bogi nils bogason | cfo icelandair group · hedging policy to reduce short term volatility 4 months...
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FIT FOR THE FUTURE BOGI NILS BOGASON | CFO ICELANDAIR GROUP
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TRAFFIC UPDATE
HIGH SEASON
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TRAFFIC DATA JULY AND AUGUST INTERNATIONAL FLIGHTS
CAPACITY UP BY 76% SINCE 2010
1,389 1,656
1,848 2,062
2,449
86.2% 85.3% 85.2% 85.9% 86.0%
0.0 %
10. 0%
20. 0%
30. 0%
40. 0%
50. 0%
60. 0%
70. 0%
80. 0%
90. 0%
100 .0%
0
500
1,0 00
1,5 00
2,0 00
2,5 00
3,0 00
2010 2011 2012 2013 2014
ASK'000
LF
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TRAFFIC DATA JULY AND AUGUST REGIONAL AND GREENLAND FLIGHTS
CAPACITY DOWN BY 7% - ICELANDIC PAX DOWN BY 12% SINCE 2012
442 442 474
409 411
69.8% 73.1%
68.5% 73.6% 73.1%
-20.0%
80. 0%
0
100
200
300
400
500
600
2010 2011 2012 2013 2014
ASK'000
LF
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TRAFFIC DATA JULY AND AUGUST CAPACITY – CHARTER
CAPACITY DECREASED BY 39% SINCE 2010- MAINLY CARGO
6,178 6,178 5,511
4,936
3,754
94%
93%
91%
95%
89%
80%
90%
100 %
0
1,0 00
2,0 00
3,0 00
4,0 00
5,0 00
6,0 00
7,0 00
8,0 00
9,0 00
10, 000
2010 2011 2012 2013 2014
Sold Block Hours
Fleet Utilization
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TRAFFIC DATA JULY AND AUGUST HOTELS
CAPACITY UP BY 20% - UTILIZATION 5.9% HIGHER
644 699 741 760 774
82.8% 83.9% 88.2% 88.7% 88.7%
0.0 %
100 .0%
(100)
100
300
500
700
900
1,1 00
2010 2011 2012 2013 2014
AvailableHotel RoomNights
Occupancy
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FINANCIAL
DEVELOPMENT
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SUCCESSFUL OPERATIONS
Total revenues and EBITDA USD million | 2010-LTM Q414
681
791
899
1,023 1,073
96 85 110 144 141
2010 2011 2012 2013 LTM Q214
Total revenues
EBITDA
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OUR SUBSIDIARIES REVENUE DEVELOPMENT
Total revenues per subsidiary USD million | 2010-2013
0
100
200
300
400
500
600
700
800
900
Icelandair Air Iceland IcelandairHotels
IcelandairCargo
Fjárvakur Iceland Travel Vita Loftleiðir IcelandairGroundServices
2010
2013
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STRONG CASH FLOW FROM OPERATIONS
Cash from operating activities and uses of cash USD million | 2010 – LTM Q214
LTM = Last Twelve Months
41
125
96 114
86
45
49
45 33 81
6 12
19
128 117
167
231
251
2010 2011 2012 2013 LTM Q214
2010 2011 2012 2013LTMQ214Gross Capex Dept payments Dividend Cash from operations
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296.8
60.2
15.6
283.3
1.1.2010 30.06.2014
Interest bearing debt
Cash and cash equivalents and marketabel securities
FINANCIAL LEVERAGE SYSTEMATICALLY MANAGED DOWNWARDS
1.2 x
1.4 x
0.9 x
0.6 x
0.3 x
2010 2011 2012 2013 LTM Q214
Interest bearing debt and available cash USD million | 1.1.2010 vs. 30.06.2014 Debt / EBITDAR
LTM = Last Twelve Months
-281.2 +267.7
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FINANCIAL STRATEGY
AND HEDGING POLICY
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On average have three
months cost as liquidity
30% can be in the form
of unused credit lines
Flexibility around
operational
assets
Equity ratio
no less than
35%
The goal is to pay
20-40% of annual
net profit as a dividend
MAINTAIN STRONG BALANCE SHEET
FINANCIAL STRATEGY
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HEDGING POLICY TO REDUCE SHORT TERM VOLATILITY
4 months
to end of
December 2014
Fuel
49%
949-999
EUR/USD
60%
1.372
12 months
to end of
August 2015
Fuel
30%
939-999
EUR/USD
47%
1.366
Full year 2015
January - December
Fuel
14%
939-987
EUR/USD
42%
1.366
Fuel
ǀ 40 – 60%
ǀ Minimum 9 months, maximum 12 months
FX
ǀ 40 – 80%
ǀ Minimum 9 months, maximum 12 months
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INVESTMENTS
AND FUNDING
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BOEING 737 MAX 16 FIRM ORDERS – TOTAL INVESTMENT 1.6 BILLION USD BASED ON LIST PRICES
Delivery schedule 2018 - 2021
2018 2019 2020 2021
MAX 8
MAX 9
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2009 2010 2011 2012 2013
31% 29%
$77
$62
$68
$104
$95
HISTORICAL INDUSTRY AIRCRAFT FINANCING REAL DEMAND SUPPORTED BY ADEQUATE FUNDING CAPACITY
30% 31% 23%
28% 24%
25%
21% 28% 14%
11%
10%
7% 5% 20%
26%
25%
25%
25%
11% 14%
5%
Cash Capital Markets Bank Debt Export Credit Lessor Self Fund
RJ Export Credit Manufacturer Tax Equity
Source: Boeing
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$125 $129
$135 $139
2013 2014 2015 2016 2017 2018
INDUSTRY AIRCRAFT DELIVERY FINANCE OUTLOOK INCREASING DEMAND AND DELIVERIES DRIVING FINANCING REQUIREMENTS
28%
23%
25%
5%
14%
$104
$112
18%
25%
9%
22%
23%
Source:
Cash Capital Markets Bank Debt Export Credit Lessor Self Fund
RJ Export Credit Manufacturer Tax Equity
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THE TOP 50 AIRLINES AIRFINANCE JOURNAL – THE AIRLINE ANALYST
Source: Airfinance Journal
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THE TOP 50 AIRLINES AIRFINANCE JOURNAL – THE AIRLINE ANALYST
Source: Airfinance Journal
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HISTORICAL AIRCRAFT FINANCING COSTS
LIBOR
0%
5%
10%
15%
20%
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Range of All-in Cost
for Aircraft Financing
Record Low
Levels
Source: Boeing
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ICELANDAIR GROUP
Reykjavík Airport
101 Reykjavík Iceland
Tel: +354 50 50 300
Fax: +354 50 50 389
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