Now Everyone Can Fly Now Everyone Can Fly 2005 Fourth Quarter & - - PowerPoint PPT Presentation

“Now Everyone Can Fly” “Now Everyone Can Fly”

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

1

Now Everyone Can Fly

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.

2

Now Everyone Can Fly

Agenda

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

Question & Answers

CONFIDENTIAL CONFIDENTIAL

Now Everyone Can Fly

1. Highlight & Events 1. Highlight & Events

4

Now Everyone Can Fly

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, 1st August

– amazing marketing potential

LCC terminal construction progressing ahead of schedule

– expect to commence operations by end of first quarter 2006

5

Now Everyone Can Fly

Reconciliation and deferred tax

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

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)

• ther costs

(1,612) associate company variance (19,523) FY05 NPAT 111,647

6

Now Everyone Can Fly

Doubled Number of Routes in 2005

We fly to more destinations in SE. Asia than MAS or SIA. We have We fly to more destinations in SE. Asia than MAS or SIA. We have domestic operations in domestic operations in three markets, a feat not easily duplicated by any airline. three markets, a feat not easily duplicated by any airline.

33 48 52 28 26 20 15 13 11 10 8 7 6 Destinations Served* Aug 2004 Jan 2002 Jun 2004 Sep 2004 Dec 2004 Jun 2005 Mar 2004 Dec 2003 Sep 2003 Jun 2003 Mar 2003 Dec 2002 Sep 2002 Period

* Excludes Kuala Lumpur and Bangkok as destinations

7

Now Everyone Can Fly

Consistent passenger growth

1 ,561 1 ,630 1 ,744 6,289 1 ,354 2,839 1 ,481 61 1 291 M ar-2001 Jun-2002 Jun-2003 Jun-2004 1 Q 2Q 3Q 4Q 2005 Passengers Flown by AirAsia Group Passengers Flown by AirAsia Group ( (‘ ‘000) 000)

There is no stopping the LCC phenomenon

122% growth (2005 vs. 2004)

CAGR 106% pa

8

Now Everyone Can Fly

Load factor as expectation

1000 2000 3000 4000 5000 6000 7000 2002 2003 2004 2005 62% 64% 66% 68% 70% 72% 74% 76% 78% ASK (Malaysia) ASK (Associat es) Load Fact or ASK & RPK (million) and Load Factor (%) AirAsia Group ASK & RPK (million) and Load Factor (%) AirAsia Group

Not just any kind of growth, but HIGH QUALITY GROWTH

9

Now Everyone Can Fly

Profitability linked to fleet development

2 3 7 13 20 19 21 22 4 6 6 6 8 2 2 3 5 Mar-01 Jun-02 Jun-03 Jun-04 Mar-05 Jun-05 NOW Dec-05 E Indonesia Thailand Malaysia Aircraft Expansion Aircraft Expansion

Slight shortage of originally stated number of aircraft

• merely a delay in rollout

10

Now Everyone Can Fly

Impact of aircraft deployment delays

Capacity loss Capacity loss

We are 3.0 aircraft short of forecast Resulting capacity loss equates to 869 million ASK (12% shortfall)

Capacity loss Capacity loss

A ctual vs . Forecas ted A verage # A ircraft

• 5.0

10.0 15.0 20.0 25.0 Q 1 Q 2 Q 3 Q 4 2005 A ctual Forecast

Shortfall = 15.4%

A ctual vs . Forecas t C apacity (m illion A SK )

• 1,000

2,000 3,000 4,000 5,000 6,000 7,000 8,000 Q 1 Q 2 Q 3 Q 4 2005 A ctual F

• recast

Shortfall = 11.8%

CONFIDENTIAL CONFIDENTIAL

Now Everyone Can Fly

2. Results Commentary 2. Results Commentary

12

Now Everyone Can Fly

Operational Statistics

Strong passenger growth

– 44% growth for Q42005 vs. Q42004 – 55% growth for FY2005 vs. FY2004

Effective capacity growth

– 76% growth for Q42005 vs. Q42004 – 82% growth for FY2005 vs. FY2004

Superior cost control

– 8% improvement yoy for Q4 2.40/ASK US cents – 10% improvement yoy FY2005 2.22/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

13

Now Everyone Can Fly

Operational Statistics – Q4

12.20 13 12 2.62 3.56 1080 843 126 838,247 78%

Q4 -2004

19

# aircraft (end)

17.56 19 2.40 3.63 1903 1447 150 1,203,456 76%

Q4 -2005

44%

Average # aircraft

(8% )

Cost/ ASK (US cents) # aircraft (beginning)

2%

Rev/ RPK (US cents)

76%

ASK (mn)

72%

RPK (mn)

19%

Average fare (RM)

44%

# Passengers Average Load factor ∆ (% ) Operational Statistics

14

Now Everyone Can Fly

Operational Statistics – FY2005

9.50 13 7 2.46 3.74 3592 2771 131 2,838,822 77%

FY2004

19

# aircraft (end)

16.30 13 2.22 3.59 6525 4881 143 4,414,069 75%

FY2005

72%

Average # aircraft

(10% )

Cost/ ASK (US cents) # aircraft (beginning)

(4% )

Rev/ RPK (US cents)

82%

ASK (mn)

76%

RPK (mn)

9%

Average fare (RM)

55%

# Passengers Average Load factor ∆ (% ) Operational Statistics

15

Now Everyone Can Fly

Thailand takes off

314 409 351 378

1452 RPK (mn)

371 544 508 560

1982 ASK (mn) 6 2.66 3.31 111 1,603,594 73% 2005

2.89 3.28 3.80 3.49

Rev / RPK (US cents)

6 2.81 125 389,384 68%

Q4

6 2.64 120 410,005 69%

Q3

2.89 2.57

Cost / ASK (US cents)

4 6

# aircraft (end)

91 369,340 84%

Q1

115 434,865 77%

Q2 Average fare (RM) # Passengers Average Load factor Thailand Statistics

Within a year, we are the market leaders in Thailand Improving average fare and yields Cost control on track with expectations

16

Now Everyone Can Fly

Profitability

116% 271% 58,071 125,478 7,051 26,184 Profit before tax

1903 16,108

46,206 33,135 25,566

199,508 Q4-2005 1080 (1,953)

24,778 13,856 8,608

113,595 Q4-2004 76% na

86% 139% 197%

76% qoq ∆ (% ) FY2004 FY2005

(RM ‘000)

6525 111,635

204,169 152,819 126,103

666,250 82% 128%

77% 110% 106

70% yoy 3592 ASK (million) 49,067

115,402 72,612 61,318

392,690 Net I ncome − EBITDAR − EBITDA − EBIT Revenue

Profit before tax soared

– 271% growth for Q42005 vs. Q42004 – 116% growth for FY2005 vs. FY2004

Effective capacity growth

– growth in capacity did not undermine profitability margin

17

Now Everyone Can Fly

Balance Sheet

Note: (*) For the 15 months ended June 30, 2002

Balance Sheet Balance Sheet (RM (RM’ ’ million) million)

899 953 60 35 46 29 17

• 582
• 337
• 105

150 161 49 3 938

• 436

Mar-01 Jun-02 Jun-03 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 SHR Equity Net Debt

(*)

Consistently building shareholder value

Post IPO

18

Now Everyone Can Fly

Cash Generating Machine

Note: (*) For the 15 months ended June 30, 2002

Cashflow from Operating Activities Cashflow from Operating Activities (RM (RM’ ’ million) million)

15 29 113

• 146
• 3
• 12
• 19

Mar-00 Mar-01 Jun-02 Jun-03 Jun-04 Jun-05

(*)

“Normalized CFO” is RM113m. RM259m is paid for aircraft and fuel

• deposits. Therefore CFO is ‘superficially’ depressed at RM146m

CONFIDENTIAL CONFIDENTIAL

Now Everyone Can Fly

3. Cost Management 3. Cost Management

20

Now Everyone Can Fly

Cost Management

3.40 2.90 2.46 2.08 2.13 2.12 2.40 2.22 2.35 1.96 1.71 1.20 1.02 1.00 1.26 1.14

2002 2003 2004 Q1 Q2 Q3 Q4 2005 Cost / ASK Non Fuel Cost

Cost / ASK (US cents) Cost / ASK (US cents)

Superior cost containment despite fuel price impact

Malaysian Operations

21

Now Everyone Can Fly

Operating Expenses

16.8 18.9 22.9

4.0

30.6

7.7 11.7 40.0 4.4 11.6 1.6

2005 % Revenue FY2004 FY2005 Operating Expenses

(RM ‘000)

111,635 126,103 152,819

(26,716)

204,169

(51,350) (78,960) (266,610) (29,383) (77,347) (9,781)

666,250 15.6 61,318 EBI T 18.5

2.9

72,612

(11,294)

EBI TDA

• Depreciation & Amortisation

14.8 29.4

10.9 16.7 26.2 2.4 18.8 6.5

2004 58,071 Net I ncome 115,402

(42,790) (65,724) (102,708) (9,579) (73,778) (25,499)

392,690 EBI TDAR

• Cost of aircraft

− Staff Cost − Fuel and Oil − User & Station Charges − Maintenance & Overhaul − Others Revenue

22

Now Everyone Can Fly

Cost / ASK – what changed from last year to this year?

(US cents) Cost per Change Reasons ASK (% )

Staff cost 0.31

• 34.7 Improved productivity

Maintenance & Overhaul 0.31

• 42.3 Economies of scale benefits

Other costs 0.08

• 40.9 Effective marketing

Cost of aircraft 0.21

• 33.9 Higher aircraft utilization rate

Fuel and Oil 1.08 42.9 Fuel price spiking User & Station Charges 0.12 68.9 More international routes Depreciation & Amortization 0.11 30.2 Purchased some aircraft

Total Cost per ASK 2.22

• 9.8%

Good Bad 2.22 (2005) vs. 2.46 (2004) {10% improvement}

23

Now Everyone Can Fly

Peer Comparison: the numbers speak for themselves

AirAsia has the best unit cost in the region and in the industry

* *Jetstar Jetstar numbers are EBIT, taxed at Qantas parent marginal rate, # numbers are EBIT, taxed at Qantas parent marginal rate, # Nok Nok Air figures are for three quarters annualised Air figures are for three quarters annualised

24

Now Everyone Can Fly

Peer Comparison – Cost/ASK (ex fuel)

The true fitness measure for cost efficiency

Cost / ASK ( ex fuel) vs. Stage Length

1 2 3 4 5 6 7 600 900 1200 1500 1800 2100 2400

St age lengt h ( km) COST / ASK

JB W J GOL RY AT EJ SW

25

Now Everyone Can Fly

Fuel Hedge FY2006

WTI Crude Oil Capped Swap for FY2006

• 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

26

Now Everyone Can Fly

Fuel Surcharge

Fuel surcharge started 14 July

– Peninsular Malaysia RM 5 – East Malaysia RM 15 – International RM 25

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

AirAsia Flight Schedule (July 2005)

International 30% Peninsular Malaysia 24% East Malaysia 46%

Total Sectors = 900 / week with 19 aircraft

27

Now Everyone Can Fly

Fuel Surcharge Impact

No fall-off of load factors since fuel surcharge implemented in May

– indication that market is able to absorb fuel surcharge

M A S D o m e st ic L o a d Fa ct o r

0 % 2 0 % 4 0 % 6 0 % 8 0 % 1 0 0 % Ja n Fe b M a r A p r M a y Ju n Ju l A u g S e p O c t N o v D e c 2 0 0 4 2 0 0 5

T unam i S ent im ent t o t r av el r ec o v er s F uel S ur c har g e Im p lem ent ed

28

Now Everyone Can Fly

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)

CONFIDENTIAL CONFIDENTIAL

Now Everyone Can Fly

5. Manchester United Sponsorship 5. Manchester United Sponsorship

30

Now Everyone Can Fly

Manchester United Sponsorship

31

Now Everyone Can Fly

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

32

Now Everyone Can Fly

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

CONFIDENTIAL CONFIDENTIAL

Now Everyone Can Fly

6. Outlook 6. Outlook

34

Now Everyone Can Fly

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

35

Now Everyone Can Fly

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

36

Now Everyone Can Fly

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

37

Now Everyone Can Fly

Ancillary Income Progress

4.5 5.0 5.5 6.0 Q1 Q2 Q3 Q4 Ancillary Income as % Revenue

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

38

Now Everyone Can Fly

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)

39

Now Everyone Can Fly

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