INVESTOR RELATIONS PRESENTATION NOVEMBER 2016
CONTENTS AEROMEXICO AT A GLANCE BUILDING A STRONG AND FLEXIBLE AIRLINE STRATEGIC INITIATIVES 2
AEROMEXICO: MEXICO S PREMIUM NETWORK CARRIER. Mexico s only full service carrier, offering customers up to a three-class service. Operating a hub and spoke network model with main hub in Mexico City. Global Airline. Only Mexican carrier flying to long-haul markets in Europe, Asia and South America. Over 80 destinations in more than 20 countries, above 610 daily flights. 19.4 million passengers transported in last twelve months. Founding member of SkyTeam. Enhanced strategic alliance with Delta Air Lines. Coalition Loyalty Program. 3
THE MEXICAN MARKET: STRONG AND GROWING 3.0 2.0 1.0 0.0-1.0-2.0 Growth Opportunities for Mexican Economy (1) Air Traffic Penetration (2) Expected GDP Annual Percentage Change 2.5 2.1 2.3 1.6 0.5-0.1-0.6 2015 2016 2017 Mexico Latin America and the Caribbean Brazil Flights Per Capita for Middle & Upper Class Population 0.6 0.8 1.4 2.4-3.0-4.0-3.8-3.3 Mexico Brazil Europe US Favorable Demographics Growing Middle Class (3) Favorable Demographic Trends (4) Sources: (1) IMF October 2016, World Economic Outlook for other markets (2) Morgan Stanley Research FY 2014. (3) INEGI (4) CONAPO Middle Class (2010 Demographics in Million) (2050 Demographics in Million) 90-95 90-95 49mm 70 mm 80-84 80-84 70-74 70-74 60-64 60-64 50-54 50-54 40-44 40-44 30-34 30-34 20-24 20-24 10-14 10-14 0-4 0-4 6 4 2 0 2 4 6 6 4 2 0 2 4 6 Men Women 4
THE MEXICAN MARKET: STRONG AND GROWING LTM September Domestic Market Share LTM September International Market Share 2.2% 1.3% 1.8% 13.0% 13.5% 31.9% 34.8% 16.7% 27.1% 22.3% 4.7% 3.9% 7.1% 12.4% 7.3% LTM Domestic Passenger Growth Millions of Passengers 12.4 +3.8% 12.9 LTM International Passenger Growth Millions of Passengers 6.0 +8.9% 6.5 LTM 14-15 LTM15-16 LTM 14-15 LTM15-16 5 Source: Traffic Report YTD September 2016 (Passenger Information, includes Charter operations). Source: DGAC, Statistical Report 2016.
AEROMEXICO: RECENT EVENTS 2014-2016 Transaction Delta Master Trust. Grupo Aeromexico celebrates 80 years as Mexico s flagship airline. Issuance of notes guaranteed by US Ex IM Bank (USD $195.8 million, 2.3% structured notes ). Grupo Aeromexico issues $2 billion MXP through its CBF's program. COFECE approves Antitrust Immunity with Delta subject to conditions. Delivery of 787-9 through JOLCO agreement. 2014 Apr Sep 2015 Mar Sep Nov 2016 Apr May Aug Oct Nov May Delta announces intention to increase stake in Aeromexico to up to 49%. AM and Delta accept COFECE conditions on ATI approval. Aeromexico and Delta request authorization for joint cooperation agreement. US-Mexico Open Skies Agreement commences. DOT grants ATI subject to conditions. 6
THE MEXICAN MARKET: FINANCIAL RESULTS 3Q 2016 Total Revenues Millions of Pesos 12,419 +16.5% 14,472 Operating Margin Millions of Pesos 1.1 Pts. 10.2% 9.1% YTD15 YTD16 YTD15 YTD16 1,127 Operating Profit Millions of Pesos +31.1% 1,478 3,326 EBITDAR Millions of Pesos +22.2% 4,063 YTD15 YTD16 YTD15 YTD16 7 Source: Grupo Aeromexico Quarterly Results YTD September 2016
THE MEXICAN MARKET: FINANCIAL RESULTS YTD SEPTEMBER 2016. Total Revenues Millions of Pesos 34,377 +13.2% 38,901 Operating Margin Millions of Pesos 0.5 Pts. 6.4% 5.9% YTD15 YTD16 YTD15 YTD16 2,025 Operating Profit Millions of Pesos +23.7% 2,505 8,105 EBITDAR Millions of Pesos +24.0% 10,051 YTD15 YTD16 YTD15 YTD16 8 Source: Grupo Aeromexico Quarterly Results YTD September 2016
CONTENTS AEROMEXICO AT A GLANCE BUILDING A STRONG AND FLEXIBLE AIRLINE STRATEGIC INITIATIVES 9
BUILDING A STRONG AND FLEXIBLE AIRLINE: ENHANCING CONNECTIVITY Enhanced international network to connect within Mexico and Mexico with the World. 19 USA & Canada 4 Europe 2 Asia 8 Central America & Caribbean 85 Destinations: 45 domestic and 40 international 7 South America 10
BUILDING A STRONG AND FLEXIBLE AIRLINE: ENHANCING CONNECTIVITY Largest network in a strong and growing Mexican market 11
BUILDING A STRONG AND FLEXIBLE AIRLINE: ENHANCED CONECTIVITY Aeromexico has developed AICM as one of the best global hubs. Global Airport Country Index 1 ATL USA 2503 2 ORD USA 2280 3 DFW USA 1940 4 CLT USA 1585 5 IAH USA 1028 6 DTW USA 903 7 CGH Brazil 880 8 DEN USA 877 9 MEX Mexico 826 10 PHX USA 778 Conectivity Index, OAG 841 880 826 Latin America 635 528 567 427 423 295 332 CGH MEX GRU BOG BSB Índice Index 2010 Índice Index 2015 Connectivity Index per Airline, ANNA. 76 72 54 53 46 44 AM Destinations 2016 85 2010 68 Aeromexico (MEX) Copa (PTY) Azul (VCP) Avianca (BOG) TAM (GRU) GOL (GRU) 12 Source: OAG 2016 Connectivity Index (calculated as ( possible connections / number of destinations served ) ANNA ( Airline Network News Analysis) 2015: (number of destinations served by the airline Hub).
BUILDING A STRONG AND FLEXIBLE AIRLINE: REVENUE DIVERSIFICATION Diversification of revenue streams to reduce risk Income Millions of pesos International / Domestic Passengers Millions of PAX transported 25,263 55% 6,506 33% 5,557 12,159 31% 69% 20,222 45% 2,250 7,317 24% 76% 12,898 67% 2005 LTM 2016 2005 LTM 2016 13
BUILDING A STRONG AND FLEXIBLE AIRLINE: COST PRODUCTIVITY Aeromexico is the most cost efficient full service carrier in the Americas. Airlines in Americas, CASK Stage Length Adjusted LTM 9.81 Low Cost Carriers Full Service Carriers 8.49 8.39 7.22 6.75 6.65 6.42 6.15 6.08 5.47 14 LATAM, AVIANCA and COPA updated up to LTM June 2016. Information from 2016 Quarterly Financial Reports. Includes profit sharing expense and fuel hedge losses. Adjusted Stage Length @1,000 miles. Exchange Rate: Considers GAM s average exchange rate for the period (18.74).
BUILDING A STRONG AND FLEXIBLE AIRLINE: FLEET STRATEGY DRIVING EFFICIENCY Fleet substitution as key element to achieve cost efficiency while improving passenger experience Years Americas Mean:11.8 9.6 8.3 14.2 Average Fleet Age 12.2 9.0 12.7 11.6 10.1 11.2 Europe Mean:11.0 10.0 10.2 Mexican Industry Aircraft Orders 100 New Boeing Aircraft Order Up to: 90 B737 MAX Up to: 10 B787-9 2007 2016 Americas Europe Rest of Domestic Industry +160 New Aircraft Order (1) DGAC 2015 for Mexican fleet, (2) Source for International Airlines: https://www.planespotters.net/airline. (2) Ascend and public information from each airline. Public orders announced since 2012. Fleet scheduled to arrive from 2012 through 2025 15
BUILDING A STRONG AND FLEXIBLE AIRLINE: FLEET STRATEGY DRIVING EFFICIENCY Fleet type Model 4Q15 3Q16 4Q16E 4Q17E E-145 18 15 15 12 E-170/175/190 44 50 50 55 Regional 62 65 65 67 737-700 19 19 19 17 737-800 31 34 34 39 Narrow Body 50 53 53 56 B787 9 9 12 14 B777 4 4 3 3 Wide Body 13 13 15 17 Total 125 131 133 140 Source: Grupo Aeromexico. Fleet. 2016. Estimates. 17
BUILDING A STRONG AND FLEXIBLE AIRLINE: RISK MANAGEMENT Reducing exposure to external factors, building flexibility in our fleet plan. 300 Aircraft Economic Cycle Exchange Rate Exposure Revenues 250 200 150 100 50 0 Aircraft Staggered Leases Fleet plan flexibility 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Year MXN 40% MXN 32% Costs USD 60% USD 68% Reduced risk from exchange rate fluctuations. Fleet 2017 2018 2019 Total Regional Total 7 3 3 13 Narrow Body Total 10 5 9 24 Wide Body Total 0 3 0 3 GAM Total 17 11 12 40 Source: Grupo Aeromexico. Fleet. 2016 Fuel Hedging Strategy 40%-50% of expected fuel consumption for the next 12 months is hedged with call options and call spreads. Fuel surcharges complement Grupo Aeromexico s hedging strategy. Strike price: $1.75/Gal 18
BUILDING A STRONG AND FLEXIBLE AIRLINE: BEST PEOPLE Focus on productivity Global management team that combines experience of international airlines Best crew and customer service teams in the Mexican industry Attracting and developing talent Safety and security has and will continue to be our top priority 19
CONTENTS AEROMEXICO AT A GLANCE BUILDING A STRONG AND FLEXIBLE AIRLINE STRATEGIC INITIATIVES 20
STRATEGIC INITIATIVES : DELTA PARTNERSHIP ENHANCEMENT Delta intends to increase equity stake in Grupo Aeromexico to up to 49% through a cash tender offer at 43.59 MXP per share. POTENTIAL JOINT NETWORK FOR MEXICO US TRANSBORDER MARKET Santo Domingo AM and DL have obtained Mexican Competition Authorities (COFECE) approval for antitrust immunity for a new joint venture on flights between the US and Mexico. The transaction is expected to complete, subject to DOT approval, in the second half of 2016. This joint venture would provide an enhanced customer proposition, deeper schedules and enhanced network possibilities for travelers, differentiating Delta and Aeromexico from other airlines in the market. 21
STRATEGIC INITIATIVES: ANCILLARY REVENUES Website Cobranded Cards Upgrades to Clase Premier New website User-friendly environment, driving propensity for online booking and interaction with Aeromexico. App Renewed New product New App Personalized, protected access to facilitate booking and provide targeted marketing. AM Plus Seat Selection Kiosks New check-in kiosks Better customer service- 50% faster check-in, enhanced passports and visa scanning functionality 22
STRATEGIC INITIATIVES: NEW MEXICO CITY AIRPORT Strategic opportunity for Mexico to create and develop the best global hub in Latin America. Designed by award winning architect, Norman Foster, who was also architect for Hong Kong and Beijing International Airports, amongst other globally recognizable buildings. Enhanced processes to optimize connectivity and promote NAICM as the hub of a global flagship airline: Aeroméxico. 23
STRATEGIC INITIATIVES: PRODUCT RECOGNITION & CORPORATE RESPONSIBILITY Product Recognition Social Responsibility Initiatives Mexico & Central America Leading Airline, 2016. PAX International Readership Awards, 2016. Airline Alliance of the Year, 2016. Best Airline in Mexico, 2015. Best Domestic Airline, 2015. 24 Source: Grupo Aeromexico
THANK YOU FOR JOINING US TODAY. 25
Investor Relations Contact Information: aminvestorrelations@aeromexico.com Tel (+52) 55 9132 4477 Jonathan Wallden Sr. VP Financial Planning & Investor Relations Contact Information: jwallden@aeromexico.com DISCLAIMER This presentation is neither an offer for sale nor a request to buy any securities. Such offer or request may only be made through an offering memorandum containing the description of the terms and conditions of such offer and shall include detailed information of the company and its management, as well as the financial statements of Grupo Aeromexico, S.A. de C.V. ( Grupo Aeromexico ), in terms of the Securities Market Law (Ley del Mercado de Valores) ( LMV ) and the General provisions applicable to securities issuers and other securities market participants (Disposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores) (the Provisions ). Statements in this presentation that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements". Such statements include, but are not limited to, statements about future financial and operating results, the Company s plans, objectives, estimates, expectations and intentions, and other statements that are not historical facts. These forwardlooking statements are based on the Company s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. 26