Air Berlin PLC 13 th August 2015 Analyst Call 2nd Quarter 2015
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Executive Summary Q2, as announced, a transitional quarter positive outlook for the second half 2015 Revenue RASK growth in a competitive environment resulting from capacity reductions and further optimization of the new Revenue Management System Further revenue optimization, e.g. from the new ticket fare system, implemented in Q2 Costs Advantages of the low oil price offset by fuel hedging and a high US Dollar exposure In addition, further charges due to retraining of crew and additional number of aicraft in the transition phase to a single narrow body fleet Outlook Yield and RASK continue to grow within the next periods Further network and product optimization ongoing Further result improvements on operating level in second half of the year 3
A. 2nd Quarter 2015 4
Q2 performance influenced by tactical capacity cuts and currency Total revenue [EURm] EBITDAR & EBIT [EURm] Net result [EURm] Q2 2014-7% Q2 2015 1,146.4 1,071.0-1% 152.0 150.0-131% 8.6-535% -6.9-15.9-37.5 Total revenue EBITDAR EBIT Net result Flight revenue deterioration due to capacity cuts Ground and other services incl. ancillaries improved versus prior year EBITDAR on prior year level EBIT below prior year with increased lease costs due to strong USD and one time effects from fleet harmonization to Airbus FX changes including hedges had a negative impact on EBITDAR and EBIT due to weakened EUR rate whilst fuel price reduction leads to improvements Net result in Q2 2015 decreased more than EBIT Positive hedging valuation swings in prior year 5
Significant capacity cuts drive revenue development Q2 2014 Q2 2015 Capacity & Guests [m] ASK [bn] RPK [bn] Load factor [%] 11.05-8.0% 10.16 8.77-6.3% 8.23 16.01-7.1% 14.87 13.19-7.6% 12.19 82.4-0.5% 82.0 Capacity Guests ASK RPK Loadfactor Remarks Continuous network restructuring and capacity adjustments results in overall capacity reduction Load factor based on RPK vs ASK down compared to previous year Shift of Easter holidays in March this year and Lufthansa strikes in Q2 2014 had a material impact 6
RASK slightly ahead of prior year Yield [ ], Revenue and Cost 1 per ASK [ c.] Cost 1 per ASK incl. fuel [EUR ct] 120.52-1.7% 118.50 Q2 2014 Q2 2015 7.20 +1.5% 7.31 7.16 0.6% 7.20 5.47 2.7% 5.62 Fuel 1.73 1.69 Yield R/ASK C/ASK excl. fuel Airport charges 1.43 1.49 Remarks Total revenue per ASK on 2014 level with yield per PAX slightly below Costs per ASK increase in personnel expenses and leasing & depreciation comes from one-off effects resulting from capacity reduction and fleet harmonization Leasing & depreciation Navigation & Air transportation tax Personnel 0.99 0.71 0.84 1.12 0.74 0.96 Higher airport charges due to a focused network on high value airports Other incl. OOR 1.50 1.31 Corresponding personnel costs have risen by a direct employee takeover from NIKI, tariff developments and nonrecurring expenses Q2 2014 Q2 2015 (1) Cost on EBIT level including other operating result 7
Postive currency and derivatives effects in 2014 did not repeat Interest expense Currency & derivatives effects Total income tax result Q2 2014 Q2 2015 31.8-101% +9% 6.0-116% -0.4-1.0-22.3-20.3 Breakdown of financial result EURm 8
B. First Half year 2015 9
Operational result improved despite headwinds from FX Total revenue [EURm] EBITDAR & EBIT [EURm] Net result [EURm] 1,908.2-2% 1,864.6 Jan-Jun 14 Jan-Jun 15 +18% 114.9 136.0 +7% -23% -189.7-175.8-201.2-247.6 Total revenue EBITDAR EBIT Net result Flight revenue deterioration due to capacity cuts partly compensated by positive yield and load development Ground and other services incl. ancillaries improved versus prior year EBITDAR improvement driven by positive development of Q1 2015 and stable Q2 2015 versus prior year EBIT affected by increased rental costs driven by oneoff effects due to ongoing fleet harmonization FX changes including hedges had a negative impact on EBITDAR and EBIT due to weakened EUR rate whilst fuel price reduction leads to improvements Net result in Q2 2015 decreased more than EBIT Positive hedging valuation swings in prior year 10
Capacity cuts drive higher load factor Jan-Jun 14 Jan-Jun 15 Capacity & Passengers [m] ASK [bn] RPK [bn] Load factor [%] 18.84-6.4% 17.64 14.63-4.1% 14.04 27.66-3.5% 26.69-3.0% 22.72 22.04 82.2 0.5% 82.6 Capacity Guests ASK RPK Loadfactor Remarks Ongoing network improvements and capacity adjustments results in overall capacity reduction, especially due to strong capacity cuts in 2 nd quarter Strong load factor improvement in Q1 2015 (+1.7 % pt) partly offset by Q2 2015 development leads to a slight improvement in load factor over the first half of 2015 Shift from shorter to longer routes results in less ASK reduction than capacity 11
RASK growth stronger than CASK growth Yield [ ], Revenue and Cost 1 per ASK [ c.] Cost 1 per ASK incl. fuel [EUR ct] 119.00 0.7% 119.81 Jan-Jun 14 Jan-Jun 15 7.59 +0.8% 7.64 6.90 1.2% 6.99 5.83 2.3% 5.97 Fuel 1.76 1.68 Yield R/ASK C/ASK excl. fuel Airport charges 1.39 1.47 Remarks Total revenue per ASK improves due to positive yield and load factor development Leasing & depreciation Navigation & Air transportation tax 1.10 0.71 1.17 0.73 Costs per ASK increase in personnel expenses and leasing & depreciation due to one-off effects resulting from ongoing capacity reduction and fleet harmonization Personnel 0.94 1.06 Higher airport charges caused by a focused network on high value airports Other incl. OOR 1.69 1.53 Fuel price decrease could partly offset CASK deterioration Jan-Jun 14 Jan-Jun 15 (1) Cost on EBIT level including other operating result 12
Currency & derivatives effects burden financial result in H1 2015 Interest expense Currency & derivatives effects Total income tax result Jan-Jun 14 Jan-Jun 15-214.1% -10.2% 22.2 9.6-88.1% 1.1-25.3-43.3-47.7 Breakdown of financial result [EURm] 13
Consolidated balance sheet structure B/S as of Dec 31 st, 2014 B/S as of June 30 st, 2015 1,863 1,790 Fixed assets 47% 122% Debt Fixed assets 48% 132% Debt Other current assets Liquid assets 39% 14% -22% Equity Other current assets Liquid assets 40% 12% -32% Equity Net debt: 804 Net debt: 767 EUR m 14
Hedging Hedging profile [%] 1) FX rate development [EUR/USD] 1) 100% 95 85 1,40 D O L L A R 80% 60% 40% 20% 1,35 1,30 1,25 1,20 1,15 1,10 0% Jul Aug Sep Oct Nov Dec 1,05 Jul Aug Sep Oct Nov Dec Hedge Percentage 2015 Hedge Percentage 2014 Current Hedge Rate 2015 Hedge Rate 2014 Market / Fwd Rate 100% 80 85 1.000 Price development [USD/t] 1), 2) F U E L 80% 60% 40% 20% 900 800 700 600 0% Jul Aug Sep Oct Nov Dec 500 Jul Aug Sep Oct Nov Dec Hedge Percentage 2015 Hedge Percentage 2014 Current Hedge Price 2015 Hedge Price 2014 Market / Fwd price 1) as of 06 August 2015 resp. 01 August 2014, 2) excl. differentials 15
C. Update on the realignment 16
Realignment of airberlin business model 1st Phase until September 2015 2nd Phase until March 2016 3rd Phase from April 2016 Management & Leadership Key performance indicators (KPIs) and incentives already introduced at the top three management Realignment of corporate structures along the airline value chain to drive performance Review of network strategy and planning, scheduling, revenue management and sales channel management WIP Staff engagement (myceo etc.) Market Segmentation & Capacity adjustments Short-term capacity optimisation from March to June 2015 (minus 5 %) implemented Yield improvements through new revenue management strategy Realigning of different sales channels and increase of partner airline market shares Increase of market shares in strategic target markets and airberlin hubs and new partnerships of withdrawal from non-strategic markets focus on our core business Realignment cost structure following capacity adjustments Profitability & Growth Developing multi-hub strategy as well as new long-haul destinations Deciding on platform growth strategy as well as outsourcing of non-core activities Improving IT infrastructure as the basis for future growth 17
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