Hongkong, November 2016 Content Milestones Success Factors Future - - PowerPoint PPT Presentation

Hongkong, November 2016

Content

Milestones Success Factors Future Growth

39

Milestones

Vietnam Best Places to Work in the Tourism and Hospitality industry 2014 by Anphabe & Nielsen

Successful execution of the low cost carrier model in Vietnam and Southeast Asia

Incorporated and obtained air

• perator’s

certificate “AOC” Flew its first commercial flight from Ho Chi Minh City (“HCMC”) to Hanoi as well as to Da Nang

2007 2013 2015 2011 2012 2014

Hosted its 10,000,000th passenger ceremony Hosted its 3,000,000th carried passenger ceremony Golden Award PATA 2015 for innovative marketing campaign by the Pacific Asia Travel Association “Best Asian Low Cost Carrier 2015”, by TTG Travel Awards 2015 Recognitions of Achievement given by Prime Minister in 2015 Best airline award from the Vietnam Economic Times International Star Award for Quality, by the Business Initiative Directions Top 10

• utstanding

brands by the International Intellectual Property Institute, Vietnam

Milestones Awards

Flew its first international flight between HCMC and Bangkok Achieved 29.6% domestic market share as at 31 December 2014(1)

65%

Achieved 37.1% domestic market share as of 31 December 2015(2) Signed contract with Airbus for purchasing 100 Aircrafts

65%

Signed contract with Boeing to purchase 100 Boeing 737 MAX 200 aircraft

2016

Vietnam Best Places to Work in the Tourism and Hospitality industry 2014 by Anphabe & Nielsen Hosted its 19,000,000th passenger ceremony

(1) Source: CAAV; based on total passengers boarding domestically via Vietnam-based airlines for the full year ended 31 December 2014 (2) Source: CAAV; based on total passengers boarding domestically via Vietnam-based airlines for the full year ended 31 December 2015

41

42

Key Factors (2015)

(1) Up to date 2016; (2) Data of 2015; Exchange rate: 22.500 VND/USD (3) Unconsolidated financial statement 2015

20 mm

cumulative passengers carried(1)

35 Aircraft (1) 04 Operational bases 47 Routes (1) 31 Domestic 16 International US$379.7mm

Passenger Revenue(2) á 49% YOY 2014

89% Domestic 88% Network

Load Factor (2)

40%++

Domestic Share (1)

US$489.5mm

Total Revenue(3) á 59% YOY 2014

+

US$21.5mm

Cargo Revenue(2) á 62% YOY 2014

US$83.9mm

Ancillary Revenue á 114% YOY 2014

+ =

Ha Noi Hai Phong Thanh Hoa Vinh Dong Hoi Da Nang Hue Buon Ma Thuot Quy Nhon Nha Trang Da Lat Phu Quoc Ho Chi Minh Can Tho

US$4.3mm

Other Revenue á 326% YOY 2014

+

13.3 hours

Aircraft Utilization

43

Key Factors (09/2016)

40 Aircrafts

(á 114% YOY 2015)

5 Operational bases 53 Routes

(á 113% YOY 2015)

36 Domestic 17 International 71,281 Flight Hours

(á 118% YOY 2015)

89% Load Factor 9.8 mil Passengers

(á 120% YOY 2015)

63,128 Operational Flights

(á 119% YOY 2015)

* Data of Q2 2016

Success Factors

45

Vietnam – A large market

(1) Includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam Source: SAP independent industry report; IMF World Economic Outlook Database (July 2015), ICAO (2014 annual report), Travelocity, Vietnam Rail, Hoang Long Transit Co, (December 2015)

5.0% 4.4% 4.2% 3.2% 3.1% 2.5%

Vietnam Philippines IndonesiaThailand Malaysia Singapore

Projected real GDP per capita CAGR (CY2015- CY2020)

The fastest growing economy in ASEAN Low air-travel penetration – even within Asia

• Avg. ASEAN(1): 3.5%

Australia Brunei China Japan Malaysia New Zealand South Korea Thailand US Indonesi a

Vietnam

2,000 4,000 6,000 8,000 10,000 15,000 30,000 45,000 60,000 75,000 2014 total RPKs per capita 2014 GDP per capita (US$)

Amongst fastest growing urbanizing economies in ASEAN Strong historical and forecasted international tourism growth

33% 44% 53% 49% 74% 100% 54% 56% 71% 72% 86% 100% Vietnam Indonesia Malaysia

Urbanization (share of total population living in urban areas)

2014 2050

21% 12% 18% 23% 12% 4.0 3.3 7.0 14.5 15.9 24.6 6.1 4.6 9.4 17.1 24.8 27.5 8.1 6.0 12.6 22.3 31.6 36.5 Vietnam Indonesia Thailand

International tourist arrivals (in millions)

2010 2014 2020

11.3% 5.9%

%

2010-2014 CAGR

%

2014-2020 CAGR 5.9% 5.4% 7.7% 6.0% 4.3% 5.5% 11.7% 5.0% 2.8% 5.9%

46

Vietnam – Why LCC?

11,900 2,307 11,900 142 17,500 2,872 12,000 146 5,000 10,000 15,000 20,000 Passengers ('000s)

Road Rail 2011 2014

45.3% 8.8% 45.3% 0.5% 53.8% 8.8% 36.9% 0.4% 0% 10% 20% 30% 40% 50% 60% Air Road Rail River Share of domestic transport modes (%)

stimulates airline travel and captures market share from

• ther modes of transport such

as bus and rail due to advantages of air travel vis-à- vis land transport

HCMC Hanoi

Air travel is the most efficient transport mode(1)

Travel modes HCMC – Hanoi HCMC – Danang Time (hrs) Fare (VND) Fare (USD) Time (hrs) Fare (VND) Fare (USD) Air

(2)

2:05 961,000 443 1:20 615,000 284 Bus 35:00 861,385 39 15:30 405,458 19 Rail 34:00 1,066,278 49 17:00 616,833 28

1,150 km 615 km

47

4 27 37 61 Vietnam Indonesia Philippines Thailand

Stringent licensing requirements Key government incentives to support VietJet Highly concentrated domestic markets, effectively a duopoly

þ

Minimal foreign competition as no foreign airlines permitted to

• perate domestic routes

Tax Fuel supply Airport costs

# of AOCs (Air Operator’s Certificate excludes General Aviation)

þ

No new commercial entrants since 2011when VietJet commenced its first commercial flight

(Controlled by ) Domestic market share % by air passenger volume for 2015(2)

þ

US$10.5bn investment to develop airport infrastructure across the country, increasing the number of operational airports from 22 to 26 by 2020 Air transport master plan

(Controlled by )

(1)

46.2%

37.1%

15.3% 1.4%

Vietnam – Significant government support

(1) Excluding 2 licenses withdrawn due to bankruptcy (2) Source: CAAV; based on total passengers boarding domestically via Vietnam-based airlines for the year 2015 Source: SAP independent industry report; CAAV, Ministry of Transportation Republic of Indonesia, Civil Aviation Authority of the Philippines, Department of Civil Aviation (DCA) of Thailand, Axis Research Ltd. report dated July 2015

48

Vietjet – Domestic airline & LCC in Vietnam

0% 10% 20% 30% 40% 50% 60% 70% 80% 2012 2013 2014 2015

1.0 3.0 4.9 7.9 11.2 11.6 12.3 13.3 12.2 14.5 17.5 21.2

2012 2013 2014 2015

VietJet Vietnam ex VietJet Vietnam Leading airline in the domestic market within only 4 years VietJet represents the majority of growth in the domestic passenger aviation market 45.0% 49.3% 53.8% 2012 2013 2014

Air travel as a % of domestic transport modes(2)

þ

Increasing market share since 2012 (by full year all passenger volume)

þ

Creating a new market – 14% of the passengers between Jul 2015 and Dec 2015 were first-time air travelers

2012–2015 domestic air passenger (million)

Domestic market share % (by full year air passenger volume)

Stimulating aviation growth as a transport mode

þ

More than 70% of new passengers every year fly with VietJet þ

VietJet focuses on attracting passengers from other transport modes such as road and rail and also first time travelers. As a result, air travel market share has been growing significantly

VietJet ’s entry in 2011 has created new demand for air travel in Vietnam, allowing the company to avoid fighting for market share from competitors

(1)

49

Vietjet – Best-in-class cost structure

2.48 2.42

2014 2015

CASK ex-fuel(1) (US Cents / ASK)

Asia Europe/ Middle East Americas

Average: 2.87 Average: 3.11 Average: 4.49

There is still headroom for cost structure improvement to further decrease both CASK & CASK ex-fuel

(1) As of fiscal year 2014 and 2015 for peers; excluding net interest expense Source: SAP independent industry report, company information, financial model

50

Vietjet – Best-in-class cost structure (cont’d)

0.48

þ Highest seat density þ New, fuel efficient aircraft on order expected

to achieve additional fuel efficiency

þ New engines on aircraft also allow significant

cost savings

3.5

Young, modern and fuel efficient fleet A Lowest labor cost B Lowest airport cost D

Average fleet age(1) Unit airport operating charges(1) (US Cents/ASK)

0.46

Asia Pacific Area Peer Avg: 5.2 Asia Pacific Area Peer Avg: 0.82 Asia Pacific Area Peer Avg: 0.53

0.20

Asia Pacific Area Peer Avg: 0.27

Unit maintenance cost(1) (US Cents/ASK)

Among lowest unit maintenance cost E þ Young and efficient fleet þ Attractive maintenance and support

arrangements due to large aircraft and engine orders

(1) As of fiscal year 2014 and 2015, FY 2015 data used for VietJet Source: SAP independent industry report, Airbus, company information, financial model

51

Vietjet – Strong operational performance

Rigorous aircraft maintenance program that meets international standards Intensive flight crew, cabin crew and employee training programmes Strict compliance with local regulations, international standards and industry best practice Compliance with all relevant guidelines issued by the Civil Aviation Authority of Vietnam (“CAAV”) and airports as well as the air traffic authorities of international destinations VietJet’s assessment as a safe airlines by an independent report has led to a remarkable reduction in insurance cost at c.30% annually

IATA Operational Safety Audit Well-trained and highly professional crew Aircraft safety features

VietJet is committed to operational safety with an emphasis on high tech safety features & regular maintenance

Source: Company information

52

Vietjet – Efficient Operation

5.30 5.04 4.14 0.50 1.50 2.50 3.50 4.50 5.50 6.50 FY2013 FY2014 FY2015 20.2% 29.6% 37.1% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% FY2013 FY2014 FY2015 9.38 10.10 12.14 0.00 5.00 10.00 15.00 FY2013 FY2014 FY2015 2,994 5,160 8,198 162 402 1,115 3,156 5,562 9,313

• 2,000

4,000 6,000 8,000 10,000 12,000 FY2013 FY2014 FY2015

Domestic International

Total Pax(1) Load Factor(2) Aircraft Utilization Market Share Evolution(3) CASK(4) Ancillary Revenue Per Pax(5)

(‘000) On-time performance (%) (Hours per Aircraft per Day) (%) (US$(6))

89% 89% 89% 81% 84% 84%

88% 89% 88%

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% FY2013 FY2014 FY2015

Domestic International Total

11.9 12.4 13.3 0.5 2.5 4.5 6.5 8.5 10.5 12.5 14.5 FY2013 FY2014 FY2015

93.1% 81.9% 82.6%

Load factor (%) (US Cents(6))

(1) Recorded by VJC’s booking engines (2) Represents RPK as a proportion of ASK (3) CAAV data based on total passengers boarding domestically via Vietnam-based airlines per year (4) Calculated as cost of sales less the cost of aircraft sold plus selling expenses and general and administrative expenses, divided by ASK (5) Calculated as total ancillary fare revenue over total passengers carried (6) Converted at a rate of 1US$ = 21,036 VND (FY2013), 1US$ = 21,246 VND (FY2014) and 1US$ = 21,890 VND (FY2015)

53

Vietjet – Innovative Sales & Distribution Network

Number of bookings by distribution channel (2015)

With more than 90% of sales revenue generated through web-based channels, VietJet’s 6 distribution channels(1) have been highly effective in helping to boost sales for the Company

Organic distribution channels (1) Third party distribution channels (2)

Internet and mobile

GDS

Retailers, Post and Banks Travel agencies Booking

• ffice

Call centers

(2)

26.6% 24.2% 22.6% 65.7% 67.9% 65.4% 5.7% 6.3% 9.9% 2.0% 1.5% 2.1%

2013 2014 2015

VietJet website Travel agencies (web-based)

(1) Organic distribution channels: internet incl. mobile booking application, booking office, call centre; Third-party channels: travel agents, retailers and banks, global distribution system (2) Global distribution system, call centre, retailers Source: Company information, SAP independent industry report

54

Vietjet – Significant ancillary revenue

Ancillary revenue per passenger (US$) (2) Ancillary revenue as % of adjusted revenue (3)

9.4 10.1 12.1 12.4 2013 2014 2015 1H 2016 16.4% 17.2% 22.3% 23.0% 2013 2014 2015 1H 2016

has recorded robust growth in ancillary revenue, with significant

• pportunities to further increase this stream to be in line with global peers

Inflight sales

• f souvenirs,

food and beverage, duty free products and advertising packages Pre-flight purchases such as seat selection, priority services, checked baggage, in flight services and travel insurance

(1) Based on IdeaWorks report on airline ancillary revenue in 2014 (2) Ancillary revenue including cargo revenue; Calculated as total ancillary revenue over total passengers carried; Converted at 1US$=21,036VND, 1US$=21,246VND and 1US$=21,890VND for FY13-15, respectively (3) Ancillary revenue including cargo revenue; Adjusted revenue calculated as total revenue less aircraft sale proceeds Source: SAP independent industry report; IdeaWorks

55

Vietjet – Strong brand recognition

Highly innovative marketing campaigns Blue-chip partners and co-branding Frequent flyer and corporate programs Prominent digital media presence enhancing awareness

þ

Strategic partnerships with blue-chip, multinational enterprises globally

þ

Co-branding with various brands to enhance awareness, boosting ancillary revenue significantly through advertising

has a 96% brand awareness(1) in Vietnam with superior customer loyalty

þ

Focus on communicating directly with potential customers and emphasizing its low fares

þ

Enhanced brand awareness through sponsorship of key local campaigns Co-branding Strategic partners

þ

Strong on-line presence across e-commerce platforms and popular social media outlets Powerful omni-channel platform

þ

Named as one of the world’s Top 3 fastest growing airline brands on Facebook by Socialbakers in August 2015, together with Qatar Airways and Turkish Airlines

þ

Top 3 airlines globally in terms of Facebook’s post engagement rate (the

• ther 2 being Eva Air and Japan

Airlines)

Sponsor of South East Asian Games in 2015

A B C D

þ

Frequent flyer program “VietJet Sky Club” expected to launch in 2H2016

þ

Highly selective and rigorous staff recruitment and training to ensure high quality customer service

(1) Based on Axis Research Ltd. report dated July 2015, VietJet had 96% brand awareness in Vietnam based

• n a survey with 1,136 randomly selected participants from 13 cities in Vietnam

Source: Company information, Axis Research

56

Vietjet – Experienced leadership team

Highly experienced and visionary team with average of >20 years in domestic and international airline operations, having led VietJet to become a leading domestic airline in Vietnam within 4 years

• Mdm. Nguyen Thanh Ha

Chairwoman 9 years at Vietjet ~26 years in industry

Appointed Chairwoman of the Board in 2007 Extensive aviation industry experience in Vietnam Deputy Head of CAAV prior to joining the Company and was the head of Planning & Investment department at Vietnam Airlines before joining CAAV

• Mdm. Nguyen Thi Phuong Thao

Vice Chairwoman & CEO 9 years at Vietjet ~23 years in industry

Appointed Standing Vice-Chairwoman of the Board of Directors in 2007 and is Company’s Chief Executive Officer Vice Standing Chairwoman of HDBank Significant experience in the managing large corporations in various economic sectors in Vietnam and abroad, especially in the banking- finance sector

• Dr. Nguyen Thanh Hung

Vice Chairman 9 years at Vietjet ~23 years in industry

Appointed Vice Chairman of the Board of Directors in July 2007 Co-Founder and Chairman of Sovico Holdings Appointed ABAC (APEC Business Advisory Council) member by Prime Minister in 2006

(1) Number of years taken to achieve #1 domestic position in terms of market share since Indigo / AirAsia began commercial operations; (2) Number of years taken to achieve 35% domestic market share since Cebu began commercial

• perations; It took Cebu 11 years to achieve #1 domestic position

Source: Company information, public filings

Future Growth

58

Network & Fleet Service Quality Operation Efficiency

• Maximizing

Domestic network

• HUB expansion through:
• Collaborating with the local

partner to

• perate

HUB network

• Continuously launching and

exploring new routes in Asia

• Constantly

developing the fleets

2016 Onwards E-commerce

• Improving service

quality, especially for Ground Service, SkyBoss Service, Cabin Service

• Continues to deliver

innovative marketing campaign and events

• Launching the Loyalty

program

• Developing online

direct interacting portal for customers

Increase domestic market share to 50% by 2016 Saving operating cost in 2016 Anciliary revenue is 20.5% total revenue in 2016 Enhance brand value and awareness

l Continuously improving,

standardizing and automating all

• perating procedures

l 100% operating

activities based on advanced SOPs

l Continues to improve

payment system and supply chain in the region

l Upgrade to e-ticketing

platform to the E- commerce platform for meeting consumer demands

l Establishing more

partnerships with retailers

l Promoting cross-selling l Focus on driving

ancillary revenue

THANK YOU!

59