THE PARENT AI RLI NE 1H FY2014/ 15 RESULTS 1 THE PARENT AI RLI NE - - PDF document

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SI A ANALYST/ MEDI A BRI EFI NG 1H FY2014/15 Results 07 November 2014

THE PARENT AI RLI NE 1H FY2014/ 15 RESULTS

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THE PARENT AI RLI NE COMPANY OPERATI NG PERFORMANCE – 2Q & 1H FY14/ 15

Slide 3

25,016 Revenue Pax-KM (million) 2Q/ 14

• 0.2

% Change 81.9 Passenger Load Factor (% ) + 0.8 pt 30,562 Available Seat-KM (million)

• 1.1
• 0.2

60,825 + 0.2 pt 79.8 + 0.1 48,516 1H/ 14 % Change

Slide 4

Passenger Yield (¢/ pkm) Passenger Unit Cost (¢/ ask) Passenger Breakeven Load Factor (% ) 10.9

• 0.9

9.0

• 1.1

82.6

• 0.1 pt

THE PARENT AI RLI NE COMPANY OPERATI NG PERFORMANCE – 2Q & 1H FY14/ 15

2Q/ 14 % Change Passenger Unit Ex-Fuel Cost (¢/ ask) 5.1

• 3.3

8.8

• 0.9

10.9

• 2.0 pts

80.7 1H/ 14 % Change

• 3.9

4.9

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THE PARENT AI RLI NE COMPANY RESULTS – 2Q & 1H FY14/ 15

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4.3 Operating Profit Margin (% ) 1.3 pts 41 138 Operating Profit 42 3,084

(62)

Total Expenditure

1,175

• Fuel Cost

18

• Fuel Hedging

Loss/(Gain) 1,891

• Ex-fuel Cost

41

105 (2)

1.3

8.3 n.m. (0.1)

3,222 Total Revenue 2Q/ 14 $million

• Better/

(Worse) $million %

• (3)

183 148 6,048 (151) 6,231 1H/ 14 $million

98 2,353 1 (10) 49 3,705

Better/ (Worse) $million %

• 2.9

(1.6) 2.4

4.0 7.9 1.3

(2.4)

THE PARENT AI RLI NE COMPANY OPERATI NG PERFORMANCE

68 72 76 80 84 88 1H 10/ 11 1H 11/ 12 1H 12/ 13 1H 13/ 14

Passenger Load Factor Breakeven Load Factor

(% )

79.4

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77.5 79.6 1H 14/ 15 79.6 79.8

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THE PARENT AI RLI NE COMPANY OPERATI NG PERFORMANCE

75.4 78.0 79.8 68 72 76 80 84 88 1H 10/ 11 1H 11/ 12 1H 12/ 13 1H 13/ 14 Passenger Load Factor Breakeven Load Factor

(% )

79.4

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77.5 79.6 1H 14/ 15 79.6 82.7 79.8 80.7

THE PARENT AI RLI NE COMPANY OPERATI NG PERFORMANCE

75.4 78.0 79.8 68 72 76 80 84 88 1H 10/ 11 1H 11/ 12 1H 12/ 13 1H 13/ 14 Passenger Load Factor Breakeven Load Factor

(% )

79.4 4.0

• 0.5
• 0.2

Slide 8

77.5 79.6 1H 14/ 15 79.6 82.7

• 3.1

79.8 80.7

• 0.9

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THE PARENT AI RLI NE COMPANY MONTHLY PASSENGER YI ELD

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10.8 11.1 11.2 11.4 11.6 11.3 11.3 11.6 11.5 11.4 11.2 11.0 11.4 10.9 11.2 10.8 11.3 11.1 10.9 11.1 11.3 11.3 11.1 10 11 12 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

2012-13 2013-14 2014-15 ¢/ pkm

11.1 10.8 10.7 10.9 10.7 11.2

THE PARENT AI RLI NE COMPANY COST COMPOSI TI ON – 1H FY14/ 15

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LPO* Charges 5.1% (+ 0.2% pt) Others 10.1% (-0.3% pt) Fuel Cost Post Hedging 38.7% (-0.7% pt) AMO Costs 5.4% (-) Passenger Costs 5.7% (+ 0.3% pt) Handling Charges 7.3% (+ 0.2% pt) Staff 12.9% (-0.1% pt) Aircraft Depreciation & Lease Rentals 14.8% (+ 0.4% pt)

* Landing, Parking and Overflying

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THE PARENT AI RLI NE COMPANY TOP EXPENDI TURE I TEMS – 1H FY14/ 15

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6,195.7 6,000 6,100 6,150 6,200 H1 FY13/ 14

• 99.1

(-4.1% ) Fuel after hedging Lower net fuel cost

• 6.9

(-2.1% ) AMO Cost + 11.5 (+ 44.1% ) Exchange Higher revaluation and hedging loss

• 34.6

(-1.5% ) Others + 8.1 (+ 2.4% ) Passenger Cost 6,048.0 H1 FY14/ 15

• 147.7

(-2.4% )

Composition of decrease in Operating Expenditure

$M

• 26.7

(-3.3% ) Staff Cost

THE PARENT AI RLI NE COMPANY FUEL PRI CE AND EXPENDI TURE - TREND

Slide 12 96 90 90 100 94 135 134 124 121 123 124 121 123 80 93 90 136 132 120 126 127 126 124 122 88 85 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 Fuel Cost after hedging Fuel Price before hedging Fuel Price after hedging 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

($ million) 1,268 851 859 960 939 899 1,150 1,156 1,174 1,236 1,206 1,194

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THE PARENT AI RLI NE COMPANY FUEL EXPENDI TURE – 1H FY14/ 15

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2,442 2300 2400 2500 1H FY13/ 14 $M 2,343 1H FY14/ 15

• 99

(-4.1% )

• 75

Volume

Lower volume uplifted

• 1

Hedging

Higher hedging gain vs last year

• 9

Price

Lower weighted average fuel price

• 14

Exchange

Weaker US Dollar

THE GROUP 1H FY2014/ 15 RESULTS

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($ million) 2013/ 14 2014/ 15

GROUP REVENUE – 1H FY2014/ 15

3,840 3,682

2,750 3,000 3,250 3,500 3,750 4,000 Q1 Q2

Year-on-Year $154M

• 2.0%

Half Year Revenue $7,587M

• $158m
• 4.1%

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3,901 3,905 + $4m

+ 0.1% 2013/ 14 2014/ 15

GROUP EXPENDI TURE – 1H FY2014/ 15

3,758 3,643

Q1 Q2 ($ million) 2,750 3,000 3,250 3,500 3,750 4,000

• $115m
• 3.1%

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3,814 3,773 -$41m

• 1.1%

Year-on-Year $156M

• 2.1%

Half Year Expenditure $7,416M

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2013/ 14 2014/ 15

GROUP OPERATI NG PROFI T – 1H FY2014/ 15

82 39

25 50 75 100 125 150 Q1 Q2

Half Year Op Profit $171M Year-on-Year $2M + 1.2%

($ million)

• $43m
• 52.4%

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87 132

+ $45m + 51.7%

CONTRI BUTI ON TO GROUP OPERATI NG PROFI T – 1H FY14/ 15 ($ million)

5 183 1H 1415 (34) 37 SilkAir Singapore Airlines SI A Cargo SI A Engineering 22 186 (71) 56 1H 13/ 14 17

• 3
• 37

+ 19

• Change

Slide 18

77.3

• 1.6
• 52.1

+ 33.9

• % Change

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($ million)

2013/ 14 2014/ 15

GROUP NET PROFI T – 1H FY2014/ 15

122 35

50 100 150 200 Q1 Q2

• $87M
• 71.3%

Half Year Net Profit $126M Year-on-Year $157M

• 55.5%

Slide 19

161 91

• $70M
• 43.5%

($ million)

GROUP NET PROFI T – 1H FY2014/ 15

50 100 150 200 250 300 1H FY13/ 14 Associates Operating Profit I nterest and Others

283

1H FY14/ 15

126

• 157
• 55.5%

Slide 20

Aircraft Disposal Exceptional I tems

• 154

Share of losses from associates against profits last year

• 32

Exceptional items

+ 2

Higher

• perating

profit

+ 31

Higher gain on disposal of aircraft

• 4.0

Others

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10.0 5.0 I nterim Dividend Per Share (¢) 1.25 1.09 EBI TDAR Per Share ($) 1H 1314 1H 1415 11.26 10.96 Net Asset Value Per Share ($) At 31 Mar 14 At 30 Sep 14 24.0 10.7 Earnings Per Share (¢)

GROUP RESULTS – 1H FY2014/ 15

• 4
• 1

OUT: Decommissioned B777-200 OUT: Decommissioned A330-300

FLEET DEVELOPMENT - SI A

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105 Operating Fleet at 30 September 14

• No. of Aircraft

105 Operating Fleet at 31 March 15 + 2 I N: Delivery of A330-300 + 3 Delivery of B777-300ER

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• 1
• 1

OUT: Decommissioned A320-200 Decommissioned A319-100

FLEET DEVELOPMENT - SLK

Slide 23

26 Operating Fleet at 30 September 14

• No. of Aircraft

27 Operating Fleet at 31 March 15 + 3 I N: Delivery of B737-800

FLEET DEVELOPMENT - SCOOT

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6 Operating Fleet at 30 September 14

• No. of Aircraft

+ 2 I N: Delivery of B787-9

• 2

OUT: Decommissioned B777-200 6 Operating Fleet at 31 March 15

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GROUP CAPI TAL EXPENDI TURE

FY15/ 16 FY16/ 17 FY17/ 18 FY18/ 19 FY19/ 20 Aircraft 2,750 2,900 4,150 4,200 3,800 Other Assets 200 200 150 100 100 Total 2,950 3,100 4,300 4,300 3,900

Slide 25

GROUP FUEL HEDGI NG POSI TI ON

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For the period Oct 14 to Mar 15 Jet Fuel Brent Percentage hedged (% ) 65.3 0.8 Average hedged price (USD/ BBL - Jet Fuel) 116 100

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BUSI NESS OUTLOOK FOR FY2014/ 15

OUTLOOK

• I ntense competition
• Geopolitical factors
• Economic risks

Slide 28

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MEETI NG THE CHALLENGES

CHALLENGES

Geography

Additional Hubs

LCC Competition

Group Portfolio

FSC Competition

Network Service Product

Slide 30

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NETWORK CONNECTI VI TY

Slide 31

• SilkAir
• Projected capacity growth of 7% for FY14-15 over FY13-14
• New destinations & frequency increase for existing destinations
• 4 new destinations: Kalibo, Mandalay, Hangzhou, Bali

NETWORK CONNECTI VI TY

• Air New Zealand
• SQ – NZ alliance to launch on 6 Jan 2015
• NZ to operate daily AKL-SIN vv on B772
• SQ to operate daily SIN-AKL vv on A380 and daily SIN-CHC vv on

B772

• 20% capacity increase between Singapore and New Zealand
• Turkish Airlines
• Major expansion of codeshare ties commencing May 14
• Connecting passengers between SQ and TK increased more than

13,000 in the period Jun 14 – Sep 14, year-on-year

Slide 32

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NETWORK CONNECTI VI TY

Slide 33

SQ Operations SQ Codeshare on Partner Carriers As at Sep14 Destinations 63 208 Weekly flight segments 1,594 6,514

Codesharing enables SQ to expand its network via inorganic growth

• SIA – Virgin Australia announced World’s First

Loyalty Programme Conversion on 24 Sep 2014

• Exclusive to the two airlines
• Gives members greater access to upgrades and

reward seats across combined international and domestic network

FFP DEVELOPMENT

Slide 34

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• KrisFlyer Spree

− Launched 19 Jun 2014 − Online platform where members can earn miles when they shop − Attract new KF members and increase engagement and benefits to existing ones

• Pay with KrisFlyer Miles

− Members are able to use miles to pay for all or part of their commercial airfares, fuel surcharge, and fees. − Effective Aug 2014, miles can be used to pay for preferred seats − Minimum miles level reduced from 5,000 to 3,000

Slide 35

FFP DEVELOPMENT BRANDI NG I NI TI ATI VES

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• Projecting the SIA Brand to a global audience through

sponsorships

• 2014 Formula 1 Singapore Airlines Singapore Grand Prix
• 2014 WTA Finals Singapore

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Full Service LCC Regional

The Group’s portfolio of brands extends its market reach

Long-Haul

Markets Positioning

Extend Market Reach

SI A GROUP PORTFOLI O

Slide 37

Gaining Travellers' Mindshare

Slide 38

SI A GROUP PORTFOLI O

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• Strong LCC growth in Asia Pacific
• Further growth potential

LCC participation as an engine of growth

Asia Pacific 5-year CAGR* (2009 – 2013) Full Service Carriers + 6% Low Cost Carriers + 18% Region Market Share* of LCCs (January –August 2014) Europe 42% United States 31% Asia Pacific 26% Singapore 30%

*Source: Diio Mi, CAPA

Slide 39

SI A GROUP PORTFOLI O

• FSC platform
• SQ/ MI synergy
• 50% increase in SQ/ MI connecting traffic in

last three years

• 60% of MI traffic is connecting SQ

A short-haul LCC platform is essential

SilkAir SI A

• Traffic growth in Singapore has been driven by transfer traffic

From/ To Singapore YoY Growth* Point to Point Traffic 3.4% Transfer Traffic 6.1%

Slide 40

SI A GROUP PORTFOLI O

Tiger

• LCC platform
• Scoot-Tiger ATI
• Mutually beneficial cooperation between a

short haul LCC and Scoot

• Tiger Airways remains the most viable

short-haul LCC platform for the Group

Scoot Tiger Tiger

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• Unprofitable overseas subsidiaries have been disposed of
• Capacity overhang has been addressed
• Refocus on Singapore operations
• Commercial cooperation with Scoot - with ATI - will bring clear

benefits to both Tiger Airways and Scoot

Tiger Airways is entering a rebuilding phase

Slide 41

TI GER AI RWAYS

• Tiger Airways needs to repair balance sheet
• SI A providing support
• To support the increased investment in Tiger Airways, SI A will

require

• Greater influence over Tiger Airways’ development
• Greater alignment of interests
• Therefore, stepping up to controlling stake
• For Tiger Airways to grow, it would need capabilities of SI A

Group

• Economies of scale
• Network connectivity and distribution

SI A’s stake in Tiger Airways

Slide 42

TI GER AI RWAYS

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• Passed 3 million passenger milestone in Jul 2014
• Commence renewal of fleet from end of 2014 with

first delivery of B787

• 13 destinations in eight countries or territories

Slide 43

SCOOT

• LCC based in Don Mueang International Airport, Bangkok
• Second home market for Scoot
• Fleet of B777s
• Milestones:

− Brand Launch on 8 Sep 2014 − Air Transport Service License granted on 8 Sep 2014 − Air Operator Certificate received on 30 Oct 2014

NOKSCOOT JOI NT VENTURE

Slide 44

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• FSC based in New Delhi, India
• Tap into the large Indian market
• Fleet of 20 A320s
• Milestones:

− No-Objection Certificate

granted on 02 Apr 2014

− Brand Launch on 11 Aug 2014 − Arrival of livery-painted

Aircraft on 15 Oct 2014

− Next: Air Operator’s Permit

TATA-SI A JOI NT VENTURE

Slide 45

NEW VENTURE

Slide 46

• Airbus Asia Training Centre
• Leverage strengths of SIA and Airbus to provide

pilot training to the region

• Capitalise on strong delivery streams of Airbus

aircraft to the region

• Milestones:
• Signed MOU in Feb 2014
• Signed JV Agreement in Aug 2014
• Next: Prepare for operational launch by early 2015

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Thank You