EVA AIR 2018 Investor Conference

Transcription

1 EVA AIR 2018 Investor Conference

2 Legal Disclaimer The information contained in this presentation, including all forward-looking information, is subject to change without notice, whether as a result of new information, further events or otherwise, and EVA Airways (the Company ) undertakes no obligation to publicly update or revise the information contained in this presentation. Investors should not regard the above forward-looking information as legally binding but as information subject to change. No guarantees regarding the completeness, accuracy, and reliability of information contained are made explicitly or implicitly. They are not intended to represent complete statement of the Company, industry or future development. 1

3 Outline 2017 Business Results 1. Operating Performance 2. Operating Costs Analysis 3. Financial Risk Management Development Trend of Airline Industry Passenger & Cargo Business Review Market Outlook & Strategies Fleet Major Affiliated Enterprises 2

4 2017 Business Results 3

5 Group Financial Statistics Group Operating Revenue Operating Performance NT$ Million % 163, , % Net Operating Income NT$ Million 8,695 7, % Profit NT$ Million 6,311 3, % Group profit attributable to owners of parent NT$ Million 5,752 3, % Earnings Per Share NT$ % Group Financial Position % Total assets NT$ Million 228, , % Total liabilities NT$ Million 163, , % Total equity NT$ Million 64,209 59, % 4

6 EVA Financial Statistics Operating Performance % Operating Revenue NT$ Million 125, , % Operating Income NT$ Million 5,943 4, % Profit NT$ Million 5,752 3, % Earnings Per Share NT$ % EVA Financial Position % Total assets NT$ Million 201, , % Total liabilities NT$ Million 143, , % Total equity NT$ Million 58,008 53, % 5

7 Operating Costs Analysis Group EVA 100% 50% % 5% 1% 1% 6% 6% 9% 10% 9% 8% 9% 17% 23% 11% 17% 21% 100% 50% Others 7% 7% 1% 1% 8% 8% 11% 12% 11% 9% 11% 13% 16% 15% 7% 9% Commissions Passenger service Landing, parking Lease rental Depreciation and amortization Staff 22% 21% 28% 26% Maintenance 0% 0% Fuel 6

8 Operating Costs Analysis - Fuel Cost Fuel expenditure Fuel average price (SIN JET) % USD/BBL % Fuel consumption thousand/bbl 15,660 14,710 6% Fuel cost NT$ Million 33,129 26,872 23% Fuel hedging expenditure NT$ Million 361 2,007-82% Total fuel cost NT$ Million 33,490 28,879 16% Fuel hedging coverage Year % Coverage % 2018 Less than 10% 7

9 Financial Risk Management-Currency The operating revenue of the Company is mainly from international passenger, cargo and postal revenue. Foreign currency income is sufficient to cover the demand for foreign currency expenditure, which is equivalent to the effect of Natural Hedge. As for extra expense and demand in foreign currency due to time differences, the Company would carry out forward exchange agreement according to the trend of foreign exchange markets to reduce risk. 8

10 Financial Risk Management- Currency of Revenue and Expenditure % REV. EXP. REV. EXP. 4% 5% 13% 4% 1% 13% 4% 1% 2% 4% 3% 2% 2% 2% 6% 6% 50% 32% 47% 33% 46% 43% 42% 43% 42% 0% TWD USD CNY EUR JPY OTHERS 9

11 Financial Risk Management-Cash Flow Analysis (NT$ Million) % Cash and cash equivalents at the beginning of year 37,875 28,891 31% Net cash flows from operating activities 15,942 17,719-10% Net cash flows from investing activities (16,187) (12,371) 31% Net cash flows from financing activities (2,197) 3, % Cash dividends paid (810) (1,158) -30% Net increase (decrease) in cash and cash equivalents (2,442) 8, % Cash and cash equivalents at the end of period 35,433 37,875-6% 10

12 PROFIT/(LOSS) D/E RATIO (TIMES) Profit and Net Debt/Equity Ratio NT$ Million 6,000 6,436 5, ,000 2, , (1,307) -2,

13 Development Trend of Airline Industry 13

14 % ASK Growth Passenger Capacity Trend Global vs. Asia Pacific Capacity worldwide trended upwards at a stable rate since year Asia Pacific posted slightly faster growth than worldwide with similar trend. EVA posted double-digit growth during year , faster than average of worldwide and Asia Pacific E 2018F Global YoY Asia-Pacific YoY BR YoY Source :IATA&AAPA 14

15 % AFTK Growth Cargo Capacity Trend Global vs. Asia Pacific (5.0) (10.0) (3.6) (3.2) (3.4) (2.0) (7.8) (9.9) (7.7) (2.7) (15.0) E 2018F Global YoY Asia-Pacific YoY BR YoY Source :IATA&AAPA Worldwide and Asia Pacific capacity remain similar upward trend. Before 2017, global posted slightly faster growth than Asia Pacific. In line with growing passenger fleet, EVA shrank cargo fleet by plan to reduce capacity that rebound in 2018 with the deployment of 777 freighters. 15

16 bn. USD Financial Result & Forecast Global vs. Asia Pacific bn. USD E 2018F Global Revenue Global Net profit Asia-Pacific Net profit Since 2015, airline industry enjoyed rising growth of profit, US airlines scoop majority of profit. Because of growing capacity and intense competition, Asia airlines profitability is relatively less than the global growth trend. Air fares fluctuate with oil prices. IATA points out that 2015 air fare fell 5% compared with However, the dropping oil price led to a significant reduction in operating costs, and the profit surged during Source :IATA&AAPA 16

17 Airline Industry Development Trend (I) In line with global fleet expansion, both supply and demand grow in passenger and cargo. New generation aircraft model with highly efficient performance, accelerates the development of long-haul direct flights. Deepening airline partnerships to improve competitiveness. Full-service airlines continue to enhance facilities and services to secure premium market. Firstly introduced by EVA in the airline industry, premium economy class becomes the mainstream product. To compete with LCC, full-service airlines incorporate low-cost business model into service lineup. Full-service airlines start providing customer-made ancillary service. Low cost carriers start constructing network, entering long-haul service and building up alliance. 17

18 Airline Industry Development Trend (II) Belly capacity in passenger aircraft posts faster growth and the cargo volume continues to increase. In line with new retail sales model, the share from e-commerce continues to grow. In addition to traditional air cargo service, extended value-added service is provided to meet demand of integrated logistics. Airport automation and self-served services enhance traveling experience. Congestion at major airports is affecting network expansion and operation efficiency. 18

19 Passenger & Cargo Business Review 19

20 Passenger Traffic VS Passenger Revenue (NTD 100M) ASK (100M Kilometer) Passenger Number (10 thousand) % % 436 1,213 1, % 1,007 Yield (NTD) (3.8%) 2.32 Load Factor (%) 78.3% 80.0% (1.7pp) 80.8% 20

21 Passenger Revenue & Share by Region NTD 100 Million 1, % +7.7% 1% 1% 11% % 10% 12% Oceania 10% 12% % 18% 17% Europe S.E. Asia 20% % 20% CN,HK,MO 1% % 39% 39% N. E. Asia America Revenue posted growth of 4.9% in year 2016 and 7.7% in year Year 2017, revenue reached NTD 92.4 billion, ranked the best among Taiwanese carriers. America leads with 39% revenue share, followed by N.E. Asia 20%. 21

22 Passenger Business Overview Transfer passengers to/from N. America and S.E. Asia increase by 21%. Transfer passenger to/from N.E. Asia and S.E. Asia increase by 77% with enhanced frequency. Traffic between Taiwan and Japan, South Korea kept growing, passengers volume increase by 7%. Benefited by visa-free policy, passenger traffic to/from Southeast Asia increases by 20%. Frequency increasing on Brisbane route surges passenger growth of 72%. Influence from terrorist attack and refugee degrades and boosts outbound growth of 32% to Europe. Stable demand on China 1 st tier cities routes with an average load factor above 80%. Launching profitable routes from Taipei Songshan to Chongqin and Tianjin. Ending services to lowly efficient routes, Guam and Surabaya. Passenger yield started to rebound in Q

23 Passenger Network Comparison Region Destination Frequency (Week) Destination Frequency (Week) America Europe Northeast Asia Southeast Asia Hong Kong Macau and China Oceania Remark Suspension:Guam Frequency Increase:San Francisco Chicago Vancouver Toronto Frequency Decrease:New York Frequency Increase:Fukuoka Frequency Decrease:Komatsu Suspension:Surabaya Frequency Increase:Bangkok Frequency Decrease:Kula Lumpur Newly Add: Chongqin (from Songshan Airport) Frequency Increase:Tianjin Frequency Decrease:Harbin Total

24 Freight Traffic VS Cargo Revenue (NTD100M) AFTK (100M kilometer) Cargo Volume (10 thousand ton) % (2.7%) % 62 Yield (NTD) % 7.51 Load Factor (%) 87.9% 82.7% 5.2pp 82.8% 24

25 Cargo Revenue & Share by Region NTD 100 Million % 9% 22% 0% 10% +11.9% 0% 10% 25% Oceania % Europe Asia % 67% 65% America Year 2017, revenue increased by 11.9% YOY owing to the recovery of cargo volume and yield. America leads with an average more than 65% of total revenue share in recent 3 years. Major revenue generated from belly cargo of passenger aircraft with share of 56% (year 2017) vs. 39% (year 2015). 25

26 Cargo Business Overview Operating 13 flights/week to America and 21 flights/week to Asia. Volume and revenue increase by 3.6% and 11.9% respectively while capacity reduces by 2.7% compared to year Both volume and yield soar and load factor exceeds 90% in America routes. Capacity increases by 11.8% with almost full loading in Europe routes. Freight yield rebounds from the bottom and increases by 8.0% YOY. The deployment of Boeing 777 freighter has improved flight dispatch rate and operating efficiency. 26

27 Freighter Network Comparison Region Destination Frequency (Week) Destination Frequency (Week) America Southeast Asia Hong Kong Macau and China Remark Including technical landing station in Anchorage. Total

28 Market Outlook & Strategies 28

29 Passenger Market Outlook Global economic growth forecast has been revised upward to 3.9% in 2018, lifting travel demand. OPEC continues to cut crude oil production, the risk of surging oil price may dilute operating profit. Transfer passenger to/from N. America and S.E. Asia grows steadily. Relatively weak Euro and Pound Sterling encourage growth of European tourism. Traffic between Taiwan and N.E. Asia remains upward trend, charter and extra flights are to be arranged flexibly to meet market demand. Passenger traffic to/from Southeast Asian countries is expected to continue growing owing to visa-free policy. Subject to special cross-strait relationship, flexibility in aircraft type and frequency is arranged accordingly to meet market demand. 29

30 Passenger Market Strategies Enhancing load factor and stabilizing declining yield trend. Responding to market demand, increasing services in San Francisco and Vienna (direct flight), and launching Taoyuan - Chiang Mai operation. Enhancing Star Alliance partnership, sharing resource and reducing operating costs. Flexible fleet dispatching and scheduling to support market changes. Diversified marketing channels and enhanced advertising campaign to increase brand recognition. Continuing to explore time slot in congested Pudong Airport. 30

31 Cargo Market Outlook The long-standing downward trend in air cargo started to rebound from 2017 owing to improved supply and demand. This upward trend is expected to continue in New trade policy promotes American-Made products export and balances trade between Asia and North America. E-commerce, IOT (Internet of Things) and artificial intelligence have become the mainstream in air cargo market. 31

32 Cargo Market Strategies To continue deploying highly efficient Boeing 777 freighters and the 4 th 777 freighter will be received by the end of To strengthen belly cargo sales from passenger aircraft in line with its characteristics of efficiency, frequency and punctuality. To make more efficient use of passenger and cargo network. To enhance sales from high yield products, such as temperature-controlled, courier and express services. To continue collaborating with global logistics company as strategic partner. To adjust freighter services with flexibility in response to the dynamic changes from international trade and moving manufacturing bases. 32

33 Passenger Fleet and Network Frequency/Week Region City Variance North America Europe N.E. Asia S.E. Asia China HK,MO Oceania Total

34 Cargo Fleet and Network Frequency/Week (13 long-haul / 21 short-haul) Region \ period Phase I 1/1~4/30 Phase II 5/1~8/9 Phase III 8/10~12/31 77X (x1) 74Y (x4) 77X (x2) 74Y (x3) 77X (x3) 74Y (x2) America (LAX SFO ORD DFW ATL) Greater China (HKG PVG SZX CKG) Asia (Except Greater China) (HAN BKK SIN PEN KIX) Total

35 Fleet 35

36 Fleet (Year 2017) Aircraft Type Owned Leased Total ER A A A ATR F F 5-5 Total Average Passenger Fleet Age 4.2 years 36

37 Fleet Aircraft Type ~ F F ER -1 Continue to deploy highly efficient aircraft to reduce our fleet age and operation cost, meanwhile to enhance overall safety and quality. 37

38 Major Affiliated Enterprises 38

39 Major Affiliated Enterprises Company Name Capital EVA Share % Evergreen Aviation Technologies Corp. NT$ 6.36 Billion 80.0% Evergreen Aviation Precision Corp. NT$ 3.00 Billion 40.0% Evergreen Air Cargo Services Corp. NT$ 1.20 Billion 60.6% Evergreen Sky Catering Corp. NT$ 1.21 Billion 49.8% Evergreen Airline Services Corp. NT$ 0.51 Billion 56.3% EVA Flight Training Academy US$ 20 Million 100.0% 39

40 Major Affiliated Enterprises (I) Evergreen Aviation Technologies Corp. Provide aircraft maintenance, engine refurbishment and component repair procurement services. 4 th Hangar operated and New Engine Shop was under construction in 2017, with revenue increased by 23% YOY. World top 10 MRO (Maintenance Repair & Overhaul). Evergreen Aviation Precision Corp. Aerospace parts manufacturing and assembling service provider. Receive order of GE engine PP20 components and Boeing 767 Rigid Cargo Barriers. Evergreen Air Cargo Services Corp. Provide air cargo import, export, and transfer of goods, clearance and warehousing services. Handling capacity reached a record high of 670,000 tons with market share of 30.2% in

41 Major Affiliated Enterprises (II) Evergreen Sky Catering Corp. Provide in-flight meal service in Taoyuan and Taipei airport. Year 2017, number of meal service reached million, up 10%. 2 nd factory is expected to operate in the second quarter of 2018 with the daily supply of meals up to 60,000 servings. Evergreen Airline Services Corp. Provide ground handling services at Taoyuan, Taipei, Kaohsiung and Taichung airports. Year 2017, ground handling operation reached 73,324 aircrafts, up 9.7%. New laundry factory is expected to operate in the second quarter of EVA Flight Training Academy May 2013, established in California, with 9 brand new training aircrafts. Stylish training facilities with capability of training 80 cadets per year. Training for other airlines pilot in addition to self-trained pilot. 41

42 Thank You Q & A 42