briefing investors analysts
TRANSCRIPT
22 November 2021
Analysts & Investors Briefing
Aviation Group
AirAsia Group Berhad3Q2021 FINANCIAL
RESULTS
Legal Disclaimer
Information contained in our presentation is intended solely for your personal reference and is strictly confidential. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the Company. Neither we nor our advisors make any representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein.
In addition, the information contains projections and forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company’s assumptions are correct. Actual results may differ materially from those projected.
This presentation is strictly not to be distributed without the explicit consent of Company’s management under any circumstances.
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AirAsia Group is an investment holding company with a portfolio of synergistic travel and lifestyle businesses
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Last valuation received: US300 million
World’s Best LCC for 12 consecutive years
Financial Services
Last valuation received: US1 billion
High quality data Technology
Delivering best value at lowest cost
Leading brand
MRO
Logistics
RedBeat Ventures
Aviation Group
3Q2021 Key HighlightsAirAsia established as an investment holding company, with a portfolio of synergistic travel and lifestyle businesses● Independent management at each portfolio company, allowing flexibility to further drive innovation and
productivity, based on same AirAsia DNA of low cost and high efficiency
Digital on full speed● Digital businesses contributed 60% to Group’s revenue this quarter● airasia Super App reported revenue growth of 7% YoY. airasia ride closed its first month of launching with >40k
bookings. 400% higher transaction volume MoM for Travel vertical in Sept driven by Flights, Hotels and SNAP● Opened new cities for airasia food such as Kota Bharu, Melaka, Bangkok, Ipoh, Kota Kinabalu● BigPay grew user base by 28% YoY● Teleport revenue tripled YoY with strategic growth in cargo network. Delivery volume grew 53% YoY
Cost containment measures contributed positively● 3Q21 fixed costs reduced 23% YoY● Airline staff costs down 38% YoY due to headcount rationalisation & attrition● Zero fuel swap losses since 2Q21
Cash balance increased this quarter due to funding and strict control of cost
Airline foresees a V-shaped rebound in air travel in near future● Active capacity management contributed to healthy Group load factor of 75% in October● September and October saw month-on-month improvements as world opens up● Already seeing huge pent-up demand translating into higher seats sold● MAA, IAA, PAA, TAA operating more than 400 flights daily 4
3Q2021 Financial HighlightsGroup Revenue declined 37% YoY, 20% QoQ:
● Digital businesses revenue grew 142% YoY and contributed 60% to Group’s revenue ● Teleport revenue tripled YoY due to strategic growth of cargo network● airasia super app revenue grew 7% YoY while BigPay revenue grew 26% YoY● Aviation revenue down 70% YoY, 37% QoQ due to lockdown and restrictions in key
operating markets during the quarter. Nonetheless, RASK up by 48% to 21.83 sen● Collectively, the four airlines operated 11% of pre-Covid domestic capacity during the
quarter. Limited international operations in 3Q21.
Adjusted group EBITDA of negative RM281 million widened:● Fixed costs reduced 23% YoY ● 65% reduction in airline opex YoY insufficient to cover drop in aviation revenue of 70% YoY.
Zero fuel swap loss since 2Q21● Airasia superapp reported a negative EBITDA of RM79.2 million for 3Q21, primarily driven
by Navitaire minimum guarantee fee, investment cost to accelerate expansion of our ecosystem including food delivery platform and unified search and additional cost from Gojek Thailand acquisition
● BigPay's improving cost of sales was offset by higher opex, as it embarked on investing in user acquisition and team growth, with the majority of QoQ change being from unrealised FX losses and one off costs from its fundraise in August
Adjusted loss before tax widened 3% YoY:● Wider adjusted EBITDA loss offsetted by lower depreciation of right of use assets
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Adjusted Group EBITDA (RM m)*
Adjusted Group PBT (RM m)*
Revenue (RM m)
*Adjusted Group EBITDA and PBT excluded one-off items incurred during the respective quarter, including gains, impairments, fuel swap losses and forex gains/losses. Zero one-off items in 3Q21 vs one-offs reported in 3Q20: RM393 million gain on disposal of PPE, RM444 million impairment of receivables and RM281 million fuel swap losses
Fixed costs reduced by 23% YoY, cash position improved by higher funding3Q21 Fixed Costs effectively reduced by 23% YoY, 15% QoQ
● Airline staff costs declined 38% YoY, 4% QoQ due to headcount rationalisation, voluntary salary cuts and attrition
● Other opex reduced by 11% YoY, 33% QoQ due to strict cost control measures implemented for marketing, rental and IT spend
Cash balance improved QoQ in 3Q21
● Net cash movement was an average increase of RM55 million per month. Higher average funding per month in 3Q21 due to cash proceeds from Fly Leasing and funds from convertible loan note into BigPay
● Operating cash flow burn averaging RM68 million per month in 3Q21, lower YoY but slightly higher QoQ due to lower sales
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Non-variable maintenance
Other opex
Staff
(RM mil)
Average funding/ asset
disposals received per
month
Average net cash burn per
month
(RM mil)
Fixed costs reduced since 1Q20 due to effective cost
management
Average cash burn on a down trend
Aviation: Pent-up demand boosting travel in 4QHealthy Group load factor at 67% in 3Q21, up 1 ppt YoY, attributed to active capacity management. Load factor improved to 75% in October
PAA outperformed other entities in 3Q21, posting 167% YoY growth in number of passengers carried, while recording a solid load factor of 77%. Overall a subdued third quarter for MAA, IAA, TAA.
MAA posted improvements in September, number of passengers carried more than doubled MoM compared to August and resulted in 13 ppts increase in load factor, driven by the commencement of Langkawi travel bubble. Nationwide interstate and selected international travel authorised from 11 Oct onwards resulted in a surge in bookings
Gradual resumption in flight routes for MAA, IAA, PAA, TAA following easing of travel restrictions across our operating markets.
We aim to fly 60% of pre-covid domestic flights by Dec 2021 from 11% in 3Q21.
Significant increase in seats sold for near-term travel due to pent-up demand & year-end holiday season. Seeing a strong resurgence in the visiting friends and relatives (VFR) as well as the leisure and spontaneous travel markets first
Robust short-haul business model, lean operations, strong dominance in Asean coupled with pent-up demand will ensure our quick recovery upon relaxation of travel restrictions
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Load Factor (%)
Domestic Capacity (% of 2019)
Gradual pick up starting Sept as travel restrictions eased
Oct-21
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July First cargo-on-seat conversion for Teleport
August Foreign AMO approval for Base Maintenance (Indonesia)
August First Ka-band Wifi installation for airasia wifi
Sept Base maintenance approval for A320neo (Malaysia)
Operational Updates
Existing Customers
EBITDA positive of RM6mn in 3Q21
In the midst of fundraising exercise, expects completion in 2Q22
3Q21 Performance & Outlook
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Revenue tripled YoY attributed to strategic growth in cargo network
Delivery volume grew 53% YoY and 49% QoQ to 310k in 3Q21
Achieved margin improvement for the quarter via active optimisation of the cargo network
Gradual return of passenger flights expected to boost cargo performance
Expects to complete first fundraising by end 4Q21
3Q21 Performance & Outlook
Teleport’s dedicated 737-800 Freighter officially launched in Nov
Fully containerised main deck and large volume capacity of 21T
Accelerate Teleport’s shift from pure air freight logistics to a complete multi-modal operator
Stationed in Bangkok, able to reach key markets including Hong Kong, Shanghai, Chennai, Mumbai
Acquired through a multi-year agreement with K-Mile Asia, Thailand’s express freight airline
Nov. ● Launched , a gamechanger for fully integrated contactless travel and lifestyle experiences
● Passengers can book airasia ride on flights equipped with airasia wifi
July. ● Acquired Gojek’s Thailand operations● Launched airasia food and airasia fresh
in Kota Kinabalu● Launched airasia fresh in Singapore
Aug. ● Launched airasia ride in Klang Valley● airasia food expanded to Johor Bahru,
Melaka & Bangkok● airasia fresh revamped as airasia grocer● airasia money offers digital car
insurance
Oct.● airasia ride expanded to Penang● Strengthened OTA positioning by
partnering with >700 international airline flying to >3000 destinations and promoting >300,000 hotels
Sep. ● airasia ride expanded to Langkawi
Revenue increased 7% YoY
airasia ride closed its first month with >40k bookings. airasia ride achieved a daily peak of 8k bookings on 16 Nov
Average MAU increased 40% QoQ driven by food and ride offerings
Month-on-month showed 400% higher transaction volume for Travel vertical in September driven by Flights, Hotels and SNAP
airasia superapp reported a negative EBITDA of RM79.2 million for 3Q21, primarily driven by Navitaire minimum guarantee fee, investment cost to accelerate expansion of our ecosystem including food delivery platform and unified search and additional cost from Gojek Thailand acquisition
3Q21 Performance & Outlook
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UpdatesOfficially applied for a digital bank license in Malaysia with a consortium of strategic partners
Secured up to US$100 million in investment led by SK Group to further establish as the leading challenger bank in Southeast Asia
Total user base grew 28% YoY
New users increased by 169% YoY
Better performance in payments and remittance revenue streams as spending shifted internationally with higher take rates
BigPay's improving cost of sales was offset by higher opex, as it embarked on investing in user acquisition and team growth, with the majority of QoQ change being from unrealised FX losses and one off costs from its fundraise in August
3Q21 Performance
New services to be launched in the coming months - include responsible credit, microinsurance, savings and an offering for mSMEs and freelancers
Sufficient liquidity in 2021 and 2022 supported by solid funding progress
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Funding plan from debt and equity:
● Private Placement - Raised RM336.5 million via two tranches in 1Q21● Danajamin scheme - Have received approval from Danajamin for 80% guaranteed loan of up to
RM500 million under the Danajamin Prihatin Guarantee Scheme● Rights issue - Shareholders’ approval obtained on 11 Nov 2021 at EGM ● BigPay investment - Secured investment of up to US$100 million● Foreign loan of US$150 million approved; US$100 million received in November● Others - Positive ongoing discussions for raising new capital for Aviation Group, Asia Digital
Engineering, Teleport and airasia super app
Monetisation and other corporate exercises:
● Completed two batches of lease restructuring in 3Q21. Expects to complete full exercise by end 2021
● Received US$57 million proceeds from Fly Leasing shares● Completed SLB of 1 engine & sale of 1 engine in 1Q21, after SLBs of 7 engines in 3Q20● Completed acquisition of Gojek businesses in Thailand, for a share swap consideration, which
valued airasia superapp at US$1 billion● Acquired online food delivery platform Delivereat valued at US$9.8 million, which valued Teleport
at US$300 million
3Q2021 Airline Performance
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MAA IAA PAA
Key Indicators 3Q20 3Q21 % 3Q20 3Q21 % 3Q20 3Q21 %
Passengers Carried 1,774,963 155,668 ▼ -91% 73,701 15,332 ▼ -79% 67,760 180,971 ▲ 167%
Capacity 2,610,682 254,890 ▼ -90% 150,660 38,880 ▼ -74% 121,320 235,080 ▲ 94%
Load Factor (%) 68% 61% ▼ -7ppts 49% 39% ▼ -10ppts 56% 77% ▲ 21ppts
RPK (million) 1,678 143 ▼ -91% 90 18 ▼ -80% 62 131 ▲ 111%
ASK (million) 2,422 239 ▼ -90% 180 40 ▼ -78% 114 181 ▲ 59%
Fuel consumed (Barrels) 387,094 40,363 ▼ -90% 26,207 8,823 ▼ -66% 28,994 36,332 ▲ 25%
RASK (US cents) 3.4 5.1 ▲ 49% 1.7 5.2 ▲ 201% 7.8 5.3 ▼ -32%
CASK (US cents) 9.3 54.2 ▲ 483% 30.2 100.0 ▲ 232% 48.2 19.5 ▼ -60%
CASK Ex-Fuel (US cents) 7.0 52.8 ▲ 654% 21.8 98.0 ▲ 350% 36.5 17.6 ▼ -52%
Fleet downsizing in line with demand and maximising utilisation
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Our network plans are continuously revised to reflect the latest recovery timeline following the ongoing pandemic impact
MAA, TAA, IAA, PAA 2021 20221 Jan 210 208Net Fleet Movement -2 -231 Dec 208 206Note: 2 third party leases to rejoin AirAsia Group’s fleet in 4Q21Fleet plan is subject to changesUpdated fleet plan as of 16 November 2021