avianca holdings s.a. 2q 2013 earnings results · operating revenues reached usd $ 1.1 billion, an...
TRANSCRIPT
Avianca Holdings S.A. 2Q 2013 Earnings Results
Disclaimer
This presentation contains certain forward-looking statements. Such forward-looking statements
involve a certain degree of risk and uncertainty with respect to the Company’s business, financial
results, trends, strategy and projections, and are based on assumptions, data or methods which,
although considered reasonable by the Company, may turn out to be incorrect, or may not be possible
to realize. The Company gives no assurance that expectations disclosed in this presentation will be
confirmed. Prospective investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that actual results may
differ materially from those in the forward-looking statements, due to a variety of factors. The
Company specifically disclaims any obligation to update any forward-looking statements, which speak
only for the date they are made.
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Source: Company information
2013 Industry Highlights Environment Capacity worldwide, measured in ASK's, grew 3.9% during the first half of 2013
when compared to the same period in 2012, while traffic (RPK’s) increased 4.8%. As a result, load factor for the industry increased to 79.0%, up 0.8 pp when compared to the same period in 2012
During the first half of 2013 international air travel traffic (RPK’s) in Latin America grew well above the global pace at 8.7%, supported from strong business travel demand
During the first semester of 2013, the number of passengers carried in Latin America grew 6.7% when compared to the same period in 2012. Capacity, measured in ASK’s, increased 5.5% while traffic measured in RPK´s increased 7.0%. As a result the load factor increased to 76.2% from 75.1% in the same period last year
During the first half of 2013, the global freight business experienced a stabilization in the number of tons shipped of 0.1%, while Latin America maintained a stable growth trend of 1.6%.
Fuel Prices
Fuel prices decreased on average 4.6% in the first half of 2013 while for the second quarter of this year prices decreased 6.5% over the same period in 2012
Exchange Rate
The Colombian peso experienced, during the first half of 2013, a depreciation of nearly 9.1%. For the second quarter of this year the peso depreciated 5.3% over the same period in 2012
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Source: ALTA & IATA
Operating revenues reached USD $ 1.1 billion, an increase of approximately 7.6% over the same period of 2012 Operating income (EBIT) for 2Q 2013 was USD $ 35.3 million, an increase of USD$ 23.1 million over the same period of last year. Consequently operating margin increased to 3.2%, up from 1.2% in 2Q 2012
EBITDAR came in at USD $ 144.1 million, a 30.8% increase over the same period of last year. EBITDAR Margin for the quarter rose to 13.0% increasing 2.3 pp over the same period of 2012 The cost per available seat kilometer excluding fuel costs (CASK ex Fuel) decreased 0.5% versus the same period of 2012
Capacity measured in ASK’s increased 8.7%, while passenger traffic measured in RPK’s rose 9.3%, outpacing Latin America and worldwide traffic growth . As a result, the load factor for the quarter increased to 78.2% from 77.7% in the previous year
Passengers carried reached 5.9 million, increasing 9.6% over the same period of 2012.
In the second quarter of 2013 AVIANCA HOLDINGS reached a Net income of USD$ 70.3 million
Source: Company information
2Q 2013 Results Highlights
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Source: Company information
(USD$ Millions) 2Q 2012 2Q 2013 % Var 2Q
2013
% VAR 2Q 2013
(Ex-Items)*
1H 2012 1H 2013 % VAR 1H
2013
% VAR 1H 2013
(Ex-Items)*
Total Operating Revenues 1,027.0 1,105.1 7.6% 7.6% 2,078.7 2,223.1 6.9% 6.9%
Passenger 856.3 906.0 5.8% 5.8% 1,738.0 1,843.6 6.1% 6.1%
Cargo and other 170.8 199.1 16.6% 16.6% 340.7 379.6 11.4% 11.4%
Total operating expenses 1,014.9 1,069.9 5.4% 4.7% 1,984.9 2,085.1 5.1% 4.2%
Expenses Excluding Fuel 700.7 757.5 8.1% 7.1% 1,345.0 1,432.9 6.5% 5.3%
Aircraft fuel 314.2 312.4 -0.6% -0.6% 639.9 652.2 1.9% 1.9%
EBIT 12.2 35.3 +100% +100% 93.9 138.0 47.0% 74.2%
EBIT Margin 1.2% 3.2% +2 pp +2.64 pp 4.5% 6.2% +1.69 pp +2.45 pp
Net Income -44.8 70.3 +100% +100% -45.7 147.5 +100% +100%
Net Margin -4.4% 6.4% +10.7 pp +9.8 pp -2.20% 6.64% +8.83 pp +8.83 pp
EBITDAR 110.2 144.1 30.8% 38.2% 289.8 344.9 19.0% 25.7%
EBITDAR Margin 10.7% 13.0% +2.3 pp +2.9 pp 13.9% 15.5% +1.57 pp +2.33 pp
Avianca Holdings consolidated operating revenues increased by 7.6%, leveraged by a strong growth 9.6% in passengers carried
Total Operating Revenues grew 7.6% while Total Operating expenses grew 5.4%. Excluding special items Total Operating expenses increased only 4.7%
Operating profit grew by USD$ 23 million over the same period of 2012, while operating margin increased by 2.2 pp reaching 6.2%
Net income for the second quarter of 2012 includes a foreign exchange loss of USD$ 27.3 million and net income for the same period in 2013 includes a profit of USD$ 71.2 million profit
EBIT = Operating Income, EBITDAR = earnings before interest, tax, depreciation, amortization and aircraft rentals
*
• Ex-Items: Excluding Gain/Loss on sale of property and equipment
Source: Company information
2Q 2013 Earnings Results Summary
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1,014.8
1,066.9
1,018.7
1,069.9
3.80
16.11
8.03
6.78 6.10
6.03 4.74
3.49 0.75 -1.87 -1.89 2.93
Total Costs Highlights (Numbers expressed in million of USD$)
Excluding special items total costs increased in USD $48.3 Million
• *Ex-Items: Excluding Gain/Loss on sale of property and equipment • Others Include: Air Traffic & Flight Operation
2Q 2013 Earnings Results
+4.7%
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Source: Company information
41.70
69.49
37.90
72.42
-3.80
49.70
28.30 1.89 1.87 16.10
8.00
6.78
6.09 6.03
3.49 0.75 2.93
EBITDA Highlights (Numbers expressed in million of USD$)
Excluding special items EBITDA increased in USD$ 34.5 Million
+91.3%
2Q 2013 Earnings Results
7
Source: Company information
* Cash and Cash equivalents under IFRS standards expressed in USD$ Millions
2Q 2013 Cash Balance
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En el 4T 2012 se tuvieron los
siguientes movimientos de caja:
Adicionalmente, la compañía a Septiembre de 2012 contaba con:
*
Cash US$MM Cash/Revenue LTM US$MM
Concepto US$ Millones
Generación de caja operativa 128.8
Pago de Pensiones (8.5)
Pago de Intereses (18.1)
Pago de PDP's (40.1)
Pago de deuda (56.1)
Otros (39.6)
Total (33.6)
Concepto US$ Millones
Depósitos para compra de flota 266.5
Depósito para mantenimiento aeronaves 151.4
Depósito para arrendamiento aeronaves 106.2
Total 524.1
AVH Cash Position highlights the following
variations for the 2nd Q13:
AVH has made the following cash deposits:
511
466425
630
13.4%10.9%
9.8%
14.3%
2011 2012 1Q-2013 2Q-2013
Deposits US$ Millions
PDP's 359.5
Maintenance Reserves 161.5
Security Deposits for Operating Leases 37.1
Total 558.1
Variations US$ Millions
Net Financing Activities 295
Operating Cash Flow 81
Asset Sales 13
Interests (17)
Others (19)
PDP's (32)
Dividend Payments (37)
Debt Payments (79)
Total 205
Source: Company information
During the second quarter of 2013 realized hedge losses summed up to USD$ 1.0 million, which accounted for 27% of the gallons hedged.
Hedged 164 million gallons, approximately 31% of the expected volume to be consumed over the next 12 months
The average hedge price per gallon stands at USD$ 2.92 / gallon
Source: Company information
2Q 2013 Fuel Hedging Strategy
33% 31% 25%
17% 1%
1%
14% 15% 17%
14%
0%
10%
20%
30%
40%
50%
3Q 2013 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014
FUEL HEDGE (% Consumption)
H.O SWAP H.O CALL OPT
46%
43%
31%
1% 1%
47%
INSTRUMENT 3Q -13 4Q -13 1Q -14 2Q -14 3Q -14 4Q -14
H.O SWAP (USD) 2,887 2,909 2,921 2,892 2,799 2,790
H.O CALL OPT (USD) 2,933 3,010 2,981 2,854 0 0
* Hedge in Heating Oil
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Capacity (ASK’s millions) Traffic RPK’s (millions) Load Factor
2Q 2012 2Q 2013
9.3% 8.7%
Yield (USD$)* RASK (USD$)
-3.2% -1.0%
CASK - Exfuel (USD$)
-0,5%
77.7%
78.2% 9,506
8,748
7,435
6,801
12.6 12.2 11.7 11.6
8.01 7.97
0.5 pp
Capacity (ASK’s millions) Traffic (RPK’s millions) Load Factor
Yield (USD$) TRASK (USD$) CASK* - Exfuel (USD$)
2Q 2013 Passenger Business Highlights
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QoQ Total CASK decreased 3.0%
*Accounting Cask includes all business segments (Passenger, Cargo & Other) Source: Company information
+22.8%
+4.4%
International Network
Domestic Network Colombia – Peru - Ecuador
Regional Network Central America
3 HUBS
Bogota
San Salvador
Lima
3 Complementary
Focus Cities
San Jose
Quito
Guayaquil
Avianca routes Destinations HUBS Complementary Focus Cities
Map Conventions
Guayaquil
Pereira
Armenia Ibague
Bucaramanga
La Paz
Santa Cruz de la Sierra
Waspan
Puerto Cabezas
Blue Field
Corn Island
San Carlos
San Juan del Norte
La Fortuna/Arenal
Bonanza
Sluna Rosita
Tamarindo
Tambor
Quepos/Manuel Antonio
Bahía Draka
Palmar Sur
Puerto Jimenez Golfito
Taca Regional routes Destinations HUBS Complementary Focus Cities
Map Conventions
South America
North America
Europe (Spain)
Total ASK Growth
8.7%
Map Conventions
Avianca,Taca, Aerogal routes Destinations HUBS Complementary Focus Cities
Map Conventions
Intra Home Markets
Domestic
CAM & CAR
+1.05%
+0.41%
18.7%
17.8%
Diversified Capacity Growth
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Source: Company information
+14.9%
+13.5%
+18.3%
+8.85%
International Network
Domestic Network Colombia – Peru - Ecuador
Regional Network Central America
3 HUBS
Bogota
San Salvador
Lima
3 Complementary
Focus Cities
San Jose
Quito
Guayaquil
Avianca routes Destinations HUBS Complementary Focus Cities
Map Conventions
Guayaquil
Pereira
Armenia Ibague
Bucaramanga
La Paz
Santa Cruz de la Sierra
Waspan
Puerto Cabezas
Blue Field
Corn Island
San Carlos
San Juan del Norte
La Fortuna/Arenal
Bonanza
Sluna Rosita
Tamarindo
Tambor
Quepos/Manuel Antonio
Bahía Draka
Palmar Sur
Puerto Jimenez Golfito
Taca Regional routes Destinations HUBS Complementary Focus Cities
Map Conventions
South America
North America
Europe (Spain)
Total RPK Growth
9.3%
Map Conventions
Avianca,Taca, Aerogal routes Destinations HUBS Complementary Focus Cities
Map Conventions
Intra Home Markets
Domestic
CAM & CAR
+2.8%
+7.8%
Diversified Traffic Growth
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Source: Company information
71.5%
International Network
Domestic Network Colombia – Peru - Ecuador
Regional Network Central America
3 HUBS
Bogota
San Salvador
Lima
3 Complementary
Focus Cities
San Jose
Quito
Guayaquil
Avianca routes Destinations HUBS Complementary Focus Cities
Map Conventions
Guayaquil
Pereira
Armenia Ibague
Bucaramanga
La Paz
Santa Cruz de la Sierra
Waspan
Puerto Cabezas
Blue Field
Corn Island
San Carlos
San Juan del Norte
La Fortuna/Arenal
Bonanza
Sluna Rosita
Tamarindo
Tambor
Quepos/Manuel Antonio
Bahía Draka
Palmar Sur
Puerto Jimenez Golfito
Taca Regional routes Destinations HUBS Complementary Focus Cities
Map Conventions
South America
North America
Europe (Spain)
Total LF Growth
78.2%
Map Conventions
Avianca,Taca, Aerogal routes Destinations HUBS Complementary Focus Cities
Map Conventions
Intra Home Markets
Domestic
CAM & CAR
82.8%
76.0%
87.5%
75.3%
68.7%
Network optimization
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Source: Company information
3.027.120847.760
510.760
485.937
468.297
294.626
165.744 131.188
Domestic Colombia 14,7%
North America 3,91%
CAM/CAR 5,86%
South America 6,02%
Intra Home Markets 13,08%
Domestic Peru 23,68%
Domestic Ecuador -34,38%
Europe 20,41%
+ 9.6%
2Q 2012 Vs 2Q 2013 Pax Growth
Diversified Passenger Growth
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Source: Company information
60,21%
12,90%
29,88%
55,48%
15,12%*
20,81%
Colombia Peru Ecuador
Sustained leadership in the Colombian Domestic Market with a 55.48% market share as of June 30th 2013
During the first semester of 2013 the Colombian domestic market grew by more than 25% in number of passengers
Domestic Market Share by Country
2Q 2012
2Q 2013
A market leader in the Andean Region and Central America
*Data as of March 30th 2013
15
Source: Company information
Internacional Markets Share by Region
The integration of Avianca Holdings route network has consolidated the company's leadership and passenger traffic between its home markets, generating significant connectivity in the Americas. This has enabled:
An increase in passenger traffic in domestic markets
Enhanced service from our home markets to international destinations
To efficiently occupy the capacity incorporated in the different markets
Offer a wider choice of possibilities to connect two destinations in the region
2Q 2012
2Q 2013
A market leader in the Andean Region and Central America
68,75%
28,09%
44,48%
29,48%
68,22%
27,40%
43,14%
30,83%
Home Markets Home Markets toNAM
Home Markets toSAM
Home Markets toSpain
16
Source: Company information
As the company implements its cargo fleet renovation plan it will reorganize and optimize its current cargo network. As the company does not do segment reporting; it is assumed that due to the increase in capacity the CATK has been reduced during the first half of 2013
2Q Cargo Business Highlights
Capacity (ATK’s Thousands) Shipped Tons
Load Factor Average Fare (USD$)
1Q 2012
1Q 2013
6.9% 10.9%
237,756
263,785
67.9% 63.8%
4.1pp
1.10 0,98
-11.6%
60,365
66,330
Capacity (ATK´s Thousands) Tons Shipped
Load Factor Average Fare ($USD)
17
Source: Company information
2Q 2013 Highlights
Increased frequencies from and to the Bogota hub as part of the network optimization plan on the following routes:
• 1F BOGSMR 7F BOGRCH • 14F BOGCTG 6F BGAMDE • 7F BAQBOG 4F BOGMAD • 14F BOGCLO 3F BOGPUJ • 10F BOGMDE 1F BOGHAV • 4F BOGCUC 3F BOGGYE
Implemented the second frequency to Madrid (Spain) from the Bogota Hub.
During the second quarter of 2012 the company launched its single commercial brand: Avianca
Avianca S.A was recognized by Skytrax as the airline with the best onboard and airport service in South America
LifeMiles was chosen as the Frequent Flyer Program with the Best Redemption Ability in the Americas, by one of the most recognized awards in the industry: the Freddie Awards.
In Line with the fleet renewal plan, the company continues to incorporate new aircraft to its operation:
2 A320 equipped with sharklets
During the second quarter the company took delivery of the first ATR 72
FLEET
NETWORK
MILESTONES
Source: Company information
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In Summary
During the second quarter the company has continued with its leadership and consolidation strategy in Latin America
The company continues to expand its passenger network, while outperforming the growth in traffic in Latin America and worldwide
The cost reducing initiatives implemented so far have resulted into relevant margin expansion :
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• Operating income increasing by USD$ 23.1 million over the same quarter of last year and USD$ 138.0 million over the first semester of 2012
• Operating margin of 3.2%, up from 1.2% in 2Q 2012 and increasing to 6.2% in the first half 2013 over the same period last year
• EBITDAR Margin of 13.0% (+2.3 pp) and 15.5% (+1.6pp) in the first quarter and in the first half of 2013 over the same period of 2012 respectively
Source: Company information
Outlook 2013
ASK 8% - 10%
10 - 12%
77% - 79%
EBIT % 6.5% - 7.5%
LF
PAX
The results obtained on this second quarter are in line with the Companies full-year 2013 outlook
Source: Company information
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Thank You
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