuel and aircraft ownership costs) (40.4) (6.1) EBITDAR (1) Margin +6.8 % % Finance and ownership (8.3) (1.6) Flybe Finland - loss before tax (4.5) (0.6) Margin (8.1)% (7.0)% Tax credit Flybe Finland - loss after tax (3.4) (0.6) Flybe 60% share of loss from JV of (2.1)m, on plan After central management costs Flybe Group - 60% share of loss after tax (2.1) (0.5) and interest Flybe Europe received, Flybe - central management costs (0.5) (0.1) Europe loss was - interest received (7.2)% of Flybe s Flybe Europe - divisional result (2.4) (0.6) share of revenue (1) EBITDAR comprises PBT and adds back interest, depreciation (exc maintenance assets), amortisation and aircraft rental charges 14

15 Flybe Europe - Revenue H1 2012/13 H1 2011/12 Passengers ('000) Load factor (%) Seats ('000) Sector length (km) Passenger revenue ( m) Passenger yield ( ) Contract flying ( m) Revenue from other activities ( m) Total revenue ( m) Passenger revenue per seat ( ) H1 2011/12 contract flying revenue generated from seven ATR turboprops and two E170s 12 E190 aircraft from October 2012, taking total to 21 out of 28 Flybe Finland aircraft deployed on contract flying 15

16 Flybe Aviation Support H1 2012/13 H1 2011/12 Change Financial results MRO loss of Maintenance, repair and overhaul (9.5)% (0.7)m, Training Training Academy % Academy loss of (0.2) Total revenue (4.4)% Operating costs (22.5) (22.2) (1.4)% Divisional profit (0.9) n/m Operational headlines Third party man hours (3.8)% Flybe man hours (20.0)% Total man hours (10.1)% (10.1)% YOY decline in MRO man hours impact of weak Q2 16

17 Group - Fleet Under Management At September At March Fleet substitution i Movements continues, Flybe UK Flybe UK fleet up by one Embraer 118-seat E195 regional jet aircraft at Embraer 88-seat E175 regional jet September 2012 Bombardier 78-seat Q400 turboprop (3) four Q400s now Flybe UK total contract flying for Brussels, four Flybe Europe ATR 48-seat ATR42 turboprop grounded for Winter 12/13 ATR 68- and 72-seat ATR72 turboprop Embraer 76-seat E170 regional jet Flybe Europe total Now 28 aircraft in fleet, of which 21 are Total contract flying Held on operating lease Owned and debt financed Now 97 aircraft (of Total which 25 are contract flying), Total seats in fleet under management 7,078 6, total seats 8,302, Average seats per aircraft average age 4.7 Average age of ffleet t( (years) (0.1) years 17

18 Group Cash Flow Two E175 deliveries acquired on finance lease, disposal of two Q400s (4.0) (1.3) (6.4) m 40 (22.0) Group operating cash outflow (4.8)m 0 Free cash at March 2012 Loss for period Depreciation and amortisation Net working capital Transfer to restricted cash Capital expenditure net of disposal proceeds Financing Free cash at September 2012 Restricted cash Total cash 18

19 Group Balance Sheet At September 2012 At March 2012 Movements m m m Fixed assets Cash and restricted cash (8.5) Landing slots and other intangible assets Joint ventures (1.8) Derivative financial instruments (3.6) 3.9 (7.5) Aircraft deposits (3.4) Other assets (4.0) Total assets (5.6) Net debt at 30 September 2012 of (50.0)m, vs (29.7)mat March 2012 Debt (109.1) (97.3) (11.8) Other liabilities (215.2) 2) (228.6) 13.4 Net assets of 85.4m Net assets and shareholders' funds (4.0) 19

20 Agenda 20 Introduction Financial Review Strategy Strategic Review Update & Business Update Review - Jim French, Chairman & CEO Outlook

21 Flybe Today UK s No. 1 regional airline Europe s Largest Regional Airline 29.1% brand market share, 52.6% share of regional domestic market Europe s largest regional airline Rapidly growing European business Led by low risk, long-term contract flying Europe s leading regional MRO and training facilities Independent relationships i include: Finnair joint venture, contract flying, codeshare BA shareholder, h codeshare Air France/KLM codeshare, capacity share Brussels Airlines contract flying 21

22 Delivering Our Strategy Capitalising on UK Leadership Manchester hub concept Fully functioning regional hub 17 connecting routes 7 new routes from East Midlands and Birmingham following closure of BMI Baby Challenging UK domestic market UK Domestic Travel Down 20.6% since 2007 Flybe brand market share increased from 14.2% to % % increase in APD Millions s Sum of Total Sum of BE

23 Delivering Our Strategy Capitalising on UK Leadership Launch of Making flying better Removal of debit card charges transitional impact on ancillary revenues Other airlines continue to impose administration fees Key components of Making flying better winter winter Promotional codes New FFP Upgrade to 175 jets Manchester Hub Assigned Seating Focus on cost and capacity management 17 aircraft out of scheduled service since 2008 Initiatives under way to deliver 2 per seat cost saving from 2013/14 onwards October summer june Online self management for disruptions Onboard Wi-fi trial Self Bag Tag Trials Mobile booking, apps, check-in Larger hand baggage sizes Making flying better New economy ticket inc ancillaries Per booking credit card charges Flight frequency New website New look advertising inc TV No debit card charges 22 Growth in revenue from contract flying and charters 23

24 Delivering Our Strategy European Growth Flybe Finland Now Finland s largest domestic airline New contract flying agreement with Finnair 12 E190s, commenced 28 October 2012 Significant overhead cost reduction since acquisition in August 2011 Revenue in 2013/14 expected to be 300m+, targeted profitability in line with original business plan and cash generative Further opportunities in Europe Significant rationalisation and consolidation Through alliances with national carriers such as joint ventures, contract flying or codeshare Flybe well placed to benefit 38.6% of Flybe s airline revenue touches Europe Expected to increase 24

25 Delivering Our Strategy Fleet Renewal At October aircraft, average age 4.7 years 36 Embraer E-Series regional Jets 47 Bombardier Q400 turboprops ops 14 ATR turboprops 25 contract flying, 72 scheduled flying Scheduled deliveries to March 2013 Delivery of two Embraer 88-seat E175 regional Jets Indicative profile of fleet under management at March Embraer E-Series regional Jets 47 Bombardier 78-seat Q400 turboprops 14 ATR turboprops 99 total aircraft 25 contract flying, 74 scheduled flying 25

26 Agenda 26 Introduction Financial Review Strategy Strategic Update Review & Business Review Update Outlook Jim French, Chairman & CEO

27 Outlook UK Forward passenger sales revenue in Flybe UK for Winter 2012/13 ahead c2.5% YOY, on capacity 1% to 2% down H2 YOY fuel increase expected to be c. 6m, compared with c. 13m in H1 2012/13 Six new routes at East Midlands Four Q400 aircraft contract flying for Brussels, four aircraft grounded for Winter 2012/13 Initiatives underway to deliver 2 per seat annual cost savings from 2013/14 Europe Excellent progress in Flybe Finland on plan and targeted to be profitable in 2013/14 Other low risk growth opportunities being evaluated Aviation Support Adjusting cost base to reflect current weaker trends in 3 rd party MRO activity Commercialisation of Training Academy progressing well targeting profitability in 2013/14 27

28 Outlook No change to 2012/13 revised guidance given on 10 August 2012 Group revenue current trends point to YOY growth of between flat and 2% Group costs including fuel, an increase YOY of c2.5% Strategy t on track But against backdrop of current macro-economic headwinds Medium term financial target remains 7% operating margin With actions being taken to restore profitability to Flybe UK, and the continuing growth and move to profitability in Flybe Europe, the Board remains confident about Flybe s future prospects 28

29 Flybe /13 Half-year Results Analyst and Investor Presentation 8 November 2012

30 Legal Disclaimer This presentation has been prepared by Flybe Group plc (the Company ) ). This presentation does not constitute or form part of any offer to sell or issue, or invitation to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for, any securities of the Company or in any other entity, nor shall this document or any part of it, or the fact of its presentation, form the basis of, or be relied on in connection with, any contract or investment decision, nor does it constitute a recommendation regarding the securities of the Company or any other company. The information contained in this presentation has not been independently verified. This presentation does not purport to be all-inclusive or to contain all the information that a prospective investor in securities of the Company may desire or require in deciding whether or not to offer to purchase such securities. No representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its affiliates (within the meaning of Rule 405 under the US Securities Act 1933) ( Affiliates ), members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation or any other material discussed verbally. None of the Company or any of its Affiliates, members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements which are based on the Company's or, as appropriate, the Company's directors' current expectations and projections about future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussion of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements, as well as those included in any other material discussed at any analyst presentation, are subject to risks, uncertainties and assumptions about the Company and its subsidiaries and investments, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures. In light of these risks, uncertainties and assumptions, the events or circumstances referred to in the forward-looking statements may differ materially from those indicated in these statements. Forward-looking statements may and often do materially differ from actual results. None of the future projections, expectations, estimates or prospects in this presentation should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of the assumptions, fully stated in the presentation. Forward-looking statements speak only as of the date of this presentation. Subject to obligations under the listing rules and disclosure rules made by the Financial Services Authority under Part VI of the Financial Services and Markets Act 2000 (as amended), neither the Company nor any of its affiliates, or individuals acting on its behalf, undertakes to publicly update or revise any such forward-looking statement, whether as a result of new information, future events or otherwise. As a result of these risks, uncertainties and assumptions, you should not place undue reliance on these forward-looking statements as a prediction of actual results or otherwise. The information and opinions contained in this presentation and any other are material discussed verbally are provided as at the date of this presentation and are subject to verification, completion and change without notice. In giving this presentation, neither the Company nor its advisers and/or agents undertakes any obligation to provide the recipient with access to any additional information or to update this presentation ti or any additional linformation or to correct any inaccuracies i in any such hinformation which hmay become apparent. 30