SHAPING A SUSTAINABLE FUTURE

Transcription

1 SHAPING A SUSTAINABLE FUTURE Full Year Results Year ended 31 March 2017 Analyst and Investor Presentation 8 June 2017

2 Agenda Introduction Christine Ourmieres-Widener Financial Review Philip de Klerk Performance Review and Priorities Christine Ourmieres-Widener Summary and Q&A 2

3 Introduction PASSIONATE ABOUT THE AIRLINE INDUSTRY TRULY PASSIONATE ABOUT FLYBE Tremendous opportunities for Flybe to connect and engage with communities and to establish a reputation for excellence in serving our customers

4 Financial review

5 2016/17 Group financial summary Revenue 13.4% increase in Group revenue Metrics per seat 3.6% reduction in passenger revenue 5.2% reduction in costs including fuel (constant currency) 2.0% increase in costs including fuel Profit & loss (6.7)m adjusted loss before tax 1 (19.9)m reported loss before tax (26.7)m reported loss after tax Robust balance sheet 153.5m net assets, (64.0)m net debt and 124.3m total cash 1. Adjusted profit before tax is before revaluation gains or losses on USD aircraft loans

6 Results reflect FX, challenging environment and additional capacity 2015/ /17 YOY change m m m Flybe UK 8.8 (5.8) (14.7) FAS Group costs (5.8) (4.3) 1.6 Adjusted profit/(loss) before tax 5.5 (6.7) (12.2) Revaluation losses on USD loans (2.8) (13.2) (10.4) Reported profit/(loss) before tax 2.7 (19.9) (22.6) Tax credit/(charge) 4.1 (6.8)* (10.9) Profit/(loss) after tax 6.8 (26.7) (33.5) EBITDAR Earnings/(loss) per share (basic), pence 3.1 (12.3) (15.4) *Tax charge of 6.8m as we decided not to recognise the full tax asset due to the increase in the quantum of capital allowances

7 Group revenue increased by 13.4% 2015/16 m 2016/17 m YOY % change Passenger revenue % White Label revenue Revenue from other activities FAS revenue (third party) Revenue %

8 Stable yield but lower load factor 2015/ /17 YOY % change Seats, m % Passengers, m % Load factor, % 72.6% 69.6% -3.0ppts Average passenger sector length, km % Passenger Yield % per seat 2015/ /17 YOY % change Passenger revenue % Other revenue, incl. White Label Total Flybe UK revenue %

9 Cost per seat up 2%, but 5.2% reduction at constant currency 58 (0.47) Change in FX rates YoY (4.00) (0.46) Mostly increase in White Label staff costs More owned aircraft 0.85 (0.14) Including maintenance cost m Mainly E195 flying Hedging benefits Fuel price saving /16 Op. cost per seat FX impact 2015/16 Constant currency Staff Costs Airport, Enroute & Ground Ops Aircraft Rental Charges Other Operating gains/(losses) Other 2016/17 Op. cost excl. fuel Fuel 2016/17 Op. cost per seat

10 Lower oil price benefit, but currency headwind Fuel Market price in US dollar flat at USD470 32% reduction in blended price at USD556 per metric tonne USD 13% adverse market rate Blended rate decreased by 8% at USD1.45 Outlook Fuel: 90% hedged for 2017/18 at USD490, 29% for H1 2018/19 at USD544 USD: 89% hedged for 2017/18 at USD1.41, 31% for H1 2018/19 at USD1.29 As at 5 June 2017

11 Balance sheet 124.3m total cash at 31st March 2017 (31st March 2016: 171.4m) (64.0)m of net debt (31st March 2016 net funds: 62.2m) 153.5m net assets (31st March 2016: 154.2m) Pension scheme closed Triennial actuarial valuation completed; 12m deficit agreed over 12 years Deficit recovery contributions increase from 0.5m to 0.83m p.a. IAS19 pension deficit increased to 20.8m Capital restructure implemented to increase distributable reserves

12 Fleet peaked in May / / / No. of Aircraft Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 E195 Surplus AC Republic Deliveries Excludes ATRs

13 Fewer aircraft and reduced cost Took ownership of 10 used Q400 aircraft, out of operating lease for c 98m C 8m p.a. saving from increasing the number of owned aircraft and reducing the number of leased aircraft over the last two years Added flexibility to manage fleet size As at 31 ST March Total Aircraft* % Owned 2015/ % 2016/ % 2017/ % 2018/ % 2019/ % assumes all lease aircraft returned at end of lease and no new purchases off lease, ATRs excluded

14 Net debt of (64.0)m (25.1) (7.4) (7.7) 57.0 (107.8) 40.0 m (64.0) (20.0) (40.0) (13.2) (60.0) (80.0) Net funds 31 Mar 2016 Operating cash Maintenance Capex & Into service Intangible and other Capex Net Financing Underlying net funds Aircraft & Engine Purchases FX on USD loans Net funds 31 Mar 2017

15 2016/17 Financial results - summary Continued growth of revenue and number of passengers Continuous focus on cost per seat Improved aircraft ownership cost Adjusted loss before tax of (6.7)m (profit 5.5m in 2015/16) Reported loss after tax of (26.7)m (profit 6.8m in 2015/16) Strong balance sheet and cash position

16 2016/17 Performance and Priorities 2017/18 FLYBE GROUP PLC

17 2016/17 Performance FLYBE GROUP PLC

18 2016/17 Performance Serving more customers with a stable yield 33 new routes in 2016/17, 13 routes cancelled 199 Total routes // 64 airports // 152,064 flights 8.8m passengers and 12.3% more capacity Revenue growth, lower load factor and stable yield Reliability mixed 82.7% OTP arrivals, down from 85.4% 99.0% TDR, up from 98.8% Aircraft utilisation improved 6h 54m per day, up by 5% Employees 3 year pay deal 5% share deal, aligning interests with shareholders 18

19 Flybe diagnosis A sound business model for the airline With other business opportunities Capacity control to enable a demand led business A strong brand but strategy should be focused on the UK However. More focus on operational and organisational excellence More customer centric Enhanced digital platform Creating better shareholder value 19

20 Sound business model A leading regional airline serving UK regions

21 Thinner routes can only be served economically by regional aircraft Flybe analysis of minimum route thickness by aircraft type for a daily frequency 400,000 Competitors Main Area 350, , , , ,000 Flybe Sweet Spot ,000 50, Flybe Partners SAAB340 ATR42 ATR72/Q400 E175 E195 A319 A320 B737 Note: Analysis assumes: 70% Load Factor on SAAB340, ATR, Q400, E175 and E195, 89% on A319 and A320 and 85% on B Flight frequency at 3 rotations a day, 7 days per week. No. in bars are avg. seats per aircraft type (Source: Flybe analysis)

22 Other business opportunities White Label A long term partnership with SAS Brussels airline contract expires in October Selective investment in profitable opportunity MRO Retain it and integrate it A400M contract very successful Prime role in supporting Flybe Training Academy Becoming a profit centre 22

23 Priorities 2017/18 FLYBE GROUP PLC DAVID SCHILCHER 2016

24 Sustainable Business Improvement Plan NETWORK, FLEET & REVENUE OPTIMISATION OPERATIONAL EXCELLENCE ORGANISATIONAL EXCELLENCE SALES & MARKETING TO DRIVE REVENUE GROWTH TECHNOLOGY FIT FOR FLYBE COST IMPROVEMENT PROGRAMME Create a sustainably profitable network and determine fleet size and shape for Flybe's operations. Maximise revenue opportunities. Design & implement a sustainable operational planning structure delivering a safe, secure, cost effective customer proposition. Improve the safety & security performance Design and deliver cost effective organisation structure, with management and staff fully aligned to company objectives Deliver sustainable revenue growth to maximise profitability. Enhance the customer interface and experience through new digital platforms. To deliver a cost effective IT service that fully meets Flybe's customer, operational and internal requirements. Ensure Flybe has a sustainable, competitive cost base enabling Flybe to deliver cost effective flying to customers. ORGANISATION AND SAFETY CULTURE TO ENSURE SUCCESS

25 Taking control of our fleet Expectations unchanged from H (6) 74 (5) (3) 3 69 (1) (4) % % 35% 36% 43% 48% /16 Fleet Q400 delivery 2016/17 Fleet Q400 delivery Q400 expire 2017/18 Fleet Q400 expire E195 expire E175 delivery 2018/19 Fleet Q400 expire E195 expire E175 delivery 2019/20 Fleet Excludes 5 ATRs deployed in Stockholm for SAS White Label and assuming all leases returned at the end of lease and no additional purchases off lease % shows the owned aircraft in our fleet

26 Focus on UK Concentrate on routes starting and finishing in UK Cancelled intra European routes for W17 Brexit risk & opportunity Balanced focus on leisure travelers 26

27 Codeshare / Franchise

28 Flybe loves Scotland 31% of total passengers Eastern Airways partnership Loganair no longer to be part of the Flybe Franchise 2 New routes launched to LHR 79 Flights per week from Scotland to London Flybe will remain Scotland s best airline 28

29 Operational excellence Improved reliability Additional modifications to Q400 aircraft Well planned and executed maintenance Improved third party management Integrated maintenance organisation Improved on time performance Better availability of spare aircraft Better availability of standby crew Working closer with airport partners Implement new systems AMOS Electronic Flight Bag 29

30 Organisational excellence Design Flybe s Future Organisation Leaner organisation, more responsibility Less duplication, more accountability Consistent with fleet & network strategy and company priorities Develop Flybe s culture Embed refreshed values Strengthen safety, security and compliance culture Reward based on performance 30

31 Flybe must be better at digital Over 80% of booking via the web Non standard & Lack of flexibility Poor customer experience Limited customer communication Limited customer data Restricted upselling opportunity A 3 year roadmap A great opportunity to improve revenues and decrease costs 31

32 The new digital platform will support the customer life cycle

33 Outlook and summary FLYBE GROUP PLC

34 H1 2017/18 Outlook H1 forward sales as of 5th June 2017: 2.7% capacity increase vs. prior year 45% of capacity sold vs. 44% prior year 2.6% increase in yields helped by timing of Easter 4.6% increase in passenger revenue per seat We expect c4% capacity reduction in Winter 34

35 We have slowed capacity growth, leading to improved load factor 20.0% 15.0% Capacity growth (seats) YoY change 10.0% 5.0% Capacity expected to reduce in H2 0.0% -5.0% Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Load Factor

36 Revenue per seat is recovering, and benefit of oil price annualises 10.0% YoY change 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Cost per seat Incl. fuel Benefit of lower Oil prices Q1 16/17 Q2 16/17 Q3 16/17 Q4 16/17 Q1 17/18 Cost per seat Revenue per seat Excl. fuel -6.0% -8.0% -10.0%

37 Summary Business resilient in tough market Growth in capacity, passenger volume and revenue Reduction in unit cost Partnerships Control of capacity growth Capacity will be reduced over the coming years Optimise route network Enhance reliability and efficiency Digital & customer centric Digitalise Improve marketing and sales Serving our customers better will create value for shareholders

38 Q&A

39 Legal disclaimer

40 Appendix

41 Fleet evolution At 31 st March 2017 Aircraft Deliveries Aircraft Handbacks At 31 st March 2018 Bombardier Q400 turboprop Embraer E175 regional jet Embraer E195 regional jet ATR72 turboprop (SAS contract) Total Held on operating lease Owned Total Total seats in fleet 6, ,592 Average seats per aircraft The fleet peaks in May 2017 before Flybe starts to return end-of-lease aircraft to its lessors in Autumn Six Bombardier Q400 aircraft will be handed back later in 2017 at, or slightly ahead of, lease expiry. The number of owned aircraft moved from 17 to 27 year-on-year with owned aircraft now representing 32.5% (2015/16: 23.0%) of the fleet. (Excluding ATRs 34.6% of the fleet is owned)

42 Group Balance Sheet m March 2017 March 2016 YOY change m m m Aircraft Other property, plant and equipment Intangibles (1.4) Net (debt)/funds (64.0) 62.2 (126.2) Derivative financial instruments 24.5 (9.9) 34.4 Other working capital - net (117.2) (123.5) 6.3 Deferred taxation (0.6) 11.3 (11.9) Defined benefit pension scheme deficit (20.8) (15.3) (5.5) Other non-current assets and liabilities Net assets and shareholders' funds (0.7)

43 Total cash of 124m (107.8) (25.1) (7.4) m Opening Cash 31 Mar 2016 Operating cash Maintenance Capex Intangible Capex Financing activities Aircraft & Engine Purchases Closing cash 31 Mar 2017