Seoul, February 2017 Content Milestones Success Factors Future - - PowerPoint PPT Presentation

Seoul, February 2017

Content

Milestones Success Factors Future Growth

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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

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Viet ietnam's nam's leading L leading LCC – ac achie hieved within ed within just 4 y just 4 year ears

(1) Source: CAAV; based on total passengers boarding domestically via Vietnam-based airlines for FY2015 (2) Source: CAAV; for the month ended 30 June 2016 (3) Based on total air tickets purchased through VietJet’s ticketing channels (4) Out of a total order of 119 aircraft, of which 17 has been delivered (5) Adjusted revenue calculated as total revenue less aircraft sale proceeds; 1US$=21,890VND; CAGR since FY2013 (6) Calculated as cost of sales less the cost of aircraft sold plus selling expenses and general and administrative expenses, divided by ASK (7) Converted at 1US$=21,036VND, 1US$=21,246VND, 1US$=21,890VND and 1US$=21,873VND for FY13-1H16, respectively

• Achieved a domestic market share (i.e. among Vietnam-based airlines for passengers

boarding domestically) of 37.1% as of 31 December 2015(1), within only 4 years of

• perations. Further achieved a domestic market share of 43.1% as of 30 June 2016(2)
• Operated an extensive network of 36 domestic routes and 17 international routes,

excluding charter services as of June 30, 2016

• Served 9.3m passengers in FY2015, representing a CAGR of 71.8% since 2013(3)
• Modern and young fleet (average age of 3.3 years) comprising 33 Airbus A320s and 5

A321s as of 30 June 2016, with an additional 102 Airbus A320-family(4) and 100 Boeing 737 MAX 200 aircraft on firm order with an option to lease additional Airbus aircraft

• Has successfully executed the low cost carrier model, achieving CASK and CASK ex-

fuel of US¢ 4.14 and US¢ of 2.42 in FY2015 (a decrease from US¢ 5.3 and US¢ of 2.57 in FY2013 respectively); Strong growth trajectory with FY2015 Adjusted Revenue of US$506m and EBITDAR of US$190m, growing at 70.9% and 119.9%, respectively(5)

• Aims to be a multinational airline with an intensive regional and global network

coverage, delivering not only aviation services but also consumer services applying e- commerce platform Gr Growt wth (FY13 – 1HF HFY16) CASK K and CASK K (ex-fuel)(6)

5.30 5.04 4.14 3.81 2013 2014 2015 1H2016

Ex-Fuel CASK: 2.57 Ex-Fuel CASK: 2.48 Ex-Fuel CASK: 2.42 (US Cents(7))

3,793 6,946 11,079 7,402

3,000 6,000 9,000 12,000 15,000 2013 2014 2015 1H2016 US$180m(7) US$327m(7) US$506m(7)

(VND bn)

3.2 5.6 9.3 6.4 10 19 30 38 2013 2014 2015 1H2016 Passengers (m) Total aircraft US$338m(7)

Ex-Fuel CASK: 2.43

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Key Factors (1H2016)

(1) Up to 30/06/2016; Exchange rate: 21.6730 VND/USD & 21,873 VND/USD as at 30/06/2015 and 30/06/2016 (SBV rate) (2) June 2016.. (3) Consolidated financial statement 1H2016

24.8 mm

cumulative passengers carried(1)

38 Aircraft (1) 05 Operational bases 53 Routes (1) 36 Domestic 17 International 6.8 mm

Passenger)  66% YOY 1H2015

88% Domestic 88% Network

Load Factor (1)

43.1%

Domestic Share (2)

US$574.1mm

Total Revenue(3)  40.13% YOY 1H2015

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

13.1 hours

Aircraft Utilization

Success Factors

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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)

5.2% 4.8% 4.4% 3.0% 3.1% 1.6%

Vietnam Philippines Indonesia Thailand Malaysia Singapore

Projected real GDP per capita CAGR (CY2016-CY2021)

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

• Avg. ASEAN(1): 3.9%

Australia Brunei China Japan Malaysia New Zealand South Korea Thailand US Indonesia

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 Philippines Indonesia Thailand Malaysia Singapore

Urbanization (share of total population living in urban areas)

2014 2050 21% 12% 18% 23% 12%

4.5 3.3 7.0 14.2 16.6 24.6 7.1 5.2 10.4 17.7 29.9 25.7 10.4 7.1 14.9 24.3 42.0 35.8 Vietnam Philippines Indonesia Singapore Thailand Malaysia

International tourist arrivals (in millions)

2010 2015 2020

7.9% 9.5%

%

2010-2014 CAGR

%

2014-2020 CAGR 6.6% 9.4% 7.5% 8.2% 6.5% 4.5% 7.0% 12.5% 6.8% 0.9%

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Vietnam – Why LCC?

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 Rail 0.4% 93.3% 0.5% 5.8% 0.7% 94.2% 0.3% 4.5% Air Road Rail River Share of domestic transport modes (%) 2011 2015 17.2% 7.7% 0.7% (1.5%) Air Road River 2010 - 2015 Growth in Passengers (%)

• Air travel is the fastest growing mode of transport

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4 27 37 41 Vietnam Indonesia Philippines Thailand

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



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)



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

(Controlled by ) Domestic market share % by air passenger volume for June 2016(2)



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)

41.3%

43.1%

13.8% 1.8%

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 month ended 30 June 2016 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

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Vietjet – Domestic airline & LCC in Vietnam

0% 10% 20% 30% 40% 50% 60% 70% 80% 2012 2013 2014 2015 Jun-2016

1.0 2.9 5.2 8.3 11.1 11.6 12.3 14.1 12.1 14.5 17.5 22.5

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

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



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



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 except Jun 2016)

Stimulating aviation growth as a transport mode



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



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)

0.4% 0.5% 0.5% 0.6% 0.7% 2011 2012 2013 2014 2015

Best-in-class cost structure with room for improvement Amongst the lowest unit costs in the world with additional room for improvement

CASK ex ex-fuel(1) (US Cents / ASK) There is still headroom m for cost structure imp mproveme ment to further decrease both CASK & & CASK ex-fuel 

The scale of VietJet’s contracts with major aircraft and engine manufacturers such as Airbus, Boeing, CFM and P&W result in greater bargaining power and more advantageous contracts



Advantages from large scale contracts include favorable deposit payments and payment terms and the advantageous contracts give VietJet a structural cost advantage by reducing the overall costs associated with the acquisition, maintenance and operation of its aircraft – for instance, VietJet benefits from training, technical and financial support and commitment from both Airbus and Boeing



Large aircraft orders will result in lower cost of aircraft ownership and maintenance from 2015, and lower fuel costs as new, more fuel efficient aircraft enter fleet

Advantages from m ma major contracts Key cost-reduction me measures A B 

VietJet plans to operate ground handling services to reduce outsourcing and therefore ground handling costs



VietJet is in the process of upgrading its in-house maintenance team which is expected to reduce costs for the company



Implement fuel savings programme by cooperating with CFM and P&W, starting from 2016

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2.48 2.42 2.43

2014 2015 1H2016

Asia Europe/ Middle East Americas

Average: 2.85 Average: 3.71 Average: 4.48

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Best-in-class cost structure with room for improvement (cont’d)

Amongst lowest unit costs globally through disciplined execution of low cost model

(1) As of fiscal year 2015 and 2016, FY 2015 data used for VietJet Source: SAP independent industry report, Airbus, company information, financial model

0.42

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

to achieve additional fuel efficiency

 New engines on aircraft also allow significant

cost savings

3.5

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

Average fleet age(1)

Asia Pacific Area Peer Avg: 4.6 Asia Pacific Area Peer Avg: 0.57 0.19 Asia Pacific Area Peer Avg: 0.27

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

Among lowest unit maintenance cost D  Young and efficient fleet  Attractive maintenance and support

arrangements due to large aircraft and engine

• rders

Lowest airport cost C

Unit airport operating charges(1) (US Cents/ASK)

0.48 Asia Pacific Area Peer Avg: 0.92

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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

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Vietjet – Efficient Operation

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)) 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),1US$ = 21,890 VND (FY2015) and 21,873 (1H 2016)

93.1% 81.9% 82.6% 83.6%

2,994 5,160 8,198 6,010 162 402 1,115 750 3,156 5,562 9,313 6,760 2,000 4,000 6,000 8,000 10,000 12,000 FY2013 FY2014 FY2015 1H2016

Domestic International

89% 89% 89% 88% 81% 84% 84% 84%

88% 89% 88% 88%

50% 55% 60% 65% 70% 75% 80% 85% 90% 95% FY2013 FY2014 FY2015 1H2016

Domestic International Total

20.2% 29.6% 37.1% 41.4% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% FY2013 FY2014 FY2015 1H2016 5.30 5.04 4.14 3.81 0.50 1.50 2.50 3.50 4.50 5.50 6.50 FY2013 FY2014 FY2015 1H2016 9.38 10.10 12.14 11.31 0.50 2.50 4.50 6.50 8.50 10.50 12.50 14.50 FY2013 FY2014 FY2015 1H2016 11.9 12.4 13.3 13.1 0.5 2.5 4.5 6.5 8.5 10.5 12.5 14.5 FY2013 FY2014 FY2015 1H2016

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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) Booking office (web-based) Others

(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

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Vietjet – Significant ancillary revenue

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

9.4 10.1 12.1 11.3 2013 2014 2015 1H2016 16.4% 17.2% 22.3% 22.6% 2013 2014 2015 1H2016

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, 1US$=21,890VND and 1US$=21,873VND for FY13-1H16, respectively (3) Ancillary revenue including cargo revenue; Adjusted revenue calculated as total revenue less aircraft sale proceeds Source: SAP independent industry report; IdeaWorks

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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



Strategic partnerships with blue-chip, multinational enterprises globally



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



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



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



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



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



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



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



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

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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

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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 40% by 2016 Saving operating cost in 2016 Anciliary revenue is 20.5% total revenue in 2016 Enhance brand value and awareness

 Continuously improving,

standardizing and automating all

• perating procedures

 100% operating

activities based on advanced SOPs

 Continues to improve

payment system and supply chain in the region

 Upgrade to e-ticketing

platform to the E- commerce platform for meeting consumer demands

 Establishing more

partnerships with retailers

 Promoting cross-selling  Focus on driving

ancillary revenue

THANK YOU!

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