ALAFCO Aviation Lease And Finance Co. KSCC

Transcription

1 Information MEMORANDUM ALAFCO Aviation Lease And Finance Co. KSCC Mr. Abulqasim Abdulghaffar Redha Acting Chief Executive Officer The 5th Forum for Listed Companies and Analysts Kuwait 20 May 2013

2 Why Invest in ALAFCO? The four pillars of investing in ALAFCO: Growth Potential of The Aircraft Leasing Market The business model of ALAFCO Prudent management Positioning of ALAFCO for the future 1

3 Growth Potential of The Aircraft Leasing Market 2

4 Aircraft Leasing Market Source - Boeing The leasing market counties to grow. The share of world fleet on lease is forecast to grow to 50% by

5 Resilience of the Industry source Airbus ALAFCO operates in the air travel industry which is resilient and grows consistently (forecast 4.8% per annum) despite short term adversities. Boeing and Airbus have forecasted that there will be 28 thousands new aircraft deliveries in coming 20 years. 4

6 The Business Model of ALAFCO 5

7 Stable Operating Model Low risk and stable operating model Investors funds not invested in risky investments. Company invests only in young new technology aircraft. Global reach, not dependent on domestic market. Aircraft are movable assets and can be transferred (unlike real estate) to airline customers among any of world regions during times of distress. They are also very liquid and allowing owners to recoup their investment in aircraft by either selling the aircraft as a whole or by breaking it into parts. Air transport is an efficient, safe and the most important mode of transport commanding a 51% share of the global transport market. 6

8 Simplicity ALAFCO specializes in its core business of aircraft leasing and offers the following products: Operating leases Sale & lease back (SLB) Lease management solutions 7

9 Results of Prudent Management 8

10 Achievements ALAFCO key milestones ALAFCO has now successfully operated in the fleet leasing market for over 12 years. During this period, the key performance milestones and highlights are as follows: Grew fleet to 46 owned aircraft and 3 managed aircraft. All of these aircraft are leased to customers All ordered aircraft due for delivery until 2011 have been delivered to customers. Always capable to obtain financing for aircraft even during global financial crises. ALAFCO today has an order book of 117 aircraft. Six A already placed with Thai Airways for 12 years lease. All leases performing as per their contracts. We had Kuwait based Wataniya Airways default on 3 A aircraft leases, but those aircraft have been re-leased to another operator and our losses have been minimized. It can be seen that ALAFCO has developed significant capability to manage the aircraft purchase and fleet leasing process and this is reflected in market confidence as demonstrated by the share price appreciation. 9

11 In million KD Financial Results Revenue Profit Consistently meet or exceed our financial targets Declared dividend every year since listing Positive cash flows Projected to achieve 15% annual growth in profitability 10

12 In million KD Financial Results Total Assets Consistent growth in assets. 11

13 Recent Transactions Sale and leaseback of 2 new B ER with Garuda Indonesia--aircraft will be delivered in June and July Extension of lease for 1 A with Royal Jordanian Airlines for 5 years. Extension of lease for 2 A with Go Air for 3 years. Lease of 1 used A aircraft to Nordwind airlines in Russia. Lease of 4 used B aircraft to Transaero Airlines in Russia. Lease of 2 used A aircraft to Vietjet Air in Vietnam. Sale of 2 B ER aircraft to China Southern. Identified customer for sale of B ER coming off lease at Malaysia Airlines. Prudently manage portfolio to ensure that old aircraft are disposed off at opportune times and off lease aircraft are re-leased to airlines and continue to contribute as revenue earning assets 12

14 Ordered Aircraft by Companies in Middle East Positioning ALAFCO Emirates Airline Qatar Airways Etihad Airways ALAFCO nasair Gulf Air Iraqi Airways Air Arabia Saudia FlyDubai Source - Ascend ALAFCO is a pioneer aircraft leasing company in the middle east. Currently ranked fourth in terms of order aircraft, just after the three government owned carriers; Emirates, Qatar Airways and Etihad. 13

15 Corporate Governance Corporate Governance is a mechanism for monitoring the actions, policies and decisions of corporations. ALAFCO is committed to excellence in corporate governance and maintains clear policies and practices that promote good corporate governance. We are the first Kuwaiti company who complied with the recent Kuwaiti Commercial law by separating the Chairman and the CEO position. We have the highest confidence in our financial reporting, underlying system of internal controls and our people, who are objective in their responsibilities and operate under the highest level of ethical standards. We believe that strengthening the management monitoring functions by inviting outside directors and outside corporate auditors contributes to the strengthening of our corporate governance and that this is appropriate for securing the confidence of shareholders, investors and others. 14

16 Listing On Foreign Exchange Feasibility study of listing on foreign exchange on-going Issuers from a wide variety of geographies have successfully raised international equity recently. A secondary listing on foreign exchange would enhance ALAFCO s visibility, increase research coverage and thus provide access to a wider international investor base. A listing on foreign exchange would maximize investor interest given the presence of similar listed companies and the strong investor knowledge of the airline leasing sector. Public lessors have performed strongly in 2012 as strength of credit markets lowered the cost of debt and gave investors confidence to invest in equity markets. 15

17 Positioning ALAFCO for the Future 16

18 New Aircraft Order Book 85 A320NEO 20 B737-8MAX 12 A XWB Positioning the company for sustained long term growth by ordering 117 new aircraft from Boeing and Airbus to lease to global airlines The company plans to acquire up to 15 narrow-body aircraft per year from through Sale and Leaseback. ALAFCO targets a portfolio of over 100 owned aircraft by end of decade. 17

19 Strategic Aircraft Orders New Technology Aircraft Ordered by Lessors Source - Ascend * Ordered aircraft include: A320NEO, A350XWB, B7373MAX and B787 ALAFCO ranked fourth among the major lessors around the world in terms of embracing technology 18

20 Targeting Airlines 2012 vs RPK ASK PLF FTK AFTK FLF Africa 7.2% 6.5% 67.7% 7.1% 9.2% 24.7% Asia-Pacific 6.0% 5.2% 77.5% -5.5% -2.4% 56.1% Europe 5.1% 2.9% 79.6% -2.9% 0.3% 47.2% Latin America 9.5% 7.5% 76.1% -1.2% 4.9% 38.3% Middle East 15.2% 12.4% 77.5% 14.7% 11.4% 44.8% North America 1.1% 0.1% 82.9% -0.5% -2.0% 35.0% Total Market 5.3% 3.9% 79.1% -1.5% 0.2% 45.2% Source - IATA Global passenger traffic grew 5.3% in 2012 over 2011 with 3.9% increase in capacity. Middle East leads passenger traffic growth and capacity growth in 2012 with a growth of 15.2%. Asia-Pacific and Middle East regions are expected to be the home of the most ALAFCO s ordered aircraft. 19

21 Airline Profitability By Region Net Profits, $ billion Global commercial airlines E 2013F Africa Asia-Pacific Europe Latin America Middle East North America Global Source - IATA Estimated profit in 2012 was US $7.6 billion. Profit forecast for 2013 is US $10.6 billion. Asia-Pacific has the highest profit over last four years. Profit forecast of Asia-Pacific for 2013 is US $4.2 billion, representing 40% of industry profit. 20

22 New Technology Aircraft Introduced During The Last Three Years A320NEO Airbus A320neo (new engine option) is a new family of aircraft that was derived from the popular A320ceo (current engine option) and is expected to be introduced in A320neo is offered with two options of new engines; PW1000G Geared Turbofan (GTF) from Pratt & Whitney and LEAP-X from CFM International. A320neo has an overall fuel burn reduction up to 15% and maintenance cost improvement up to 20%. B737MAX Boeing B737 MAX is a new family of aircraft that was developed based on the successful Boeing 737 Next Generation (NG) platform and is expected to be introduced in MAX refers to maximum efficiency, reliability and passenger appeal. The B737 MAX is powered by a new more efficient engine, the LEAP-1B manufactured by CFM International and it has an overall fuel burn reduction of up to 13% with operating cost improvements up by 8% compared to the B737 NG. B777X This year, Boeing intends to launch B777X aircraft, which is a largest B777 aircraft version, and is expected to be introduced by the end of this decade. The B777 family of aircraft is the best selling wide-body aircraft in the world. Its performance capability will be greater than today B777 aircraft. 21

23 Questions?

24 Thank You