AIRASIA 3.0 = THE TRAVEL & FINANCIAL PLATFORM OF ASEAN - AIRASIA GROUP BERHAD
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AirAsia 3.0
Airline + Digital + Technology
= The Travel & Financial Platform of Asean
April 2019
1 Strictly private and confidential
LEGAL 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’s management under any circumstances.
2 Strictly private and confidential
Agenda
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
3 Strictly private and confidential
AAGB share price since IPO
IPO price: RM1.25
FYE 2004: RM49mn PATAMI FYE 2018: RM1,980mn PATAMI
4 Strictly private and confidential
The largest LCC in Asia
The fourth largest airline in Asia 6 airlines 3 airlines
260 aircrafts, in 9 airlines
100 million passengers flown annually
500 million total passengers flown
147 destinations
across 23 Countries
Over 360 routes, including
98 unique routes
23 hubs
Over 10,000 flights per week
*Fleet size and data as at Dec 2018
5 Strictly private and confidential
Wide digital reach via AirAsia.com, mobile app and social media
Over
11,900,000 fans
Over
26,000,000 followers
Over
7,900,000 followers
Over
Over560 million Over 40 million 1,600,000 followers
annual unique (web&app) visitors mobile app download
Over
Hits from over
1,900,000 followers
Over15 million 240 Over
contactable members
different countries
1,300,000 followers
2.9%
annual conversion rate
60%
Sales via web and app Over 50 million
total fans and followers
6 Strictly private and confidential
Ancillary revenue growth from data & digital initiatives
2008 2018
9x
RM2.06bn
RM0.23bn
9% of revenue 21% of revenue
✔ Baggage ✔ Baggage (dynamic pricing)
✔ Inflight F&B ✔ Inflight F&B
✔ Pick-a-seat ✔ Pick-a-seat (+ hot seats)
✔ Wifi
✔ Insurance
✔ Ourshop
✔ Fly-Thru
✔ Logistics
7 Strictly private and confidential
1Q19 operating statistics
AirAsia Group (MAA, IAA & PAA):
● Carried 18% more passengers
● Load factor strong at 88%
● ASK up 11% as we added new
routes and frequencies for both
domestic and international routes
to further grow market share
8 Strictly private and confidential
1Q19 operating statistics
9 Strictly private and confidential
Agenda
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
10 Strictly private and confidentialWe have the planes to grow to stimulate latent demand
Equal Fleet Expansion Across AOCs in 2019
MAA TAA IAA PAA AAI AAJ Total
January 2018* 84 56 23 17 14 2 196
December 2018** 95 62 24 22 19 2 224 6 countries:
2019 Net Addition*** 2 1 5 3 6 1 18
*January 2018 fleet for Malaysia excludes aircraft grounded for reallocation to other AOCs
** December 2018 fleet excludes 2 third party leases
*** Full Year 2019 net addition of 18 aircraft excludes 2 third party leases
Exploring others:
Target aircraft financing for 2019: All on sale and leaseback.
+30
↷
+31
+35
+40
↷ ↷
↷
+37
↷
+32
↷
+23 +28
+18
↷ ↷ ↷ New A321neo aircraft
that are fuel efficient &
have lower cost per
seat
Note: Column chart includes 2 third party leases
11 2
Strictly private and confidentialRational competition & growing market share across AOCs
AirAsia’s Domestic Market Share & Rational Competition (2018 vs 2017)
6ppt 58% 2ppt 32% fla 2% 4ppt 20% 1pp 5%
s s t s t
4 ppts 1 ppt 2 ppts 3 ppts FLAT
3 ppts 1 ppt 3 ppts FLAT 1 ppt
12 Strictly private and confidentialAgenda
Data-driven organisation
Achieving the unthinkable
Strengthening our underlying airline business
DATA USERS COE
Digitalising the airline
AirAsia 3.0
DATA GOVERNANCE
Leveraging our data to create platforms
13 Strictly private and confidentialWe have a lot of Data to drive ecosystem expansion
BIG Data and Real-time Insights
Engine & Component
Contact Details FOMAX
Transactions
Online Activity Demographic
Maintenance Feedback
Loyalty
Mobile Activity
Aircraft
Social Data
Guests Speed
Transactions
Lifestyle Data Cabin Baggage Weight
Feedback
Queue
Passengers Time
Weight
Passengers Movement Apron
Temperature
Terminal Location
Available data source Counter
Transactions Aerobridge
Potential new data source Movement
14 Strictly private and confidentialData taking us to new heights
Priorities
Cost Reduction Revenue Gain
to Focus On
Verticals
Operations Pricing / Promos /
to Work On Fuel Cost Ancillary
Efficiency Bundling Rewards
Increase Increase Cost Drive
Goals Fuel Cost Increase Drive More
Efficiency & Customer
to Achieve Efficiency Uptake Traffic
Productivity Retention
Skill Sets
Required
Data Science
15 Strictly private and confidentialStaying true to being low-cost
Our top priority, ALWAYS.
Lower Predictive Driving fuel usage New A321neo aircraft
airport maintenance to reduction through that are fuel efficient &
charges increase data analytics have lower cost per
efficiency seat
Adoption of ‘Agile’ Media cost on a
organisation downtrend with
structure personalisation
16 Strictly private and confidentialAgenda
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
17 Strictly private and confidentialAirAsia 3.0
Strengthening our core airline
1 business
↑pax ↑ancillary ↑market share
Digitalising the airline
2 ↑revenue ↓cost ↑insights
Leveraging our data to
3
create platforms
Guests Belly
↑revenue ↑users
↑engagement
Cargo Baggage
Travel Lifestyle Social Commerce
e-Money Remittance Lending
Our aim is to also increase financial inclusion of our customers
AirAsia BIG Loyalty points
18 Strictly private and confidentialWe are investing in people
Building blocks laid for a platform business
Lye Kong Wei, Elias Vafiadis, Nikunj Shanti,
Group Head of Data Group Head of Software Engineering Group Head of Product
(Formerly from Grab) (Formerly from Expedia) (Formerly from Expedia)
AirAsia Software Engineering & Technology Center
Bangalore, India
19 2 Strictly private and confidentialAgenda
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
20 Strictly private and confidentialAirAsia.com - All-in One Travel and Lifestyle Marketplace
New enhanced homepage UX/UI
on web & mobile
21 Strictly private and confidentialAirAsia.com addressable market
OUR VISION
Asean internet
economy market
Now we are establishing AirAsia.com as a
size (GMV, US$bn, all-in-one travel and lifestyle marketplace
By sector 240
Ride-hailing
(Online food delivery, ☑ Transportation
29
online transport) ☑ Food delivery
Online media
(Subscription music & ☑ Media ☑ Community
31
video, online gaming, ☑ Beauty Maintaining
online advertising) our current
☑ Lifestyle deals ~10%
☑ OURSHOP market
72 102 E-commerce share will
THEN Ride-hailing 8 yield us a
Before setting up Online media 10
potential
AirAsia.com as a GBV of
separate entity:
US$24bn in
E-commerce 23
☑ Flights ☑ Activities
In 2018, we estimate Online travel (direct & aggregator) 2025E
78 (Online vacation
we had ~10% market Online travel rentals, Online hotels,
☑ Hotels ☑ Holiday packages
30
share of the online online flights)
travel space ☑ Post-booking
2018E 2025E
☑ Insurance, fintech
Source: e-Conomy Southeast Asia 2018 report by Google and Temasek 22 Strictly private and confidentialBigPay - Financial Supermarket
Asia’s Money App
● Digital challenger bank
for Southeast Asian
millennials and travelers
● Democratise financial
services with simple and
affordable solutions for
e-wallet, remittances,
and lending
500k users
e-Money Advanced money management Loans Remittance
23 Strictly private and confidentialAirAsia Group Belly Space Consolidation/Partnerships
Existing cargo supply chain is ripe for disruption:
AirAsia Group Belly Space Consolidation/Partnerships
Jan 2019 Aug 2018
Feb 2019
May 2018 Jul 2018 2Q 2019 2Q 2019
In Conversation
Full Year 2018 :
Revenue of RM206 mil.
Target for Full Year 2019 :
Revenue of RM400 mil
2 24 Strictly private and confidentialBuilding Teleport to enable direct businesses and consumers
Opening our logistics infrastructure to social sellers
Social Commerce (C2C) is growing
faster than ride-hailing in Asean
ASEAN includes – MY, PH, TH, ID, VN, SG (ASEAN6)
2018-2025 Social commerce estimated at ~50% of formal e-commerce segment
Note: Illustrative mockup of product 2
Sources: Google Temasek Reports, Nomura research, Euromonitor, eCommerceiQ, news runs
25 Strictly private and confidentialKey to our platform strategy is our low customer acquisition
cost built over the last two decades
Asean internet Asean unicorns & funding in 2016-1H18 (US$bn) Active users, from
economy market 2015 to 2018
size (GMV, US$bn,
By sector 240
Ride-hailing
(Online food delivery, Grab Go-Jek 10.1 8mn 35mn
29
online transport)
Online media
(Subscription music & VNG, Razer
31 1.4 164mn
video, online gaming, 130mn
online advertising)
72 E-commerce Lazada, Tokopedia,
102 7.9
Shopee, Bukalapak, etc 49mn 120mn
Ride-hailing 8
Online media 10
AirAsia’s annual unique
(web&app) visitors:
E-commerce 23
Online travel
(Online vacation
78 rentals, Online hotels,
0.7 Traveloka
30 online flights)
Online travel
560mn
2018E 2025E
Source: e-Conomy Southeast Asia 2018 report by Google and Temasek 26 Strictly private and confidentialAirAsia vs other platforms
Market Dominance ASEAN Indonesia/ASEAN Global ASEAN Indonesia/ASEAN
Visitors (per month) 65 million 22.2 million 750 million MAU: 18.6mn MAU: 28 million
Daily active users ~2m 0.8mn n/a Ride-hailing: 4mn Ride-hailing: 1.8m
Hotel nights for sales >500k >100k 352mn n/a n/a
Merchants 40m n/a n/a >4k 303k
(via Mastercard) (300k food merchants)
App Downloads 30 million >250 million >110mn
>40million >100mn
Valuation US$ 4.0 bil US$ 17.9 bil >US$10bn
US$ 2.3 bil ~US$10bn
Source: Publicly available company data 27 2 Strictly private and confidentialThank you
&
Appendix
28 Strictly private and confidentialMFRS 16
• To reflect what was traditionally an off balance sheet long term commitment of entity
to reflect it in the financial statements
• No separate treatment for operating lease and finance leases. All treatment will reflect
the same treatment like finance lease.
Impact to P&L in 2019:
• Impact post BBAM is approximately depreciation +RM1.6b, interest +RM0.5b, no more
op lease, net PBT -RM0.13b
• Impact post Castlelake and BBAM is approximately +RM1.9b, interest +RM0.6b, no
more op lease, net PBT -RM0.27b
Impact to balance sheet:
• +assets & + liabilities by ~RM11-14b each, net gearing ratio of 1.5 (estimate) in Dec
2019 from net cash in non-MFRS 16 compliant Dec 2018
Impact to cashflow:
• Purely accounting transaction, no further cashflow impact of pre adoption and post
adoption
Tax impact: Deferred tax (to be determined)
No breach of any financial covenants
29 Strictly private and confidentialAircraft monetisation exercise
2019
BBAM 4Q18 results
we recorded:
transaction ● BBAM’s project consultants’ fees
Nov 2018 RM167m
Completion of ● accretion of interest catch up
79 aircraft and RM64m
14 engines ● net cash proceeds: RM4.4b where
sold to BBAM we paid a special dividend totalling
RM1.3b
● Debt reduced by RM7.9b
● Turned net cash in Dec 2018
● +MRO provisions of RM300m
Castlelake
transaction
24 Dec 2018: 8 Mar 2019: Upon sale (target 2Q19) (estimated):
Signing of: Amended SPA ■ Net gain on disposal: ~RM175 million
- SPA to the disposal of signed ■ Gross proceeds of ~RM3.13 billion
Merah Aviation which will
■ Net proceeds of ~RM1.30 billion (post
consist of 25 aircraft (18
repayment of debt of RM1.9b &
A320ceo & 7 A320neo
transaction expenses of ~RM15m)
- SLB Agreement for 4 new
aircraft to be delivered ■ +MRO provisions will be based on
(A320ceo) usage - cycle hours.
30 Strictly private and confidentialFY2018 Financial Highlights
Financial Performance & Operating Statistics – AirAsia Group Berhad (“AAGB”)
Revenue (RM mil) 10% 10,638 • Profitable despite average fuel price up by
33% (RM703 mil in additional fuel cost),
resulting to 39% increase in fuel expenses
Net Operating Profit (RM mil) 51% 808
• FY2018’s performance was largely
impacted by much higher fuel cost.
Recorded average fare of RM173 despite
Capacity 18% 52,536,954
the vigorous 18% capacity added
• Minus one-off costs amounting to RM319
RASK (sen) 3% 14.71 mil, normalised CASK ex-fuel grew
marginally by 2% to 8.51 sen. Cost items:
BBAM’s project consultants’ fees RM167
CASK incl. Fuel (sen) 12% 14.80 mil, provision for doubtful debts RM88
mil, accretion of interest catch up RM64
mil
Note:
Results for AirAsia Group Berhad comprises: AirAsia Malaysia, Indonesia & Philippines only 1
31 Strictly private and confidentialForeign currency, loans & fuel hedging
Our Strategy
• Our Group’s fuel hedging strategy is based on our forward sales booking
• Jet Kero – 52% hedged for FY2019 at USD79.40 per barrel; 40% hedged for FY2020 at USD77.55 per barrel.
FY2021 4% at USD77.37bbl
• Currency hedges – USD operating expenditure is 100% hedged up to September 2019
• Interest rates – All USD loans (for aircraft) are either fixed rate loans or have fixed interest rates via interest rate
swaps
2019 Only 31% of USD borrowings are totally unhedged:
AirAsia Group 0%
31%
Q1 Q2 Q3 Q4
69%
Current Hedge Ratio 53% 52% 52% 51%
Avg Hedge Cost
80.57 78.23 77.64 78.31
(USD – Jet Kero)
Average FY Hedge
79.40 Loans by currency: USD (88%), MYR (10%) and EUR (2%)
Cost
32 Strictly private and confidentialDividends
● Committed to pay special dividends every 2
years
● Dividend policy of 20% of net profit
● Second interim dividend of 12sen/share
payable on 10 April 2019
● Interim + special dividend – totaling to RM0.64
for FY2018; 21.5% dividend yield
● Total dividends paid up over the years accounts
for approximately one-third of our share price
today.
With a CASH POSITION of RM3.35 billion as of
Dec 2018
33 Strictly private and confidentialAirAsia.com Overview
Business Summary
● Incorporated in 2019, AirAsia.com is a regional web and mobile app CONTENT COMMERCE
platform for travel and lifestyle bookings in Asia Creative Best deals
visuals & for travel &
● Offers consumers travel and lifestyle products that are available for stories, sharing lifestyle
purchase using various payment methods, including loyalty points of experience
● Expanding beyond AirAsia’s airline network, AirAsia.com features
global flights operated by other peer airlines and both proprietary and
non-proprietary travel and lifestyle inventories for consumers to
choose from
● Built travel and lifestyle ecosystem through strategic partnerships with
local and regional partners working as earn and burn channels of
loyalty points for consumers
COMMUNITY
Global community to drive
engagement
Products & Services
Travel Lifestyle Content Beauty B2B
● Flight ● Shop ● Media ● Content driven ● Marketplace for
● Hotel / Vacation ● Duty Free ● Content beauty marketplace comprehensive and
Rental ● F&B (Print + Digital) ● Cosmetics proprietary content
● Flight + Hotel ● Health, Fitness ● Inflight ● Wellness and inventory for
Spencer Lee (CEO) ● Transport ● Events Entertainment ● Skincare other businesses to
Former Head of Commercial at ● Tours + Activities ● Ticketing ● Infrastructure ● Fragrance plug-in and use
AirAsia Malaysia
● Insurance ● Services (Inflight WiFi) ● Haircare
● Itinerary Builder ● Podcast
34 Strictly private and confidentialBigPay Overview
Business Summary
● Launched in 2018, BigPay aim to democratize financial services in
Asia by building a digital bank that offers consumers e-wallet service,
remittance and lending
● Value proposition includes easy user experience, usability via
Mastercard’s extensive network, issuance of Big Points upon top up or Make financial services better value, more
use, zero foreign exchange rate charged during international travels, transparent and fairer for everyone
and zero booking fees when booking on AirAsia.com
Key Features
● Native iOS and Android build
● Latest tech stack & proprietary software
AirAsia Big Points Best Exchange Rate
● Seamless, mobile-only user experience earn with daily spend when spending abroad
● Bank grade and biometric security
● Peer-to-peer payments & split bills
● Fully automated spending analytics
● In-app card / account management Save Money Instant Money Transfer
on AirAsia flights to your friends for free
● Issue Mastercard / Visa card
Proprietary Licences
Expense Analytics
in real time
Christopher Davison (CEO)
Former Director of Clearwater Partners
Former Investment Manager at Talis
Capital Limited
e-Money Remittance Lending
35 Strictly private and confidentialTeleport Overview
Business Summary
● Today, a consolidator of belly capacity for the AirAsia group of airlines,
enabling cargo carriage for businesses across 110+ cities
● Global network reach through partner airlines beyond Asia covering
US, Europe, Middle East and Australia/New Zealand
● Our goal is to re-order the supply chain, with the airport as the AirAsia Group Belly Space Consolidation/Partnerships
distribution center of the future, and make same-day cross-border
fulfillment a reality
● We intend to open our platform and infrastructure to empower
consumers and small businesses across Southeast Asia
Affordable Air Freight
Jan 2019 Aug 2018
Now: AirAsia Network
Feb 2019
Next: 8 Major Asean Cities
May 2018 Jul 2018 2Q 2019 2Q 2019
Aim: 4 Capital Cities
In Conversation
Offering Door-to-Door Cross Border Logistics Services
Pete Chareonwongsak (CEO)
Former COO at AirAsia Philippines
Former Group Head of Business
Development
First Mile Collection Partner Warehouse Customs Clearance Transportation Last Mile Delivery
Parcel collection in origin Consolidation and sorting by Outbound and inbound Cargo terminal and Identify various last mile
country (warehouse / pick consignee for final delivery custom clearance in origin warehouse as well as cross partners based on items
up / drop off points) at destination country and destination countries docking for final delivery leg
36 Strictly private and confidentialBigLife Overview
Business Summary Products & Services
● Formally known as Big Loyalty and rebranded in 2019, BigLife is
AirAsia’s frequent flyer program aiming to power AirAsia’s greater Points Earn & Burn
ecosystem with its loyalty points as a high utility digital currency ● Earn and use points at travel and
● Offers consumers earning opportunities when transacting with an lifestyle partner channels
ecosystem partner and also offers consumers the option to purchase
Co-Branded Cards
travel and lifestyle products using the user’s point balance
● Earn extra Big Points when spending on the
● Provides additional benefits for its members such as exclusive
co-branded credit cards
discounts and priority access to sale inventories
● Tied to AirAsia’s single sign on to maximize value for users and create Points Exchange
a wholistic profile of users’ behavioral patterns ● Convert your other (Citi, CIMB, Maybank) points to
Big Points on Big Exchange points marketplace
Major Customer Value Propositions
Exclusive BIG Member Redeem short haul flights
discounts at up to 90% from as low as 500 BIG Points
Pay with BIG Points and Shop online and earn BIG Points
save more on flight bookings for every cash spent
24-hour priority access Earn and save BIG
TBD (CEO) to AirAsia sales with Fave deals
Full flight redemption Rewards differentiated
for free flights by membership statuses
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