Air Berlin PLC AGM 23 June 2015 London
AGM 2015 Executive Summary High restructuring expenses impact airberlin's 2014 earnings - 2015 outlook improved EBIT of EUR -293.8m includes restructuring cost of EUR 100.6m Fundamental realignment of business model has been launched (3-Phase-Model) Expected positive effects from the restructuring program Improvement of the operating result (EBIT) by 23 Mio. EUR in Q1 2015 New revenue management system leads to visible yield improvement Growth of revenue per ASK New line-up of management team 2
ATTRACTIVE ROUTE NETWORK Global routes and destinations with high frequencies in our network Los Angeles Chicago New York Dusseldorf Berlin Beijing Fort Myers Miami Abu Dhabi In the year 2014: 132 AB/HG destinations 292 codeshare destinations Curacao Bangkok Phuket Destinations operated by AB Codeshare destinations AGM 2015 3 Sydney
STRATEGIC PARTNERSHIPS Etihad Airways & codeshare performance oneworld Positive development of codeshare bookings (passengers in thousands) Common passenger development with Etihad Airways Common passenger development with oneworld partners +7% +9% 563 602 1,020 1,113 Jan-Dec 2013 Jan-Dec 2014 Jan-Dec 2013 Jan-Dec 2014 Additional routes (STR / VIE - AUH) and frequencies (TXL - AUH) as of winter 2015 Continued increase in oneworld passengers Further growth through closer cooperation with Iberia and American Airlines AGM 2015 4
COOPERATION WITH AMERICAN AIRLINES Common growth Triple Daily from DUS / TXL to JFK Daily to MIA and ORD 6 flights per week to LAX and 3 flights per week to RSW More than 2,500 common codeshare flights per week 81 codeshare destinations 130 codeshare routes 5
COOPERATION WITH ALITALIA Codeshare agreements with new destinations covering more destinations in Italy More than 400 codeshare flights per week From 12 airports in airberlin core markets to 15 destinations in Italy Switch to Linate, the most convenient airport in Milan 6
PARTNERSHIP WITH ETIHAD More flights to Australia and India & new destination Hong Kong New route AUH - HKG Double daily TXL - AUH with connection to 43 Etihad destinations From14 airports in DACH 2,432 common codeshare flights per week 79 codeshare destinations 100 codeshare routes AGM 2015 7
Financial Charts AGM 2015 8
Performance 2014 and trend 2015 Year 2014 Negative EBIT of EUR -293.8m Trend going into 2015 Performance improvement starting in Q4 2014 Includes restructuring cost of EUR 100.6m Yield up by 4.0% or EUR 4.8/pax vs. prior year Adjusted EBIT of EUR -193.3m driven by Disappointing yield development of -0.8% vs. prior year Unit cost per available seat kilometer decreased by -2.8% vs. prior year Net loss of EUR -376.7m EBIT improvement of EUR 48.5m Continued yield improvement in Q1 2015 Yield up by 4.2% or EUR 4.9/pax vs. prior year EBIT improvement of EUR 22.9m Announced restructuring program on track company launches a three-phase business model redesign 9
airberlin missed envisaged turnaround in 2014 Total revenue [EURm] EBIT [EURm] Net result [EURm] +0.3% 2013 4,146.8 4,160.2 2014-26.7% -19.4% -231.9-293.8-315.5-376.7 Total revenue Lack of revenue growth as higher capacity was offset by lower load factor and negative yield development EBIT EBIT 2014 includes restructuring and one-off costs of EUR 100.6m Excluding restructuring costs most operating costs such as cost of aircraft ownership, fuel, airport charges and other operating costs developed favorably Net result Financial result is EUR 11.6m below prior year Tax result improved EUR 12.5m compared to prior year Net result of EUR -376.7m including restructuring and one-off costs AGM 2015 10
Yield and load factor were the main drivers for the 2014 shortfall 2013 2014 Capacity seats [m] Passengers [m] Yield/Passenger [EUR] Comments +2.5% +0.6% -0.8% Higher capacity could only partially be sold into the 38.9 39.8 31.5 31.7 121.0 120.1 market leading to lower load factor and only a slight increase in passengers Yield development declining Consequently, revenues are only slightly up vs. prior Load factor [%] ASK [bn] Total Revenue [EUR m] year and far below expectations -1.2%pts. +3.1% +0.3% 84.8 83.5 57.3 59.0 4,146.8 4,160.2 AGM 2015 11
Cost performance in 2014 in line with expectations 2013 2014 Cost (2) /ASK [EUR ct] Comments Total Revenue/ASK [EUR] -2.7% Cost 2) /ASK incl. fuel -4.6% 7.75 7.40 Cost 2) /ASK excl. fuel Full year effect of various cost reductions in 2014 that were initiated in 2013 Renegotiation of aircraft leases Decrease in airport charges 7.24 7.05 1.87 1.71 1.75 1.67 5.88 1.71-4.1% 5.65 1.67 Slight increase of personnel costs due to fixed collective labor agreements Flight Revenue (1) /ASK [EUR] 0.94 0.45 1.16 0.80 0.45 1.18 0.94 0.45 1.16 0.80 0.45 1.18 Excluding restructuring and one-off costs improvement in Cost/ASK 1.62 1.54 1.62 1.54-3.2% 2013 2014 2013 2014 6.66 6.45 Fuel Leasing & depreciation Personnel Airport charges Navigation Other excl. OOR (1) Flight revenue incl. airport tax revenue (2) Cost on EBIT level excl. OOR and restructuring and one-off costs of EUR 100m AGM 2015 12
Outlook AGM 2015 13
Additional restructuring measures have been implemented for 2015/16 Revenue Cost Human Resources Network Reorganization plus Tactical Short Term Measures More point-to-point connections; less complexity Capacity reduction on low performing routes, focus on profitable and promising routes (total capacity reduction versus 2014: -4.8%) Revenue Management Implementation of new revenue management tools to improve yield development (PROS) Optimized pricing: long-haul pricing & Sabre Simply Good New fare concept Easy booking and check-in Simply Good Reduced direct operating costs due to new fare concept (catering and airport charges) Single Narrowbody Fleet Focus on single Airbus fleet Reduction in complexity Better economies of scale Reduced cost of aircraft ownership Maintenance MRO optimization Less MRO costs due to single narrowbody fleet Station Closure Reduction of 5 crew bases in Germany Restationing of approx. 100 pilots to Berlin and Dusseldorf Crew Productivity Increase Network optimization as well as improved crew planning Reduction in surplus personnel Optimization of operational platforms Pilot union contributed to turnaround program Overhead Reduction FTE reduction target: 200 FTE Initiatives to optimize processes Reorganization of departments and teams AGM 2015 14
Realignment of airberlin business model 1st Phase to September 2015 2nd Phase to March 2016 3rd Phase from April 2016 Management & Leadership Key performance indicators and incentives already introduced at the top three management levels for 2015 Realignment of corporate structures along the airline value chain to drive performance Review of network strategy and planning, scheduling, revenue management and sales channel management while promoting employee input Market Segmentation & Capacity adjustments Short-term capacity optimisation from March to June 2015 (- 4.5%) implemented Significant yield improvement through new revenue management strategy Realign different sales channels and increase partner airline market share Increase of market share in strategic target markets, airberlin hubs and new partnerships withdrawal from non-strategic markets focus on core business Realignment of cost structure following capacity adjustments Profitability & Growth Developing multi-hub strategy as well as new long-haul destinations Deciding on platform growth strategy as well as outsourcing of non-core activities Improving IT infrastructure as the basis for future growth AGM 2015 15
First signs of financial turnaround are visible EBIT excluding restructuring and one-off charges [EUR m] Prior year Actual Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q4 2014 Q1 2015-23.8% 115.6 91.8 +13.0% +6.8% +7.2% +48.5% -8.1-0.9-102.5-188.4-181.6-150.9-182.8-159.9 2014 full year result driven by underachievement in important third quarter EBIT improvement already seen in Q4 2014 Revenue development driven by network restructuring Further improved CASK performance Continued positive EBIT development in Q1 2015 Revenue improvement additionally supported by new revenue management system Restructuring measures gain traction on the cost side AGM 2015 16
Stronger yield performance over the last six months Yield [EUR/passenger] Prior year Actual 121.1 +4.9% 126.0 109.1 +13.7% 122.8 124.8-5.4% 119.4 120.9 +7.5% 128.4 115.5-0.3% 115.2 114.5 +7.2% 121.7 Oct 2014 Nov 2014 Dec 2014 Jan 2015 Feb 2015 Mar 2015 Average yield increase past six months: 4.8 EUR per passenger (+4.1%) Cut loss making routes as part of overall network restructuring New revenue management steering strategy more focused on late term bookings Introduction of PROS (12/2014) Change from manual to automated steering and forecasting systems Change from leg-based to network-based capacity and price allocation Ability to differentiate Point of Sale (POS) AGM 2015 17
Q1 2015 AGM 2015 18
Load factor is a main driver for the Q1 2015 improvement Q1 2014 Q1 2015 Capacity & Passengers [m] ASK [bn] RPK [bn] Load factor [%] -4.0% 7.8 7.5-0.8% 11.6 +1.5% 11.8 +3.3% 9.5 9.8 81.8 +1.7% 83.2 5.9 5.8 Capacity Passengers ASK RPK loadfactor Remarks Continuous improvements and capacity adjustments results in overall capacity reduction Yield could be improved by higher load factor in the market AGM 2015 19
Stronger revenue performance in Q1 2015 slightly offset by weaker cost development Yield [ ], Revenue and Cost 1 per ASK [ c.] Cost 1 per ASK incl. fuel [EUR ct] 116.72 +4.2% 121.66 Q1 2014 Q1 2015 8.14 +0.8% 8.20 6.54 +2.6% 6.71 +3.0% 6.35 6.54 Fuel 1.79 1.66 Airport charges 1.35 1.45 Yield R/ASK C/ASK excl. fuel Remarks Leasing & depreciation 1.25 1.23 Successful network and revenue management improvements lead to a R/ASK increase. Navigation & Air transportation tax 0.70 0.72 C/ASK remains nearly constant as increase in personnel expenses and airport charges could be almost offset by lower fuel costs Personnel 1.08 1.20 Personnel costs have risen by a direct employee takeover from NIKI, collective labor developments and non-recurring expenses Higher airport charges caused by non-controllable cost development Other excl. OOR 1.98 1.95 Q1 2014 Q1 2015 (1) Cost on EBIT level excl. revenues from other operations AGM 2015 20
airberlin improves Q1 result on operating level Total revenue EBITDAR & EBIT Net result [EURm] +4% Q1 2014 Q1 2015 761.8 793.7 +62% +13% 0% -37.0-13.9-182.8-159.9-209.8-210.1 Total revenue EBITDAR EBIT Net result Higher flight revenue due to higher yields and higher load factors drive total revenue development EBITDAR improvement of EUR 23m EBIT follows EBITDAR as costs of fleet remain constant Improved result due to higher yield and load factor on relatively stable cost base Stable net result due to higher interest expense and valuation swings in hedging instruments AGM 2015 21
Air Berlin PLC AGM 23 June 2015 London Q&A
Air Berlin PLC AGM 23 June 2015 London
Beschlüsse Resolutions 1 2 Annahme des Jahresberichts und des Jahresabschlusses der Gesellschaft für das am 31. Dezember 2014 beendete Geschäftsjahr Genehmigung des Berichts über die Vergütung der Directors für das am 31. Dezember 2014 beendete Geschäftsjahr To receive the annual report and accounts of the Company for the year ended 31 December 2014 To approve the directors remuneration report for the year ended 31 December 2014 3 Wiederwahl von James Hogan als Director der Gesellschaft To re-appoint James Hogan as director of the Company 4 Wiederwahl von Stefan Pichler als Director der Gesellschaft To re-appoint Stefan Pichler as director of the Company 5 Wiederwahl von James Rigney als Director der Gesellschaft To re-appoint James Rigney as director of the Company 6 Wiederwahl von Ali Ismail Sabanci als Director der Gesellschaft To re-appoint Ali Ismail Sabanci as director of the Company 7 Wiederwahl von Dr. Alfred Tacke als Director der Gesellschaft To re-appoint Dr Alfred Tacke as director of the Company 8 Wiederbestellung von KPMG LLP als Wirtschaftsprüfer der Gesellschaft To re-appoint KPMG LLP as the Company s auditors 9 Ermächtigung der Directors, die Vergütung der Wirtschaftsprüfer zu genehmigen Authorisation of the directors to approve the auditors remuneration 10 11 Die eingeschränkte Ermächtigung der Gesellschaft, politische Spenden und Ausgaben zu tätigen Änderung der Gesellschaftssatzung, um (i) festzustellen, dass die Mehrheit der Directors im Board Bürger der Europäischen Union sind, und (ii) der Gesellschaft zu erlauben, mehr als einen Stellvertretenden Vorsitzenden zu ernennen (nebst entsprechender Anforderungen zur Nationalität) To give the Company limited authority to make political donations and incur political expenditures To amend the articles of association of the Company to (i) ensure that a majority of directors on the Board are European Union citizens, and (ii) allow the Company to appoint more than one deputy chairman (with related nationality requirements) 24
Beschlüsse Resolutions Dafür For Dagegen Against Enthaltungen Votings withheld Gesamt (exkl. Enthaltung Total (excl. Votings withheld) Beschluss 1 / Resolution 1 60.122.906 236.058 656.300 60.358.964 Beschluss 2 / Resolution 2 59.831.190 468.899 715.175 60.300.089 Beschluss 3 / Resolution 3 60.561.662 192.348 261.254 60.754.010 Beschluss 4 / Resolution 4 60.619.878 166.371 229.015 60.786.249 Beschluss 5 / Resolution 5 60.485.018 258.376 271.870 60.743.394 Beschluss 6 / Resolution 6 60.014.432 318.267 682.565 60.332.699 Beschluss 7 / Resolution 7 60.583.393 185.285 246.586 60.768.678 Beschluss 8 / Resolution 8 59.626.972 266.360 1.121.932 59.893.332 Beschluss 9 / Resolution 9 59.608.886 290.057 1.116.321 59.898.943 Beschluss 10 / Resolution 10 59.374.736 977.917 662.611 60.352.653 Beschluss 11 / Resolution 11 59.678.939 205.133 1.131.192 59.884.072 25