MARCH 2017 Credit Suisse 20th Annual Asian Investment Conference
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Credit Suisse 20th Annual
Asian Investment Conference
MARCH 2017
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
WHY AIRASIA?
1. Growth, Growth, GROWTH!
2. Strong Earnings and Performance
• Built Asean Powerhouse.
• All associates performing excellently, not just Malaysia.
3. Founders Capital Injection - RM1 billion
4. Dividend Policy
5. Value in the Balance Sheet
6. World’s Lowest Cost Airline
7. Ancillary Target of RM60 per pax
8. The Digital Airline
3
1. GROWTH, GROWTH , GROWTH
To Cater to the Underserved Market – ASEAN +2
STRONG LOAD FACTOR TREND TO ESTIMATED AIRASIA GROUP FLEET IN
CONTINUE THE NEXT 5 YEARS
1Q17 2Q17 A320ceo A320neo A321neo
+5ppts +3ppts +1ppts
+5ppts
YoY -3ppts
323
YoY YoY YoY Flat +3ppts
+2ppts Flat 293
90 90 +2ppts YoY 92 YoY YoY YoY
263 25
89 YoY 88 88 87 14
83
YoY
86 233 6
82 203 109 141
174 24 57 84
5
169 179 176 173 170 157
AAB AAT IAA AAP AAI 2016 2017 2018 2019 2020 2021
2017 NET AIRCRAFT ADDITION
Group fleet as A320neo A320ceo 3rd party Lease Group fleet
at end-2016: deliveries: deliveries: leases: retirements: at end-2017:
[2]
174
[1]
+19 +3 +10 -3 203
[1]
29 •
•
Malaysia – 7
Thailand – 6
• Indonesia – 2
[1]
Aircraft for • Philippines – 5
Includes two aircraft leased to a 3rd party
[2] AA Msia– 14 (including for replacement of older acft), AA Thailand - 5
growth • India – 6
4
• Japan – 3
WHAT WORRIES THE MARKET?
COMPETITION.
World’s lowest-cost airline. First mover advantage.
Lowest CASK in the industry allows AirAsia to The first LCC to new markets in ASEAN and
focus on generating revenue, regardless of the operating 66 unique city pairs system-wide,
yield trend. more than any other competitor in the region.
Ancillary income machine. ASEAN advantage.
Additional stream of income other competitors Operate as one airline with a network spread
don’t have and can’t scale up as quickly. over 18 hubs across a potential market of 625
million people.
Long track record of profitability.
Able to turn a profit in lean times and when oil Only Malaysian LCC.
was over US$100/barrel. Malindo has upgraded to a full-service carrier
leaving the LCC space in Malaysia wide open for
Unbeatable frequencies. AirAsia.
Route thickness is a barrier to entry and gives
AirAsia the privilege as the price setter. Profitable and competitive.
Profitable in Indonesia despite small market
Low expansion cost. share. Lower CASK in India than the “giant”
Operating to over 125 destinations in Asia. Able Indigo despite a small fleet.
to start new routes fast with low set-up costs.
Digital Airline.
Strong brand in all home markets. Investing heavily in digitalisation and the future
Built up a strong brand over the years, a key to of aviation and travel – ahead of the rest!
success that other LCCs neglect.
5
2. STRONG EARNINGS & PERFORMANCES
AirAsia Group Recorded Profit Before Tax RM2.13 Billion in FY2016
AIRASIA GROUP: FULL YEAR 2016 PRO-FORMA CONSOLIDATED RESULTS
• Group Passengers Carried: 56.59 million (+12%)
• Group Load Factor: 86% (+6 ppts)
• Group Revenue: RM12.02 billion (+11%)
• Group Operating Profit: RM2.15 billion (+24%)
• Group Net Operating Profit: RM1.65 billion (+58%)
• Group Profit Before Tax: RM2.13 billion (12.1x)
• Group Cash Position: RM2.97 billion
• Group Net Gearing: 1.30x
6
Refer to appendix for segment breakdown
2. STRONG EARNINGS & PERFORMANCES
AirAsia Malaysia Recorded Profit After Tax RM2.03 Billion in FY2016
AIRASIA MALAYSIA: 4Q16 & FY2016 PERFORMANCE
RASK UP 6%
sen/ASK
16.50
15.71 - Strong demand for air travel
15.50
14.81 - Load factor up by 2 ppts to 87%
14.50 - Higher average fare of RM186 (+5%)
13.50
CASK DOWN 8%
12.50 - Decrease in average fuel price of
12.65
20% to US$59/barrel jet kerosene
11.50
11.70 - Fuel consumption flat despite 2%
10.50 capacity increase
4Q15 4Q16
AirAsia Malaysia FY2016
• Passengers Carried: 26.41 million (+9%)
• Load Factor: 87% (+6 ppts)
• Revenue: RM6.92 billion (+10%)
• Operating Profit: RM2.05 billion (+29%)
• Net Operating Profit: RM1.67 billion(+63%)
• Profit After Tax: RM2.03 billion(+276%)
7
2. STRONG EARNINGS & PERFORMANCES
AIRASIA’S GROWING FOOTPRINT OVER THE LAST 15 YEARS
AIRASIA’S FOOTPRINT GROWTH OVER 15 YEARS
Countries +22 + 23% CAGR
Destinations +120 + 24% CAGR
Routes +250 + 30% CAGR
ASK (in Mil) +102,494 + 45% CAGR
IN 9 YEARS IN 3 YEARS IN 3 YEARS
2001 2010 2013 2016
COUNTRIES 1 COUNTRIES 18 COUNTRIES 17 COUNTRIES 23
DESTINATIONS 5 DESTINATIONS 65 DESTINATIONS 83 DESTINATIONS 125
ROUTES 5 ROUTES 145 ROUTES 182 ROUTES 255
ASK (in Mil) 586 ASK (in Mil) 37,935 ASK (in Mil) 52,710 ASK (in Mil) 103,080
We expanded our footprint extensively into key markets whilst keeping an eye on underserved routes
with high yields, enabling us to grow to 23 countries, 125 destinations and 255 routes in just 15 years.
Source: Annual Report, Quarterly Reports and Internal data. 8
3. FOUNDERS’ CAPITAL INJECTION
Confidence
• RM1bil injection shows founders confidence and commitment towards AirAsia
growth and expansion.
Increased Shareholdings
• Combined shareholding of 32.3%
Net Gearing
• 4Q2016 - 1.30x down to 1Q2017 – 1.0x (est.)
4. DIVIDEND STOCK
Continuity of policy since 2013
• Committed to pay dividend up to 20% of the net operating profit p.a.
Dividend payments
• FY2015 - RM0.04 (2.20%) paid on 29 June 2016
• FY2014 - RM0.03 (1.20%) paid on 2 July 2015
• FY2013 - RM0.04 (1.40%) paid on 3 July 2014
9
5. VALUE IN THE BALANCE SHEET
INVESTMENTS WORTH RM5.8 BILLION
Monetisation Value of Unwinding Hedges Asia Aviation Capital -
• Realising approximately • If we unwind all hedges, we could Updates
USD900 - USD1.2 billion have a net gain of MYR 936 million: • Deadline for final bidding
from Asia Aviation Capital submission 27 Mar 2017
1. FX hedges
• IPO for training centre,
• Total gains approx MYR923mil (indicative)
AACE
• Potential full disposal of 2. Fuel hedges • SPA & SSA execution to
AirAsia Expedia (AAE • Total gains approx MYR184mil start 7 April 2017
Travel) (indicative)
3. IRS hedges
• Ground Team Red (GTR): • Out of the money. Total loss is
Set up ground handling MYR 171mil
teams in Indo-China and • However, much smaller than
China gains from FX and Fuel hedges
Note: Refer to appendix for private equity performance FY2016106. WORLD’S LOWEST COST AIRLINE
CASK (US¢) based on latest available results
7.15 7.29
5.71 5.80 1.25 1.54
4.91 5.02 5.11 5.21
4.50 4.64 4.68
4.13 1.19 1.79
3.36 3.63 1.09 1.38 1.68
3.11 1.50 1.24 1.67
1.36
0.84 1.07 1.42 5.90 5.75
4.52 4.02
3.41 3.82 3.73 3.54
2.77 3.00 3.02
2.26 2.29 2.21
Cebu
Allegiant
Southwest
JetStar
Ryanair
Spice Jet
Gol Linhas
AirAsia X Group
Citilink
Alaska
Nok
IndiGo
Norwegian Air
AirAsia (Group)
Spirit Airlines
CASK ex fuel CASK Fuel
Source: Bloomberg
AirAsia figures based on full year 2016 results, USD/MYR = 4.14 (full year average)
Jetstar’s CASK breakdown unavailable
11THE POWER OF ONE
DRIVE GROWTH & REDUCE COST FURTHER
• ASEAN Holding Co to be listed
• Branding by sending consistent messaging across the Group
• Culture cultivated by more internal marketing: One Voice, One Vision, One with our People
• Centralisation of functions and processes to extract group synergy, leverage scale & reduce cost
• Regionalisation of more departments at Group
• Standardisation and Streamlining SOPs, Standardise Document Control Management System and Station
Audit Checklists across the Group, implementing best practices across stations, One Pricing for inflight meals
Total Cost Saving Initiatives ~ USD23m annually
Shared Service Regionalisation Procurement
Savings of ~US$3m annually Savings of ~US$5m annually Savings of ~US$15m annually
AGSS & Treasury Control Center + Localised Coordination Consolidation
• Legal
AGSS (savings of US$2m) • CFO • CapEx Group purchase, ICT, GSE,
• Automation • Procurement Inflight
–Improve system & workflow • People Department
• Centralize Payment release– • Internal Audit • Consolidate media purchase –
payment below RM 1.5 M approve • Corp Finance Commercial
by AGSS, strengthen and • ICT
empowered AGSS • Network Planning • Group sourcing Lowest costs
Treasury - Cash Pooling (savings of • Engineering through scale benefits – Inflight,
US$1m) • Customer Care crew, GS
• Cash & Liquidity Optimization Best practices sharing
• Cash centralization Share resources
• Optimize Returns Eliminate duplication work
127. ANCILLARY
RM50 per pax; Onward to RM60
Others
Duty free & 19.4%
FY2016 – AirAsia Malaysia merchandise
1.6%
• Total ancillary revenue increased +10.4%
• ancillary income per pax +1.4%; RM47.02 to RM47.68 Insurance Ancillary Baggage
45.1%
Revenue
(approx. revenue RM118.9mil) 5.6%
• Biggest contributors: Connecting per pax
• Baggage up 16% (contributes 45% of total ancillary fees
revenue) and 5.7%
• Cargo (9.6% of total ancillary revenue) Assigned seat
6.1%
F&B
• Highest growth:
6.9% Cargo
• Assigned seat (+13.6%), Flythru (+34%)
• Inflight merchandise (+82.7%), Inflight Duty Free 9.6%
(+116%) and Aircraft Advertising (+191%)
• Core ancillary – FY2016 vs FY2015 achievements:
F&B
• Revenue +10%. Introduced Santan combo meals for RM10.
• Bought over T&CO (Barista in the sky for LCC).
Baggage
• Revenue +16% (RM24.4mil)
Fly-thru
• Connecting fee +34%. AA Grp recorded 2.2mil FlyThru traffic for FY2016 (+36% vs FY2015).
• AAB FY16 connecting fees +RM0.78 per pax from RM1.95 to RM2.73 (+40%) revenue of RM72.1m vs RM47.3m
• Top 3 Routes: S’pore–Tiruchirappalli (+19%), Incheon–S’pore (+88%), Jeddah–Surabaya (pilgrimage route) (+72%)
137. ANCILLARY TARGET – RM60 PER PAX
Priority By Category
Enforcement and demand
Separate branding and based pricing to optimize
drive pre-book revenue
Centralization, rationalize
Product innovation and
catalogue and drive
demand based pricing to
ecommerce conversion
optimize revenue
Focus on dynamic pricing,
Enable ROKKI at all
product innovation and
AOCs
bundling
To increase number of
users and online Maximize take up
conversion via one-click rate
payment solution
147. ANCILLARY – KEY STRATEGIES
Ancillary Revenue Growth 2017
Strategies Initiatives Timelines
Enforcement Cabin baggage and checked baggage On-going
Self-service kiosks, simplified Q2 2017
Seamless user
booking, BIG Pay for one click onwards
experience
payment solution
Technology & EPOS, Big data for personalized Q3 2017
Data marketing
Revenue Demand based pricing for seats and On-going
management baggage
Awareness & Set product value proposition, drive On-going
product education pre-book & standardise branding
Maximize touch Cabin crew as sales agents, kiosk, Q2 onwards
points MMB for anonymous booking
157. ANCILLARY – KEY STRATEGIES
Duty Free Buying Strategy
CATEGORIES Perfumes & Cosmetics
Watches Strategic Focus
Jewellery &
Gifts Buy Direct from Brand Principals
Buying Health & Margin Optimization
Gadgets
Increase Product Range by
Customers Profiling
Liquor
Introducing Major Brands In All
Categories
Cigarettes
Desirable but non-mainstream counter brands
New catalogue
differentiator
168. THE INTERNET WAY OF AIRASIA
Think of our plane as a thing, a big part of our information network.
Guests Operations Maintenance Cabin
• experience • Experience • aircraft servicing • in-flight sales
• interests • Communication • Response • time
• profiling • Fuel management management management
• Crewing
• Ground & Flight Ops
Info
• AIMS
Building a platform so all data
related to aircraft is in one place.
178. THE DIGITAL AIRLINE
Improve performance Reduce Costs
• Increase productivity with automation • Reduction of distribution cost/ channels by direct
• Offer personalised services to customer’s travel customer acquisition
needs at no additional cost • Increase share of sales through mobile device
• Increase conversion by 2ppt equals to approx. • Paperless travel
RM2bil in sales (FY2016 5%)
• Increase ancillary sales through target marketing
New Revenue Stream Create Innovative Services
• Big Duty Free • BigPay’s e-Wallet – cashless/ hassle free travel
• BigPay - Fx wallet with 5 foreign currencies (USD, • Mobile facilitates seamless travel
GBP, SGD, EUR, AUD) • Platform for future development of e-commerce
travel 1819
WHY AIRASIA?
ASEAN POWERHOUSE
THANK YOU
20AIRASIA’S GROWTH STORY
FROM MALAYSIA TO ASEAN TO ASIA
196 201 204
Passengers Flown (in mil) 2
169 57
No. of Aircraft 54
127 50 1
108 46
101
78 84 37 1
65 32
42 28
27 24 5
17 19
2 3 7 15
12 0
5 7
0.03 1 2
-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F
All figures refer to AAB, AAT, IAA, AAP, AAI, AAX
1 As of end-2016 AAB, AAT, IAA, AAP, AAI, AAX 21LARGEST LCC IN ASIA BY PASSENGERS
((million))
114.6
96.6 101.7
61.3
40.7 41.1 47.4
31.2 34.3 35.0
13.5 14.7 18.2 19.1
5.1
Tigerair Philippine China THAI Cebu Singapore Cathay Garuda Japan Indigo All Nippon AirAsia Air China China China
Airlines Airlines Pacific Airlines Pacific Indonesia Airlines Airways Group Eastern Southern
*includes AirAsia X
SECOND LARGEST AIRCRAFT FLEET IN ASEAN
51 ATR
turboprops
225 202
143
108 84 78 75 60 47 46 35 30 23
Lion Air AirAsia Group Garuda Singapore Vietnam Malaysia Thai Airways Philippine Cebu Pacific Citilink VietJet Air Nok Air Tigerair
Indonesia Airlines Airlines Airlines Airlines
AirAsia fleet notes: Includes AAX, excludes two aircraft leased to PIA and two aircraft delivered to AirAsia Japan but yet to commence operations
Source: Airlines’ Financials and CAPA
22FROM ASEAN TO ASIA
Associate Structure
MALAYSIA AirAsia
• Population base: 32m
• Years in Operation: 15
• Listed on Bursa Malaysia (AirAsia Bhd)
THAI AirAsia (Associate Co - 45% owned)
• Population base: 68m
• Years in Operation: 12
• Listed on SET under Asia Aviation PCL
INDONESIA AirAsia (Associate Co - 49% owned)
• Population base: 261m
• Years in Operation : 12
PHILIPPINES AirAsia (Associate Co - 40% owned)
• Population base: 102m
• Years in Operation : 4
AirAsia INDIA (Associate Co - 49% owned)
• Population base: 1.3b
• Years in Operation : 2
AirAsia JAPAN (Associate Co - 49% owned)
• Population base: 126m
• Years in Operation : To start in 2017
Note: AirAsia Berhad owns 13% of AirAsia X Berhad (long-haul operations) which is listed on
Bursa Malaysia 23THE AIRASIA BUSINESS MODEL
One Class Configuration
Single Class
Same specification on all aircraft
Point to Point Point to point routes
All Airbus A320 (AirAsia)
Single Aircraft
Single pool of professionals training, spare parts inventory,
Type
tools
Modern & Efficient Young fleet with average age of 5 yrs
Fleet with Good Sharklets (4% more fuel efficient) A320neo (15%)
Maintenance Long term engine programme with GE
Operational
25 minutes turnaround time (AirAsia)
Excellence
Interest
Low interest rate on all aircraft financing
Rate
No Unions
People
High productivity and deep management
High Aircraft
12.5 hours a day (AirAsia)
Utilisation
Low Distribution Cost 70% sales via internet
Discount on aircraft and engine purchase
Favorable terms
Tax incentives on purchase of aircraft
Economies of scale Cost Savings among AOC when operating same destination
Simplified Model No dedicated cargo fleet, catering, MRO, etc.
24AIRASIA – FACTS AT A GLANCE
Key Milestones Network Market Share Allstars
• 125 destinations DOM INT • 16,067k
• Voted The World’s Best Low-
• 27 countries Malaysia 48% 45% Allstars
Cost Airline for the eighth
• 258 routes Thailand 29% 14% comprising
consecutive year (Skytrax
• 60 unique routes Indonesia 3% 24% 44
World Airline Awards 2016)
• 28 new routes Philippines 13% 5% nationalities
• Voted Asia’s Leading Cabin introduced in 2016 India 2% 3%
Crew (World Travel Awards) • 5 new routes
• Largest LCC in Asia – 57 million introduced so far in
guests carried in 2016 2017
174 Airbus A320’s 21 hubs 4Q16 load factor
AirAsia Malaysia– 77 (+2 leased to PIA) 5 : KUL, JHB, BKI, KCH, PEN 87%
AirAsia Thailand - 51 6 : DMK, HKT, CNX, KBV, UTP, HDY 82%
AirAsia Indonesia – 22 (+5 A320 under IAAX) 4 : CGK, SUB, KNO, DPS 83%
AirAsia Philippines - 14 3 : MNL, CEB, KLO 85%
AirAsia India - 8 2 : BLR, DEL 86%
AirAsia Japan- 2 1 : NGO -
Aircraft as of 28h Feb ’17. Network as of Dec ’16. Allstars as of Dec’ 16. Market share as of Dec’ 2016. 25UNDERSERVED MARKET
FOR ASEAN, INDIA, CHINA & THE REST OF ASIA
European Union
North America
pop. 509 mil.
pop. 357 mil.
1.3 flights per capita
2.5 flights per capita ASEAN +2
pop. 3.3 billion
Expanding global middle class 0.3 flights per capita
Rest of World
North America & Europe
Asia-Pacific
28% 54% 66%
2009 2020 2030
Source: World Bank, IEMS, Kharas and Gertz, 2010 26COST ADVANTAGE OVER PEERS
AirAsia Malaysia AirAsia
Ryanair Nok Air2
Malaysia Airlines1 Thailand
Staff costs 0.66 0.97 0.44 0.67 0.86
Depreciation 0.28 0.36 0.36 0.17 0.04
Cost reduction initiatives
Aircraft fuel expenses 0.93 2.44 1.29 1.14 1.24
Aircraft operating lease expense 0.05 0.48 0.06 0.66 1.63
- New A320neo & A321neo
Maintenance and overhaul 0.16 0.84 0.11 0.37 1.74 • Added 5 A320neo in 2016 and a
User charges and related expenses 0.54 0.56 1.06 0.71 0.71 further 17 planned for 2017
Other operating expenses 0.18 0.55 0.22 0.26 0.84 • A321neo to be introduced in 2019
Finance costs 0.20 0.18 0.04 0.07 0.05 • 15% - 20% fuel burn reduction
Finance income (0.12) (0.05) 0.00 (0.02) (0.02) - Fuel saving
Other income (0.21) (0.24) (0.00) (0.03) (0.29)
• One engine taxi
ASK (million) 10,275 14,983 37,236 5,208 1,566
CASK (US cents) 2.67 6.09 3.59 4.00 6.82
• Required Navigation Performance
• Engine wash & tyre pressure check
AirAsia Garuda AirAsia Cebu AirAsia - Innovation
IndiGo
Indonesia Indonesia3 Philippines Pacific India
• Self Bag drop & e-boarding pass
Staff costs 0.43 0.24 0.69 0.37 0.70 0.54
Depreciation 0.06 0.11 0.08 0.50 0.02 0.12 • Enhanced mobile and web booking
Aircraft fuel expenses 1.06 1.84 1.28 1.61 1.06 1.72 • Digitalisation and One AirAsia
Aircraft operating lease expense 0.60 1.50 0.63 0.33 0.35 0.84 - Others
Maintenance and overhaul 0.47 0.63 0.88 0.47 0.32 0.15 • Renegotiating lower airport charges
User charges and related expenses 0.63 1.04 0.47 0.53 0.59 0.52
Other operating expenses 0.19 0.97 0.48 0.12 0.23 0.69
Finance costs 0.09 0.12 0.08 0.09 0.14 0.08 Note: All provided figures based on latest reported quarter of
4QCY16, unless otherwise stated.
Finance income - (0.01) 0.00 -0.01 -0.07 - 1
Malaysia Airlines figures based on the latest available audited
Other income (0.08) (0.07) 0.56 0.00 -0.08 (0.18) financial statement as at 31 December 2013
2 Nok Air figures based on latest reported financials for FY2016
ASK (million) 2,661 14,638 1,473 6,399 990 14,390 3Garuda Indonesia figures based on latest reported financials for
CASK (US cents) 3.45 6.37 5.15 4.02 3.26 4.48 9M16PRIVATE EQUITY PERFORMANCE FY2016
INVESTMENTS WORTH RM5.8 BILLION
AirAsia X Berhad Tune Protect Group Berhad AirAsia Expedia
• Est Valuation: RM 234m • Est Valuation: RM 149m • Est Valuation: RM 354m
(Our Stake 13.76%) (Our Stake: 13.65%) (Our Stake 25%)
• FY2016 vs FY2015 • FY2016 vs FY2015: • FY2016 vs FY2015
Rev: RM4.0b (+31%) Rev: RM126.08m Rev USD208.9m (+30%)
Net Op Profit: RM250.9m (vs net op. PAT: RM15.34m PAT USD27.8m (+35%)
loss - RM101.7mil) Margins: EBIT 13.9% EBITDAR 14.2%
PAT: RM230.5m vs LAT -RM349.6m
Asian Aviation Centre BIG Loyalty Asia Aviation Capital
of Excellence
• Est Valuation: RM 355m • Est Valuation: RM 292m • Est Valuation: RM 4.5 bil
(Our Stake 50%) (Our stake: 69.33%) • (Our Stake 100%)
• FY2016 vs FY2015: • FY2016 vs FY2015: • FY2016 vs FY2015:
Rev RM130.7m (+21%) Rev RM50.4m (+37%) Revenue: US223.96m ( +140%)
EBITDA RM78.9m (+22%) LAT –RM10.3m (vs -RM15.5m) EBITDAR: USD57.2m
PAT RM48.6m (+46% against • Active members increased to 5.5m from PAT: USD70.9m (+515%)
budget) 31.m. Normalised Profit Margin for
Margins: EBIT 44%, EBITDA 60% 4Q2016: EBIT 27%
10 Full Flight Simulators (FFS) roKKi.com Total acft:63
T & Co. • Est Valuation: RM 29m
(Our Stake: 73%)
• Est Valuation: RM 914k • FY2016 vs FY2015:
(Our stake: 80%) Rev RM22m (-18%)
• FY2016 vs FY2015: PAT RM2.6m (+392.5%)
Rev RM3.1m (+12%) Margins: EBIT = 12.8%, EBITDAR = 12.8% 282017 FLEET STATISTICS
AAC MAA TAA / IAA / PAA Net
Operator growth in
Owned Op. Lease Owned Op. Lease Owned Op. Lease 2017
Malaysia 2 2 71 2 - - 7
Thailand 12 16 2 - 16 5 6
Indonesia1 9 7 - - 5 1 2
Philippines 2 6 2 - - 4 53
India 2 1 5 - - - 6
Japan - 2 - - - - 3
Pakisan 2 - - - - - -
TOTAL 29 34 80 2 21 10 27
29
[1] Includes aircraft operating under IAAX flight code
29DURABLE COMPETITIVE ADVANTAGE
CURRENCY, HEDGING & COST
Bought planes at low cost. Negotiated best prices for
aircraft by ordering early and ordering big.
Fixed interest rates. All loans are either fixed rate
loans or have fixed interest rates via interest rate
swaps.
Most of fuel for 2017 is fixed. Hedged 75% of FY2017 fuel requirements at
USD59 per barrel.
Currency hedges. USD operating expenditure 50% hedged up to May 2017.
Able to pass on currency risk to passengers via increasing average fare.
15%
Only 35% of 35%
USD 50%
borrowings
is totally
unhedged:
USD borrowings Associates' a/c, MAA a/c MAA a/c hedged
natural hedged unhedged
• Loans by currency: USD (90%), MYR (7%), SGD (2%) and EUR (1%)
30OUR PERFORMING ASEAN AIRLINES
FULL YEAR 2016 RESULTS
planned
REVENUE +10% +10% capacity
+18%
reduction
RM6.92 THB32.5 IDR3,854 PHP10.8
bil bil bil bil
Malaysia Thailand Indonesia Philippines
+125%
OPERATING Reduced
+35% operating loss
PROFIT +29% to 188%1
RM2.05 THB3.8 IDR190
bil bil bil
-PHP0.9 bil 2
Malaysia Thailand Indonesia Philippines
Malaysia Thailand Indonesia Philippines
1 Reported 31
2 Less one-off charges4Q2016 SEGMENT PERFORMANCE
AIRASIA GROUP: PRO-FORMA CONSOLIDATED RESULTS
Elimination
Malaysia Thailand Indonesia Philippines India Japan Adjustments Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Segment results
Revenue 1,936,769 933,122 318,813 276,280 174,412 - (401,048) 3,238,348
Operating expenses - - - - - - -
- Staff costs (314,032) (152,818) (50,148) (44,595) (30,460) (17,567) - (609,619)
- Depreciation of property, plant and equipment (192,431) (38,085) (7,359) (5,207) (985) 634 - (243,432)
- Aircraft fuel expenses (420,484) (261,671) (83,832) (82,922) (69,128) (1,622) - (919,659)
- Maintenance and overhaul (72,369) (85,754) (48,104) (56,850) (18,926) (1,775) 126,489 (157,290)
- User charges and other related expenses (245,473) (161,704) (63,949) (30,263) (24,669) (4,504) - (530,562)
- Aircraft operating lease expenses (135,519) (151,463) (47,165) (40,563) (29,689) (8,264) 271,798 (140,865)
- Other operating expenses (109,570) (60,110) (22,175) (30,675) (10,885) -23%
(5,622) 18,500 (220,538)
Other income 143,549 6,857 33,642 (36,442) 3,706 59 (15,739) 135,633
Operating profit/(loss) 590,440 28,375 29,723 (51,236) (6,625) (38,661) 0 552,016
Finance income 80,940 3,693 399 14 919 0 - 85,964
Finance costs (126,792) (16,473) (11,257) (4,886) (111) (16) - (159,535)
Net operating profit/(loss) 544,588 15,594 18,866 (56,108) (5,817) (38,677) 0 478,446
Foreign exchange (losses)/gains 54,120 (17,857) (95,285) (68,981) (4,063) (4,117) - (136,184)
Impairment of investment in associate (163,750) - - - - - - (163,750)
Share of results of joint ventures 6,108 - - - - - - 6,108
Share of results of associates (91,870) - - - - - 103,985 12,115
Profit/(loss) before taxation 349,196 (2,263) (76,420) (125,089) (9,881) (42,794) 103,985 196,735
32AIRASIA BERHAD: 4Q16 and FY2016 PERFORMANCE
AIRASIA MALAYSIA: INCOME STATEMENT AND PERFORMANCE INDICATORS
+0.11 1.94
0.46 MRF adj. +0.12
REVENUE
(RM billion) 1.71
Passenger Other
4Q15 seat sales revenue 4Q16
Topline revenue declined year-on-year due to recognition of one-off Maintenance
Reserve Fund (MRF) adjustment in 4Q15 of RM457 million. Leaving out the one-off gain,
revenue increased by 15%.
NET OPERATING EBITDAR EBIT LOAD AVERAGE
PROFIT MARGIN MARGIN FACTOR
(RM million)
FARE
724.5
544.6 87% RM186
-25%
47% 30% (+2 ppts) (+5%)
4Q15 4Q16 4Q16 4Q16
Total passengers carried at 6.76 mil for 4Q16, up 5%, exceeding capacity growth of 2%
year-on-year.
Net Operating Profit down 25% by due to payout of staff bonuses and wet-lease
charges
Ancillary income per passenger of RM47.
334Q16 – ASSOCIATES’ PERFORMANCE
AIRASIA THAILAND (THB MIL)
Revenue Operating profit
7,678 7,559
-2%
Revenue held steady at THB7.56
585 bil. Lower operating profit from
-61% tour operator crackdown and
229 national mourning period
4Q15 4Q16 4Q15 4Q16
AIRASIA INDONESIA (IDR BIL)
Revenue Operating Profit
Revenue 11% lower due to planned
1,091 capacity reduction as part of the
-11% 971
turnaround plan
157
-43% 90 Load factor up 3 ppts to 83%.
CASK down by 25%
Second consecutive profitable
4Q15 4Q16 4Q15 4Q16 quarter with operating profit of
IDR90.6 million
34AIRASIA PHILIPPINES (PHP MIL)
Revenue Operating loss
3,106
+36% Revenue up 36% on 19% higher
2,285 passenger volume and 17%
increase in average fare
-110 -421% RASK up 5% and CASK down 18%
Smaller operating loss after
-576
4Q15 4Q16 excluding the one-off charge of
PHP493.7 million from the
disposal of last remaining legacy
aircraft
AIRASIA INDIA (INR MIL)
Revenue Operating loss
2,695
2,077 +30%
Revenue up 30% from 56%
4Q15 4Q16 increase in pax.
-102
4Q15 4Q16 CASK down 10%
-256
Reduced op. loss by 60%
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