Agenda. Introduction Christine Ourmières-Widener. Financial Review Ian Milne. Performance Update & Outlook Christine Ourmières-Widener

Transcription

1 1

2 Agenda Introduction Christine Ourmières-Widener Financial Review Ian Milne Performance Update & Outlook Christine Ourmières-Widener 2

3 Strategy of regional connectivity is working Important to UK economy, connecting businesses and people Key component of international links, connecting long-haul fights especially outside of London An increasing recognition as a significant contributor to the profitability of long-haul carriers Unique brand with strong regional customer base Growing codeshare/interlining with long-haul carriers Increased interest from legacy carriers in further cooperation Political pressure pushing for connectivity to the regions, especially into LHR 3

4 Sustainable Business Improvement Plan NETWORK, FLEET & REVENUE OPTIMISATION SALES AND MARKETING TO DRIVE REVENUE GROWTH OPERATIONAL EXCELLENCE ORGANISATIONAL EXCELLENCE TECHNOLOGY FIT FOR FLYBE COST IMPROVEMENT PROGRAMME

5 Mar-17 Mar-18 Mar-19 Mar-20 Target by Long-term early FY21 Fleet control - Q400 remains backbone of Flybe s fleet Reduction in fleet size allowing cancellation of unprofitable routes Q400 E175 E195 ATR72 Right-sizing the fleet driving the promised gains in RPS, load factors and yield 5

6 6 Financial review

7 2017/18 full year - financial summary SBIP commercial strategy delivering strong load factors and unit revenues Costs impacted by FX, one-offs and investments in performance improvements Further focus on costs as capacity declines Adjusted loss before tax * of 20.5m Reported loss after tax 9.4m Year end gross cash of 95m and net debt 59.1m * Excluding US loan revaluations 7

8 FY18 Group financial summary Group revenue 6.4% increase in revenue Metrics per seat Flybe UK 10.1% increase in passenger revenue 10.9% increase in operating costs including fuel * 7.9% increase in operating costs including fuel (constant currency) * Group Profit and loss 20.5m adjusted loss before tax * * 9.4m reported loss before tax 9.4m reported loss after tax Balance sheet Net assets of 93.1m, net debt 59.1m and gross cash of 95.0m * Excluding E195 onerous lease provisions and impairment of related assets * * Adjusted loss before tax is before revaluation gains or losses on USD aircraft loans 8

9 Performance in line with expectations 2017/ /17 YOY change m m m Flybe UK (16.8) (5.8) (11.0) FAS (0.3) Group costs (5.5) (4.3) (1.2) Adjusted loss before tax, USD loan revaluations and aircraft onerous leases (19.2) (6.7) (12.5) Aircraft onerous leases (1.3) (28.6) 27.3 Adjusted loss before tax and USD loan revaluations (20.5) (35.3) 14.8 Revaluation on USD loans 11.1 (13.2) 24.3 Reported loss before tax (9.4) (48.5) 39.1 Tax charge 0.0 (6.8) 6.8 Loss after tax (9.4) (55.3) 45.9 EBITDAR * loss per share (basic), pence * (4.5) (26.3) * EBITDAR and loss per share has been calculated including the E195 onerous lease provisions and impairment of related assets

10 9.1% passenger revenue growth offset by lower other revenue YOY % 2017/ /17 YOY change change m m m m Passenger revenue White Label revenue Revenue from other activities (4.1) (17.6) FAS revenue (third party) (10.8) (34.0) Revenue % 10

11 Yields and load factors up 2017/ /17 YOY % change Seats, m % Passengers, m % Load factor, % 75.6% 69.6% 6 ppt Average passenger sector length, km % Passenger yield (unit) % Sectors (000) % 2017/ /17 YOY % change per seat Passenger revenue % Other revenue, incl. white label % Total Flybe UK revenue % 11

12 m Group adjusted PBT bridge * 20.0 Includes LHR (10.0) (20.0) (30.0) (40.0) Driven by a 8.7 reduction in the YOY USD hedging 20.6 gain (7.8) (6.7) (2.2) Yield 4.3 up Fuel 1.4% price up (10.3) $92 per (6.9) tonne (14.4) (20.0) 21.0 Capacity down 0.9% and load factor up 6.0 ppts Investment drives TDR improvement (12.3) PY bonus release, IT onerous contract & adverse weather impact (19.2) (50.0) FY 2016/17 Adj. PBT FX including hedging Price Fuel hedge Volume / load factor Yield Airport Handbacks developments & other TDR investment Cost initiatives FY 2017/18 Adj. PBT before one offs One offs FY 2017/18 Adj. PBT * Excluding E195 onerous lease provisions and impairment of related assets 12

13 Flybe UK - cost per seat up 10.9%* 7.9% at constant currency* FY18 Investment in TDR and airport development (1.00) (0.55) (1.75) (0.75) (0.32) (0.38) (0.62) 0.25 (0.98) (1.48) FY 2016/17 CPS FX FY 2016/17 Inflation / Fuel price Hedge benefit Pax loads White label Line maint. Airport Handbacks development & TDR investment Fleet growth Cost initiatives FY 2017/18 CPS before one off items One offs FY 2017/18 CPS * Excluding E195 onerous lease provisions and impairment of related assets 13

14 Hedging protection into FY19 Fuel Average market price in US Dollar was up 19.1% at USD % reduction in blended price at USD499 per metric tonne USD 2.7% improvement in average market rate Blended rate decreased by 4.7% at USD1.38 Outlook Fuel: 91% of anticipated fuel requirements at USD573 per tonne for FY19 44% of anticipated fuel requirements for H1 FY20 at USD725 per tonne Currency 81% of anticipated USD requirements at USD for FY19 49% of anticipated USD requirements for H1 FY20 at USD At close of business on 14 June

15 E195 non-cash onerous lease provision E195s now treated as a separate cash generating unit following discussion with our auditors Unavoidable losses of E195s until their operating leases end Based on estimated future losses each year Reflected as prior year adjustment The 9 E195 leave over next 2 years, 3 in FY19, 5 in FY20 and the last in Q1 of FY / /17 Onerous E195 lease provision and impairment of related assets 1.3m 28.6m Year end assessment of E195 onerous lease provision Losses to FY m 24.9m

16 Year end balance sheet 95.0m gross cash (2017: 124.3m) 59.1m of net debt (2017 net debt: 64.0m), all debt asset backed 93.1m net assets (2017: 124.9m) Pension scheme already closed Triennial actuarial valuation completed; 12.2m deficit to be paid by 31 st March 2027 Deficit recovery contributions now 0.83m p.a ( 0.5m in 2016/17) IAS19 pension deficit reduced by 2.0m to 18.8m 16

17 95m of gross cash at year-end 17

18 59m of net debt at year-end 18

19 2017/18 full year - financial summary SBIP commercial strategy delivering strong load factors and unit revenues Costs impacted by FX, one-offs and investments in performance improvements Further focus on costs as capacity declines Adjusted loss before tax * of 20.5m Reported loss after tax 9.4m Year end gross cash of 95m and net debt 59.1m. * Excluding US loan revaluations 19

20 20 Performance update

21 SBIP focus for 2018/19 The SBIP pillars Sales and marketing to drive revenue growth Success factors Revenue per seat Passenger revenue per scheduled seat Cost improvement programme Cost per seat Unit cost per scheduled seat Operational excellence On time performance Departures within 15 minutes Network fleet and revenue optimisation Net promoter score Willingness of customers to recommend Flybe Organisational excellence Employee engagement Engagement rating Technology fit for Flybe e-fly New digital platform 21

22 SBIP focus The SBIP pillars Sales and marketing to drive revenue growth Success factors Revenue per seat Passenger revenue per scheduled seat Cost improvement programme Operational excellence Network fleet and revenue optimisation Organisational excellence Technology fit for Flybe 22

23 Capacity reduction driving unit revenue growth Capacity, RPS and load factor growth YoY 20% 15% 10% 5% 0% -5% -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016/ /18 Capacity Load factor Revenue per seat 23

24 RPS growth driven by both yield and load factor Yield Load factor ppts RPS % % / / / / / /18 24

25 Sales and marketing to drive revenue growth Brand refresh, focus on regional ties Close to you Greatly improved customer experience 25

26 SBIP focus The SBIP pillars Success factors Sales and marketing to drive revenue growth Cost improvement programme Cost per seat Unit cost per scheduled seat Operational excellence Network fleet and revenue optimisation Organisational excellence Technology fit for Flybe 26

27 Cost remains an area of focus Headwinds from sterling weakness and increasing fuel prices; strong hedging in both 2017/18 and 2018/19, but average prices will continue to rise. Focus areas include Maintenance organisation/supply chain/systems/processes.. Aircraft costs including operating lease cost reductions All supplier negotiations airports/ground handlers Cost initiatives underway for longer term savings as capacity falls 27

28 SBIP focus The SBIP pillars Success factors Sales and marketing to drive revenue growth Cost improvement programme Operational excellence On time performance Departures within 15 minutes Network fleet and revenue optimisation Organisational excellence Technology fit for Flybe 28

29 Four levers to drive operational excellence Deliver aircraft on time and ready to fly Get the first flight away on time Network schedule for successful delivery Turn the aircraft on time 29

30 TDR investment improving operational performance TDR 99.0% 99.1% 22.3% Tech. cancellations Maintenance investment improving technical performance 20.8% Restructuring of Flybe Aviation Services into Single Engineering Organisation is well underway 2016/ /18 30

31 SBIP focus The SBIP pillars Success factors Sales and marketing to drive revenue growth Cost improvement programme Operational excellence Network fleet and revenue optimisation Net promoter score Willingness of customers to recommend Flybe Organisational excellence Technology fit for Flybe 31

32 Mar-17 Mar-18 Mar-19 Mar-20 Target by Long-term early FY21 Fleet control - Q400 remains backbone of Flybe s fleet Reduction in fleet size allowing cancellation of unprofitable routes Q400 E175 E195 ATR72 32

33 Network actions driving performance 11 new Flybe operated routes launched including new LHR operation Cancelled operation on 14 unprofitable routes First year of partnership with Eastern required adjustments, relationship remains strong Ongoing network and scheduling actions to improve performance 33

34 Strategy of regional connectivity is working Franchise Airport kite partnerships Codeshare and interline White Label Selected examples: 34

35 SBIP focus The SBIP pillars Success factors Sales and marketing to drive revenue growth Cost improvement programme Operational excellence Network fleet and revenue optimisation Organisational excellence Employee engagement Engagement rating Technology fit for Flybe e-fly New digital platform to improve performance, revenue, customer insights, booking experience and customer satisfaction 35

36 Success is dependent on evolution of culture Engaged and motivated employees requirement for success Diagnostic underway, supported by company-wide engagement survey Results used to develop threeyear culture programme, requiring a sustained commitment 36

37 SBIP focus The SBIP pillars Success factors Sales and marketing to drive revenue growth Cost improvement programme Operational excellence Network fleet and revenue optimisation Organisational excellence Technology fit for Flybe e-fly New digital platform 37

38 Digital transformation underway Foundations for improvements to efficiency and customer experience Phase 1 includes replacement of core systems including airport and reservation systems Migration of the first airport to the new system completed On track for completion of core systems replacement H2 2018/19 38

39 Summary Right-sizing the fleet is driving load factors up, improving yields and revenue per seat Regional connectivity expanding through diverse portfolio of partners Sustainable Business Improvement Plan focused on five KPIs Investment in operational excellence and technology Increased focus on sustainable costs improvement 39

40 Outlook for 2018/19 Continue the fleet and capacity reduction Headwinds from fuel price and sterling volatility Continued growth in load factor and revenue per seat Organisation-wide focus on sustainable cost base Emphasis on improving operational performance Delivery of E-fly in second half of the year Strong 2018/19 H1 forward position* 8.6% planned decrease in seat capacity Yields increase by +0.3% 10.9% increase in revenue per seat 54% of seats sold compared to 49% last year * At close of business on 15 June

41 Q&A