Cebu Air, Inc. 3 rd Quarter and 9 months 2017 Results of Operations. cebupacificair.com

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1 Cebu Air, Inc. 3 rd Quarter and 9 months 2017 Results of Operations cebupacificair.com

2 Disclaimer This information provided in this presentation is provided only for your reference. Such information has not been independently verified and, as such, is not guaranteed to be accurate nor complete. Neither Cebu Air, Inc. ( CEB or the Company ) nor any of its affiliates, shareholders, directors, employees, agents or advisers makes expressed or implied representations or warranties as to the accuracy or completeness of the information contained herein and neither of them shall accept any responsibility or liability (including any third party liability) for any loss or damage, whether or not arising from any error or omission in compiling such information or as a result of any party s reliance or use of such information. The information and opinions in this presentation are subject to change without notice. EBITDAR, EBITDA, EBITDAR Margin, EBIT and core net income are not measures of performance under the Philippine Financial Reporting Standards ( PFRS ), and should not be considered in isolation or as alternatives to net income as an indicator of CEB s operating performance or to cash flow from operating, investing and financing activities as a measure of liquidity, or any other measures of performance under PFRS. Because there are various EBITDAR, EBITDA, EBITDAR Margin, EBIT and core net income calculation methods, CEB s presentation of these measures may not be comparable to similarly titled measures used by other companies. This presentation also contains certain forward-looking statements. These forward-looking statements include words or phrases such as CEB or its management believes, expects, anticipates, intends, plans, foresees, or other words or phrases of similar import. Similarly, statements that describe CEB s objectives, plans or goals are also forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Such forward looking statements are made based on management s current expectations or beliefs as well as assumptions made by, and information currently available to, management. There is no assurance that expected events will occur, that projections will be achieved, or that the Company and its management s assumptions are correct. 2

3 Business Updates

4 3Q17: A transition quarter Starting July 2017, CEB suspended 3 long-haul routes and redeployed A330 capacity into short haul A330 aircraft into Cebu, Davao, Hong Kong, Singapore, Narita, Incheon, Taipei and Bangkok Increased A320 flights into Bali, Hanoi, and domestic destinations 3Q17 shows the immediate impact of transitioning back to shorter sectors Capacity growth of 9.3% vs. 3.1% in 1H17, passengers at 7.3% growth Lower utilization and sector distance but higher turns per day for our A330 Year to Date Operating Statistics Passengers (M) % Capacity (M) % SLF 84% 86% -2ppts RPK (B) % ASK (B) % OTP 68% 58% 10ppts Seats +3% +3% +9% SLF 87% 84% 88% 86% 84% 82% Pax +1% +2% % Q16 1Q17 2Q16 2Q17 3Q16 3Q17 4

5 Domestic: Regaining growth and market share From a 1.4% decline in passengers carried in 1H17, we boosted seat capacity in 3Q by 10.6% to 4.2M, resulting to passenger growth of 8.2% YOY to 3.6M. This leads to 11M passengers flown in 9M17, up 1.5% Up-gauged key domestic routes from ATR to A320 and increased inter-island connectivity using ATR We increased market share to 58% in 3Q17 from 56% in 1H17, and our market share remains greater than our capacity share Despite the capacity boost, we continue to maintain the highest SLF: 84% in 3Q17 and 87% in 9M17 Most extensive network: 37 destinations, 72 routes, 2,000+ weekly flights 9M 2017 Domestic Market Share (1) AA, 13% PAL, 30% CEB, 57% CEB Domestic Passengers (M) and Market Share (1) -2.2% -0.7% +8.2% CEB Pax % 12% 11% 12% 11% 14% Others AA PAL CEB 29% 31% 29% 30% 31% 28% -3ppts -3ppts +1ppt 59% 56% 59% 56% 57% 58% 1Q16 1Q17 2Q16 2Q17 3Q16 3Q17 (1) Market Share: CEB 2017 figures based on boarded passengers while the rest are based on CAB statistics/internal estimates. 5

6 International: Notable growth and share in key markets Short-haul passengers grew 13% YOY in 3Q17 with a 17% capacity growth. This leads to 9M17 passenger growth of 10% with 15% capacity growth Largest SH markets: Hong Kong, Singapore, Korea, Japan and Taiwan Other notable growth markets include Bali and Hanoi Remaining long-haul routes, Dubai and Sydney, continue to outperform. 3Q17 SLF for Dubai at 89% and Sydney 80% 25 destinations, 37 routes and more than 500 weekly flights Key Markets Passenger growth (1) Source for Capacity Share: CAPA Capacity Share Hong Kong 22% 38% Singapore 4% 32% Incheon 32% 19% Narita 54% 17% Taipei 34% 25% Bangkok 40% 25% CEB Short-haul International Passengers (M), Capacity (M) and SLF +15% +13% +17% Seats SLF 81% 75% 82% 80% 78% 76% Pax +6% +10% +13% Q16 1Q17 2Q16 2Q17 3Q16 3Q17 6

7 Financial Results

8 Income Statement Highlights 3Q17 3Q16 % Change 9M17 9M16 % Change Total Revenue (Php Million) 14,675 13, % 50,331 46, % Passenger Revenue 10,309 10, % 36,929 35, % Ancillary Revenue 3,149 2, % 10,113 8, % Cargo Revenue 1, % 3,288 2, % Average Yield per passenger 2,816 2, % 3,163 3, % Average fare 2,157 2, % 2,483 2, % Ancillary/passenger % % Cargo yield per kg % % ASK (Million) 6,086 6, % 19,935 19, % Revenue/ASK (RASK) % % Cost/ASK (CASK) % % CASK ex-fuel % % (PHP million) EBITDAR 3,794 4, % 16,591 18, % EBIT 593 1, % 7,245 9, % Pre-tax Core Net income 282 1, % 6,412 8, % Net income 42 (584) 107.2% 4,376 7, % Margins EBITDAR Margin 25.9% 30.4% (4.6ppts) 33.0% 38.7% (5.7ppts) EBIT Margin 4.0% 9.1% (5.0ppts) 14.4% 20.2% (5.8ppts) Pre-tax Core Net Margin 1.9% 7.5% (5.6ppts) 12.7% 18.9% (6.1ppts) Net Margin 0.3% -4.3% 4.6ppts 8.7% 15.2% (6.5ppts) 8

9 Balance Sheet Highlights As at Sep 30, As at Dec 31, Php Millions Cash 10,440 10,296 Other current assets 5,191 4,855 Property and Equipment 86,896 81,890 Other noncurrent assets 5,760 3,473 Total Assets 108, ,514 Current debt 6,578 7,040 Noncurrent debt 37,920 35,770 Other liabilities 27,576 24,199 Total Liabilities 72,073 67,009 Total Equity 36,215 33,505 Net debt-to-equity 0.94x 0.97x Adjusted net debt-to-equity (1) 1.89x 1.93x Cash-to-sales-LTM ratio 16% 17% Forex, closing (1) Adjusted net debt is net debt plus capitalized lease and ARO liability 9

10 Cash Flow Highlights Php Millions 9M2017 CASHFLOWS FROM OPERATING ACTIVITIES Income after noncash adjustments 12,741 Net changes in working capital 1,324 Interest and taxes paid net (1,007) Net cash provided by operating activities 13,058 CASHFLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment and other noncurrent assets (12,474) Investment in JV and dividends received from JV 104 Net cash used in investing activities (12,370) CASHFLOWS FROM FINANCING ACTIVITIES Availment of long term debt, net of repayment 951 Dividends paid (1,666) Net cash used in financing activities (716) Net foreign exchange difference 172 NET INCREASE IN CASH AND CASH EQUIVALENTS 144 CASH AND CASH EQUIVALENTS, beginning 10,296 CASH AND EQUIVALENTS, END 10,440 10

11 Outlook

12 Fuel, Forex and Forward Bookings Fuel As of Nov 10, 2017, Jet Kero closed at $75.18/bbl Jet Kero Close YTD Ave Sep 30, 17 $69.64/bbl $62.89/bbl Dec 31, 16 $66.91/bbl $52.83/bbl Sep 30, 16 $59.12/bbl $50.25/bbl Hedge ratio at 49% for last quarter of 2017, 19% for 2018 and 12% for 2019, using swaps and collars Jet Kero Spot Price Index Forex As of Nov 10, 2017, USDPHP closed at P51.25/$ USDPHP Close YTD Ave Sep 30, 17 P50.81/$ P50.24/$ Dec 31, 16 P49.72/$ P47.50/$ Sep 30, 16 P48.50/$ P46.96/$ Forward Bookings As of Nov 6, 2017, 3-month forward bookings are at 27% of total available seats. Available seats are up 15% YOY USDPHP Closing Rates Data source: Bloomberg 12

13 Fleet Expansion Ave. fleet age (1) 5.04 years ATR A330 A321 CEO/NEO A319/A320 Current fleet of 61: 36 A320, 2 A319, 8 A330, 8 ATR and 7 ATR Remaining order book of 7 A321 CEO, 32 A321 NEO and 9 ATR For balance of 2017 to 2021: 2 A319 to be sold ATR s exit fleet in A320 for lease return ATR for delivery A321 CEO for delivery in A321 NEO for delivery (1) As of November 6,

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