Corporate Presentation

December 2015
Corporate Presentation 2015
B787 Dreamliner
1
Disclaimer
The material that follows comprises information about Avianca Holdings S.A. (the “Company”) and its subsidiaries, as of the date of the presentation. It has been prepared solely for
informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving legal, tax, investment or other advice to potential
investors. The information presented or contained herein is in summary form and does not purport to be complete. The Company has filed a registration statement (including a prospectus)
with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed
with the SEC for more complete information about the company and this offering.
This presentation is not a prospectus and is not an offer to sell securities. Registration statements relating to the Company’s ADSs and preferred shares have been filed with the Securities and
Exchange Commission, but have not yet become effective. The ADSs may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. The
offering is being made by means of the prospectus only, copies of which may be obtained from the underwriters.
No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, or completeness of this information. Neither the Company
nor any of its affiliates, advisers or representatives accepts any responsibility whatsoever for any loss or damage arising from any information presented or contained in this presentation. The
information presented or contained in this presentation is current as of the date hereof and is subject to change without notice, and its accuracy is not guaranteed. Neither the Company nor
any of its affiliates, advisers or representatives makes any undertaking to update any such information subsequent to the date hereof.
This presentation contains forward-looking statements, which are based upon the Company and/or its management’s current expectations and projections about future events. When used in
this presentation, the words “believe,” “anticipate,” “intend,” “estimate,” “expect,” “should,” “may” and similar expressions, or the negative of such words and expressions, are intended to
identify forward-looking statements, although not all forward-looking statements contain such words or expressions. Additionally, all information, other than historical facts included in this
presentation is forward-looking information. Such statements and information are subject to a number of risks, uncertainties and assumptions. Forward-looking statements are not guarantees
of future performance and actual results may differ materially from those anticipated due to many factors. As for forward-looking statements that relate to future financial results and other
projections, actual results may be different due to the inherent uncertainty of estimates, forecasts and projections. Because of these uncertainties, potential investors should not rely on these
forward-looking statements. Neither the Company nor any of its affiliates, directors, officers, agents or employees, nor any of the shareholders or initial purchasers shall be liable, in any
event, before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or
for any consequential, special or similar damages.
Certain data in this presentation was obtained from various external sources, and neither the Company nor its affiliates, advisers or representatives has verified such data with independent
sources. Accordingly, neither the Company nor any of its affiliates, advisers or representatives makes any representations as to the accuracy or completeness of that data, and such data
involves risks and uncertainties and is subject to change based on various factors.
In addition to IFRS financials, this presentation includes certain non-IFRS financial measures, including Adjusted EBITDAR, which is commonly used in the airline industry to view operating
results before depreciation, amortization and aircraft operating lease charges, as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and
other asset acquisitions. However, Adjusted EBITDAR should not be considered as an alternative measure to operating profit, as an indicator of operating performance, as an alternative to
operating cash flows or as a measure of the Company’s liquidity. Adjusted EBITDAR as calculated by the Company and as presented in this document may differ materially from similarly titled
measures reported by other companies due to differences in the way these measures are calculated. Adjusted EBITDAR has important limitations as an analytical tool and should not be
considered in isolation from, or as a substitute for an analysis of, the Company’s operating results as reported under IFRS.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or
services of the Company or this proposed offering.
2
2
Avianca at a glance
A leading airline in Latin America
100+ Destinations
5,400 Weekly Departures
3 Hubs:
Bogota, San Salvador and Lima
176 Aircraft
3,4
Average Jet Passenger Aircraft Age of 5.6 Years
26 countries
1
Colombia Domestic1
Intra Home Markets2
Home Markets – N. America2
Home Markets – S. America2
A Star
Alliance
Member
3,4
2012
2013
2014
CAGR
Passengers (mm)
23.1
24.6
26.2
6.5%
ASKs (bn)
36.5
38.8
41.1
6.1%
RPKs (bn)
29.1
31.2
32.6
5.8%
Revenues (US$bn)
$4.3
$4.6
$4.7
4.9%
EBITDAR (US$mm)
$659
$828
$787
9.3%
EBITDAR Margin
15.4% 18.0% 16.7%
-
Source: Company, Aeronáutica Civil de Colombia, and internal data derived from Travelport Marketing Information Data Tapes (“MIDT”)
1 Based on passengers transported during the 12-month period ended December 31, 2014; 2 In 2014. According to internal information Avianca derives from MIDT, the Company believes they are the market leader in terms
of passengers carried on international flights within the Andean region and Central America (home markets), and leader in terms of international air passengers carried from home markets to both North America and South
America; 3 Includes Jet Operative Fleet only; 4 As of September 30th, 2015
3
3
1
Successful combination of Avianca and
TACA, with additional synergies expected
2
Multi-hub network & leadership in growing
Latin American market
3
4
Modern passenger fleet
Diversified sources of revenue
Proven platform for profitable growth
4
4
SUCCESSFUL INTEGRATION
5
B787 Dreamliner
5
Avianca-Taca: an integration plan with significant
profitable growth potential
Avianca’s successful strategy since the February 2010 combination…
Focus on organization
and people
Complementary networks
and fleet
Focus on service and clear
customer strategy
• A single management team was
promptly appointed
• 2 overlapping routes pre merger; 40
new routes since 2010
• “Latin Excellence”
• PMI project management drove
synergy capture
• Multi-hub system provides better
geographic coverage
• Target customer: “Modern Latin”
… is only the first part of a well-defined integration plan
Phase 1: Commercial and Passenger Service Integration
RevenueEnhancing
Initiatives
Star Alliance
Single Loyalty Program
Single Management Team
Year
EBIT Margin
2010
Single
Commercial Code
Single Brand
Revenue
Management
Optimization
Single Web Page
Ancillary
Revenue
Core Systems Migration
Network & Commercial Integration
2011
5.3%
2012
6.6%
LifeMiles
Maximization
2013
2014
8.4%
6.2%
2015
[5.5%-7.5%]
Fleet Interchange
Single Operations
ERP
Management
Intra Hub connectivity
Airport Optimization Model
100% lower fuel benefits
Cost Control Initiatives
CostReduction
Initiatives
5.3%
Phase 2: Operational
6.6%
7,0% -and Administrative
8,7% -Integration
8,0%
9,2%
6
6
6
Avianca’s earnings growth and RASK continue to
outperform those of its closest competitors
2011 – 2014 Net Income1 growth
2011 – 2014 EBITDAR2 growth
14,4%
8,4%
13,1%
6,2%
12,0%
5
2,8%
N.M.
-5,6%
-7,6%
-23,8%
LTM RASK³ (US¢)
LTM RASK³ – CASK4 (US¢)
10,89₵
8,69₵
8.19₵
1,17₵
7,39₵
0,56₵
7,25₵
0,47₵
0,44₵
0,20₵
Source: Avianca, Copa, and Aeromexico as of FY 2014 company filings. Latam and Gol LTM as of FY 2014
Note: LTM metrics as of June 30, 2015, calculated as results from the six months ended June 30, 2015, plus results from the twelve months ended Dec. 31, 2014 less results from the six months ended June. 30, 2015. 1 Net
income adjusted for foreign exchange and derivative instrument expenses; 2 EBITDAR calculated as operating profit plus the sum of aircraft rentals and depreciation, amortization, and impairment; 3 Total operating revenue
per available seat kilometer, or RASK, represents total operating revenue of all business lines divided by available seat kilometers (ASKs); 4 CASK represents operating expenses of all business lines divided by available seat
kilometers (ASKs); CASK considers costs and ASKs of the consolidated business; 5 2011 EBITDAR adjusted for Other operating expenses of approximately US$378mm
7
7
FOOTPRINT
In high growth
Latin American markets
8
8
Avianca’s footprint connects Latin American countries
with robust fundamentals to the world
Comprehensive network in Latin America
Real GDP growth
Average (’06-’13)
Average (’14E-’19E)
3.5x
6,6%
3,8%
Peru
100+
Destinations
4,8%
4,6%
4,3%
4,3%
3,9%
3,7%
3,2%
3,2%
2,5%
1,9%
1,6%
1,3%
Colombia
Ecuador
EI
Salvador
Latin
America
United
States
Growing middle class
2000
2012
2020
Middle class1 is expected to account for
over 50% of the population by 2020
26 Countries
2.5x
1.6x
5,400 Weekly
Departures
31% 41%
26 Million
Passengers
1.3x
78%
51%
1.5x
61%
63%
48% 54%
Peru
Costa Rica
31%
Colombia
56%
37% 47%
EI Salvador
Population (mm)
International
network
Home Markets
2014E
Our home markets have more than 141mm inhabitants
18
16
16
8
6
6
5
4
Chile
Ecuador
Guatemala
Honduras
El Salvador
Nicaragua
Costa Rica
Panama
Home
markets
31
Peru
141
49
Colombia
Regional network in
Central America
124
Mexico
202
Domestic network in
Colombia, Peru, and Ecuador
Brazil



Costa
Rica
Source: Economist Intelligence Unit, the World Bank, and The Brookings Institution
1 According to The Brookings Institution, middle class households with daily expenditures between $10 and $100 per person in purchasing power parity terms
9
9
Latin America’s aviation industry is expected to be one
of the fastest growing markets in coming years
RPK growth (%)
12,9%
ASK growth (%)
2014 Growth
13,9%
15.6%
2015E Growth
2014 Growth
2015E Growth
11,4%
8,5%
7,0%
7,6%
7,7%
6,5%
6,0%
5,5%
5,4%
5,5%
5,1%
5,5%
4,6%
3,7%
2,7%
5,8%
3,5%
3,7%
3,1%
2,2%
1,5%
Middle East Asia Pacific
Latin
America
Europe
Africa
North
America
Middle East Asia Pacific
Latin American & Caribbean load factor
Latin
America
Europe
Africa
North
America
Trips per capita 20141
+13.6%
71,8%
71,6%
70,9%
70,9%
65,7%
70,1%
73,4%
74,9%
76,5%
79,7%
79,3%
79,4%
2,39
Mexico
Peru
0,54
0,81
USA
Ecuador
0,49
UK
0,40
Chile
0,32
Colombia
0,31
Brazil
0,23
Argentina
Avianca
2014
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
1,94
Source: The World Bank, IATA , LACSA, and Boeing, Economist Intelligence Unit
1 Domestic and international trips by all carriers
10
10
Avianca is a market leader in Latin American markets
with strong passenger growth trends
Colombia Domestic1
Market Share in Key Markets
Colombia
1.4%
Others
5.7%
Passenger evolution (mm)
4.5%
Peru
3.1x
16,7
4,1x
10,9
1
12.2%
33,9
57.6%
18.6%
11,0
2,9
7,7
23,0
4,1
2.0
2,1
9,0
2014
2002
2014
8,1
2002
Peru Domestic2
Central America
Ecuador
Others
4.8%
2.2x
1,1x
6.6%
16,7
15,2
13.2%
7,6
3,9
3,2
3
62.7%
12.7%
12,8
14,1
1.9
2,4
2,6
1,3
2010
2014
Domestic
International
2002
3,7
2014
2010 market share:
Central America


1
48,4%
Avianca: 2.7%
LAN: 70.3%
Intra-home markets
50,2%
1
67%
Home markets
to N. America
1
25%
Home markets
to S. America
1
37%
Others
1.4%
Source: Colombian Civil Aviation Authority, Peruvian Civil Aviation Authority, and Ecuadorian Civil Aviation Authority.
Note: Market share based on number of passengers
1 As of August 2015; 2 As of June 2015
11
11
..with new technologies that will bolster the
network Avianca has built
Convert Bogota into the “Super” HUB
Comprehensive network in Latin America
• Increase banks during the Day
 Operate Morning and afternoon banks with
wide body
• Evaluate New Destinations
 Toronto and Boston from BOG
 Europe (Frankfurt)
• Immigration to US from EDR+ Global Entry for
COL, ECU and PE
Create Alternative Banks
• San Salvador Hub
 Operate from CAM, Caribbean and MEX, and
SAM
• Lima Hub
 Connect From the South to MIA, JFK, MEX
and MAD



New destinations to US,
improve competitive position
with other US Carriers
Improve Connectivity
!
!
Strengthen Strategy to
Europe From Bog and Lima
Potential Partnerships in the
south with SKY airlines
Source: Economist Intelligence Unit, the World Bank, and The Brookings Institution
1 According to The Brookings Institution, middle class households with daily expenditures between $10 and $100 per person
in purchasing power parity terms
12
• From Ecuador
 To the central and western US through SAL
(as an option LAX from BOG
• From Medellin, Cali
 To MEX, CAM, US Central and SFO through
SAL
• From Medellin, Cali & Dom Col
 To Lax, US and rest of Europe Through BOG
• From BAQ /CTG
 To CAM, Caribbean, and US Mex Through SAL
• From PERU
 to CAM, US central and SFO through SAL
12
During 2015, we continued to strengthen and
optimize our Network
New Routes
- Bogota – Los Angeles
- Lima – Cancún
- San Andres – San Jose
Incremental Frequencies in Key Markets
International
In order to continue optimizing our network, we made
the following strategic changes in our operation as
follows:
-
We added frequencies from Bogota (BOG) to:
•
London
•
Havana
•
Punta Cana
•
Santo Domingo
…. and from Lima (LIM) to:
•
Punta Cana
Itinerary redesign in our International and Domestic Colombia Network
BOG-HUB: Itinerary redesign in the network which contemplates reducing capacity and
adjusting connection times accordingly with the new realities of El Dorado Airport.
Source: Company Information
13
13
Healthy Load Factors are the result of Avianca’s
network flexibility
Region
3Q2015 ASK
Growth
3Q2015 RPK
Growth
3Q2015
Load Factor
Domestic*
+ 7.8%
+ 12.1%
79.8%
Intra Home Markets1
+ 7.1%
+ 6.5%
76.9%
HM to North
America2
+ 1.4%
+ 0.1%
82.3%
HM to South
America3
+ 6.2%
+ 3.8%
81.9%
Central America &
Caribbean4
7.7%
+ 13.1%
+ 8.8%
70.5%
Home Markets to
Europe
+ 30.5%
+ 30.9%
88.1%
Total
ASK Growth
8.8%
RPK Growth
8.7%
Load Factor
81.3%
*Domestic Market: Colombia, Peru, Ecuador 1 Local Intra-Markets: Colombia, Peru, Ecuador, Salvador, Costa Rica, Guatemala; 2 From Local Markets to North América including México 3 From Colombia, Perú, Ecuador and Costa Rica to Bolivia, Chile, Argentina,
Brazil ,Uruguay and Venezuela, 4 Belize, Cuba Curazao, Republica Dominicana, Panamá, Costa Rica, Guatemala, Honduras, Nicaragua
14
MODERN
Passenger
FLEET
15
15
Avianca continues to streamline its fleet after a
successful fleet optimization process in 2012
2010 – 9 families
A330
2015 – 4 families3
B737
F100
A330
1
B787
A320
B767
MD83
1
1
Regional
E190
E190
A320
1
Turboprop
1,2
B757
Jet passenger operative fleet
average age:
5.6 years
Optimized and more homogeneous fleet


Increased fuel efficiency
Improved technical dispatch
reliability


Reduced crew and staff training costs
Reduced maintenance expenses through unified
spare parts inventories and maintenance processes
1 As of December 31, 2014; 2 Turboprop aircraft used for regional routes and consist of ATR42s, Cessna 208s and ATR72s; 3 Does not include one B767 that operates in Aerounion and four cargo Airbus A300F-B4F
16
16
During 3Q2015 we continued to advance in our fleet
optimization plan
Capacity
3Q2015 Operating Fleet Status
Aircraft Type
Jun-2015
In
Out
Sep-2015
108
+4
-1
111
100/194 pax2
ATR – 72
15
-
-
15
68 pax
Embraer E190
12
-
-
12
96 pax
Airbus A330
10
-
-
10
252 pax
Cessna 208
11
-
-
11
12 Pax
Airbus A330F
5
-
-
5
68 tons
Airbus A300F
4
-
-
4
40 tons
ATR – 42
1
-
-
1
48 pax
Boeing 787
5
-
-
5
250 pax
Boeing 767F
2
-
-
2
53 tons
173
+4
-1
176
Airbus A320 Family1
Total
Total fleet adjusted by operational changes of the E190 Fleet: 172
Source: Company Information
1 The Airbus A320 Family is comprised by 10 A318, 23 A319, 50 A320, 3 A321, 8 A319 sharklets, 10 A320 sharklets and 7 A321 sharklets.
2 A320 Family Seating Capacity: A318: 100pax, A319: 120pax, A320: 150pax, A321: 194pax.
17
An appealing product for our current and
potential customer base
18
18
Avianca has the youngest jet passenger fleet among
Latin American network carriers…
Aircraft Jet Passenger Fleet Age in Years
We believe a young fleet allows us to achieve:


Cost
reductions
Improved range and
network performance

Superior customer
satisfaction
8.4
6.2
6.5
7.2
5.6
Source: Public filings
Note: Avianca’s fleet age as of September 30, 2015; other airlines’ fleet age as of December 31, 2014
19
19
… with a fleet renovation plan underway
Future orders create footprint for higher profitability going forward
2015 2016 2017 2018 2019 2019-24
B-787
3
3
A320s
9
8
A320neo
ATR72
Total
2
3
•
11
17
11
12
10
100
1
13
Fleet CAPEX financing:
Total
133
1
11
13
12
Boeing 787
13
100
~20% Equity and ~80% Debt:
–
Multilateral facilities (ECAS&EXIM): 59%
–
Sale & Lease Back: 41%
Cost reductions
162
A320 Neo
•
A320 Neos: 15% less fuel consumption1
•
Sharklets: Up to 3% cost savings1
•
B787s: More fuel efficient than many similarly sized
airplanes2
Improved range and network performance
A330F
ATR72
•
A320neos provide up to 500nm1,3 of additional range
•
Opportunity to upgage in congested markets
Increased regional capacity
•
ATR72s to replace Fokker 50s
Increased cargo capacity
•
Source: Company, Airbus, and Boeing
1 Comparisons made against the original A320 family
2
According to Boeing
3
A330Fs: 40% more cargo capacity vs. previous cargo
fleet
Nautical miles
20
20
DIVERSIFIED SOURCES
OF
REVENUE
21
Avianca generates the highest percentage of
non-passenger revenues in the region
Non-passenger revenue as % of total revenue
19.8%
17,2%
11,4%
10,9%
3.2%
Avianca’s other business lines
Cargo business
Loyalty program
Logistics business
Airport services,
maintenance services,
and training
Tour provider
Sale of products on
board
Source: Public filings
Note: Aeromexico Gol and Latam LTM as of June 30, 2015, Avianca as of September 30 th, 2015. Calculated as results from the nine months ended September 30, 2015 plus results from the twelve months ended December
31, 2014 less results from the nine months ended September 30, 2014
22
22
Strong Revenue growth accounts for Avianca Cargo´s
robust performance during 3Q2015
Revenues1 – millions
+21.8%
ATKs – millions
475
406
111,9
3Q2014
+17.0%
136,5
3Q2015
RTKs – millions
3Q2014
3Q2015
Load Factor
281
+6.0%
65.2%
59.1%
265
3Q2014
3Q2015
Source: Company information. Does not include Domestic Ecuador and Colombia.
1 Includes consolidated revenues from the cargo operation in Mexico
3Q2014
3Q2015
23
LifeMiles Loyalty Coalition Program
Highlights 3Q2015
•
3Q2015 revenues increased 1.1%* vs 3Q2014
•
421K active cobranded credit cards, an increase
of 25.9% vs. 3Q2014
•
More than 6.3 million members, a 9.9 %
increase vs. 3Q2014
•
81 % Burn-to-Earn ratio, increasing 429bp
QoQ
*Source: Company Information
24
On July 13th Avianca Holdings signed an Investment
Agreement with Advent International
Overview
Value Creation
On July 13, 2015, Avianca Holdings S.A and Advent
International, the largest private equity investor in Latin
America, announced Advent’s acquisition of a 30%
minority stake in LifeMiles B.V for ~ $347.5 million(1)
For Avianca Holdings (AVH):
-
It unlocks value for AVH Shareholders
-
Positive impact on Liquidity and Leverage ratios(2):
-
LifeMiles has been a Thoughtful and Thorough Process
2011
•LM is
established
as a
separate
legal entity
2014
•AVH Board decision
to hire Morgan
Stanley to find
strategic partner
- It would have an estimate reduction of ~0.6x
2014
2012
•Miles and
Seats
Pricing
developed
with Oliver
Wyman
•Key
model
elements
refined
with
McKinsey
2015
• Advent’s
minority
investment in
LifeMiles
Net Adjusted Debt to EBITDAR(3)(4):
-
Cash as percentage of LTM Revenue(3)(5)
-
15.1%
22.4%
For LifeMiles
-
Reinforce management and corporate structure
-
Independent governance
-
Further develop retail coalition program
-
Strengthen home markets and grow in new ones
Deal structure(1)
70%
Advent - with its strong footprint in Latin America,
investment
professionals
and
independent
operating partners - will partner with Avianca to
enhance LifeMiles’ strong competitive position in key
markets and continue to pursue growth
+USD~$347.5M
New Board of Directors:
30%
4 Seats for Avianca Holdings
2 Seats for Advent
1 Independent Member
1. Completion of the transaction is subject to customary closing conditions and is expected to take place in Q3 2015
2. First quarter 2015 ratios, +USD350M in cash, ceteris paribus. 3. As of March 31, 2015.
4.Net Adjusted Debt to EBITDAR= Calculated as net adjusted debt (including capitalized leases at 7.0x) divided by adjusted EBITDAR. 5. Includes ~USD280M of cash in Venezuela.
2011
3Q
to
26
26
Passenger segment overview
Passengers – 000’s
ASKs1 – million
CAGR: 6.4%
26,230
27,898
CAGR: 11.6%
24,625
41,052
43,533
2014
LTM
11.90
10.42
2014
LTM
37.545
23,093
33,136
20,455
26,463
2011
2012
2013
2014
LTM
2011
Load factor2
79.6%
2011
79.6%
2012
2012
2013
Yield3 - US¢
80.5%
2013
79,4%
2014
79.6%
LTM
12.10
12.20
2011
2012
12.40
2013
Source: Company. LTM as of September 30, 2015.
1 Available seat kilometers, or ASKs, represents aircraft seating capacity multiplied by the number of kilometers the seats are flown
2 Load factor represents the percentage of aircraft seating capacity that is actually utilized and is calculated by dividing revenue passenger kilometers (RPKs) by available seat kilometers (ASKs)
3 Yield represents the average amount one passenger pays to fly one kilometer, or passenger revenue divided by revenue passenger kilometers (RPKs)
27
27
Financial and operational performance summary
Revenue – US$mm
CAGR: 5.5%
3,795
RASK1
4,270
4,609
4,702
4,537
2011
2012
2013
2014
LTM
11.9¢
11.5¢
11.7¢
11.5¢
10.5¢
Cost evolution – US$mm
Cost excl. fuel
Aircraft fuel cost
3.988
4.223
4.417
4,268
1.305
1.325
1.346
1,114
2,468
2.468
2,683
2.683
2,898
2.898
3.072
3,072
3,154
2011
2012
2013
2014
LTM
10.8¢
10.9¢
10.9¢
10.7¢
9.8¢
7.0¢
7.3¢
7.5¢
7.5¢
7.3¢
3.592
1.124
CASK2
CASK2 excl. fuel
CAGR : 5.3%
Source: Company. LTM as of September 30, 2015.
Note: All financial information is in accordance with IFRS
1 Total operating revenue per available seat kilometer, or RASK, represents total operating revenue of all business lines divided by available seat kilometers (ASKs); 2 CASK represents operating expenses of all business lines
divided by available seat kilometers (ASKs) and CASK excluding fuel represents operating expenses of all business lines other than fuel divided by available seat kilometers (ASKs). CASK and CASK excluding fuel consider
costs and ASK of the consolidated business
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Financial and operational performance summary
Adjusted EBITDAR1 – US$mm
CAGR: 9.7%
EBITDAR Margin
828
777
820
2012
2013
2014
LTM
15.4%
18.0%
16.5%
18.0%
544
659
2011
14.3%
Net profit excluding FX and derivative charges2 – US$mm
CAGR: 7.9%
236
95
119
2011
2012
120
2013
2014
80
LTM
Source: Company
Note: All financial information is in accordance with IFRS
1 Adjusted EBITDAR calculated as consolidated net profit for the period plus the sum of income tax expense, depreciation, amortization and impairment and aircraft rentals, minus interest expense, minus interest income,
minus derivative instruments, minus foreign exchange, minus one time expenses disclosed during each quarter; 2 Corresponds to net profit excluding foreign exchange and derivative instrument expense
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Passenger traffic continues to grow while Load
Factors improve during 3Q2015
ASKs – millions
RPKs – millions
+8.1%
+8.6%
32,947
30,466
+8.8%
24,180
11,618
+8.7%
10,683
3Q2014
3Q2015
9M2014
3Q2014
9M2015
Yield - US¢
3Q2014
Yield ex-FX 11.9
Source: Company information
9,441
8,689
PAX
11.9
26,262
6,853
3Q2015
9M2014
7,373
19,321
9M2015
20,989
Load Factor
11.9
10.0
3Q2015
9M2014
9M2015
10.5
11.9
10.8
9.5
81.3%
81.3%
3Q2014
3Q2015
79.4%
9M2014
79.7%
9M2015
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Cost saving initiatives continue to materialize
during 3Q2015
Revenues – millions
1,217
CASK1 - US¢
-8.3%
10,74
-17.0%
1,117
8,91
3Q2014
RASK-US¢
11.40
3Q2015
9.60
CASK EX FUEL
CASK EX TRM
222.6
+16.4%
202,5
3Q2014
Margin
16.6%
7.39
10.74
3Q2015
6.67
9.35
EBIT1 - millions
EBITDAR1 – millions
+10.0%
3Q2014
81,8
70,3
3Q2015
19.9%
3Q2014
Margin
5.8%
3Q2015
7.3%
Source: Company Information
1. When indicated the figures exclude one-time expenses: USD1.9M related to a Foreign Object Damage (FOD) caused to one of our aircraft during the quarter and USD7.7M of maintenance provisions for return conditions associated to the update of fee
schedule for our total fleet under operational lease
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Hedging expenses are expected to normalize
overtime
EBIT Evolution – millions
1
Fuel Hedge Expenses
EBIT
18,02
30.2
36.1
113.2
81.8
68.4
30.6
12.30
5.1
EBIT Margin
Adj. EBIT
Margin1
4Q2014
1Q2015
2Q2015
3Q2015
9.11%
6.13%
0.48%
7.32%
4.07%
10.71%
10.40%
9.37%
4Q2015e
• The Company decided to hedge 100% of the expected 2015 fuel consumption -September to December
2015 - at fixed conditions at an average WTI USD$42
• November and December will not have swaps settlements expenses but option premiums
• Normalized hedging expenses under the new call option strategy should range between USD5M to
USD7M per quarter
Source: Company Information
1: Adjusted by fuel hedging expenses related to derivatives that were exercised over the period.
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Debt evolution and amortization
Debt evolution
US$MM
Total Debt
Cash & Cash Equivalents*
Total debt by type (Sep. 2015)
Dec.13
Dec.14
Sep.15
2,265
3,172
3,339
774
650
896
Net Debt¹
1,492
2,522
2,442
Adjusted Net Debt²
3,407
4,617
4,719
Corporate
Debt
13.0%
Aircraft
Debt
68%
Bonds
19.0%
Debt amortization schedule (US$mm)
Aircraft Debt
82
49
Bond
Corporate Debt
147
550
42
57
27
30
30
54
30
262
260
275
257
246
2016
2017
2018
2019
2020
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2015
Current Installments of Long Term Debt + Long Term Debt – Cash*
Current Installments of Long Term Debt + Long Term Debt + (Aircraft Rentals 12M x 7) – Cash*
* Cash: Cash and cash equivalents + Restricted Cash + Available for sale securities + Short Term Certificates of bank deposits (Financial Statements -Note 8) + Long Term Restricted Cash (Financial Statements -Note 11)
1
2
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Solid balance sheet ratios
Cash1 as percentage of revenue
Capitalization ratio2
16.8%
13.8%
2013
2014
14.5%
2013
1,8x
2014
74.0%
2014
3Q 2015
73.7%
3Q 2015
2013
Adjusted EBITDAR – coverage ratio3
2,1x
79.3%
Net Adjusted debt to adjusted EBITDAR4
5,9x
6.0x
2014
3Q2015
4,1x
1,7x
3Q2015
2013
Source: Company
Note: All financial information is in accordance with IFRS
1 Cash at end of period; 2 Capitalization ratio calculated as adjusted net debt (including capitalized leases at 7.0x) divided by equity value plus adjusted net debt; 3 Adjusted EBITDAR coverage ratio calculated as adjusted
EBITDAR divided by the sum of aircraft leases and interest expense; 4 Calculated as net adjusted debt (including capitalized leases at 7.0x) divided by adjusted EBITDAR
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We have also taken the necessary measures to
enhance network profitability
Capacity Downsizing
12 Embraer aircraft will be faced out from fleet.
Currently, reduction of the Embraer fleet operation
is equivalent to grounding 4 aircraft
Fleet Capex reduction by 50%
Of the 11 aircraft scheduled for incorporation during 2016,
5 deliveries have already been postponed, therefore our
total fleet growth by year end 2016 is expected to decrease
by (-1)
Cost Saving Initiatives:
Contention/Reduction of G&A expenses
Incremental productivity savings on the new B787 fleet
Fewer expenses associated to better crew planning and
passenger services compensation (Network optimization)
Itinerary redesign in our International and Domestic
Network
BOG-HUB: Itinerary redesign in the network which contemplates
reducing capacity and adjusting connection times accordingly with
the new realities of El Dorado Airport.
This leads to:
•
•
Capacity reduction of ~4% (2H 2015)
Lighter cost structure: (+) Productivity & (-) Passenger Expenses (-) Fuel Expenses
Source: Company information
Increase in network profitability
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Flight Plan 2015
Outlook FY2015
PAX
6% – 8%
ASK
5% – 7%
78% – 80%
LF
EBIT
%
Source: Company Information
5.5% – 7.5%
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Thank You
Contact Information:
Investor Relations Office
[email protected]
Tel : (57) 1 – 5877700
www.aviancaholdings.com
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Reconciliation for Adjusted EBITDAR
This presentation includes certain references to non-IFRS measures such as our Adjusted EBITDAR and Adjusted EBITDAR margin. Adjusted
EBITDAR represents our consolidated net profit for the year plus the sum of income tax expense, depreciation, amortization and impairment,
aircraft rentals and interest expense, minus interest income, minus derivative instruments, minus foreign exchange. Adjusted EBITDAR is
presented as supplemental information, because we believe it is a useful indicator of our operating performance and is useful in comparing our
operating performance with other companies in the airline industry. However, Adjusted EBITDAR should not be considered in isolation, as a
substitute for net profit determined in accordance with IFRS or as a measure of a company’s profitability. These supplemental financial measures
are not prepared in accordance with IFRS or Colombian GAAP. Accordingly, you are cautioned not to place undue reliance on this information and
should note that Adjusted EBITDAR and Adjusted EBITDAR margin, as calculated by us, may differ materially from similarly titled measures
reported by other companies, including our competitors.
Adjusted EBITDAR is commonly used in the airline industry to view operating results before depreciation, amortization and aircraft operating lease
charges, as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other asset
acquisitions. However, Adjusted EBITDAR should not be considered as an alternative measure to operating profit, as an indicator of operating
performance, as an alternative to operating cash flows or as a measure of our liquidity. Adjusted EBITDAR as calculated by us and as presented in
this presentation may differ materially from similarly titled measures reported by other companies due to differences in the way these measures
are calculated. Adjusted EBITDAR has important limitations as an analytical tool and should not be considered in isolation from, or as a substitute
for an analysis of, our operating results as reported under IFRS or Colombian GAAP. Some of the limitations are:
•
Adjusted EBITDAR does not reflect cash expenditures or future requirements for capital expenditures or contractual commitments;
•
Adjusted EBITDAR does not reflect changes in, or cash requirements for, working capital needs;
•
Adjusted EBITDAR does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on debt;
•
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the
future, and Adjusted EBITDAR does not reflect any cash requirements for such replacements;
•
Adjusted EBITDAR does not reflect expenses related to leases of flight equipment and other related expenses; and
•
other companies may calculate Adjusted EBITDAR or similarly titled measures differently, limiting its usefulness as a comparative measure.
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