Jet Airways (India) Ltd. Presentation on Annual Results FY06 May 2006 1
Agenda 1. Performance Highlights 2. Sahara Acquisition Update 3. Outlook 2
Performance Highlights 3
Domestic landscape capacity growth (contd) 150000 130000 110000 90000 70000 Jan'01 54,000 Jan'02 58,400 Jan'03 61,700 Jan'04 72,100 Jan'05 80,100 Jan'06 112,800 Mar'06 123,800 Mar'06 40,450 50000 30000 Jan'01 23,000 Jan'02 27,350 Jan'03 29,050 Jan'04 30,850 Jan'05 33,150 Jan'06 37,600 10000 Jan'01 Apr'01 Jul'01 Oct'01 Jan'02 Apr'02 Jul'02 Oct'02 Jan'03 Apr'03 Jul'03 Oct'03 Jan'04 Apr'04 Jul'04 Oct'04 Jan'05 Apr'05 Jul'05 Oct'05 Jan'06-10000 9W Total (incl Others) Source: Published data, research estimates 4
Domestic seat factor FY06 Seats Offered Passengers Carried Seat Factor (%) (in Million) (in Million) (Pax/Seats) Industry 9W Industry 9W Industry 9W Q1 7.6 3.1 5.3 2.2 69.7% 71.4% Q2 8.3 3.2 5.3 2.1 63.8% 67.9% Q3 9.7 3.2 6.6 2.3 67.8% 69.8% Q4 10.8 3.5 7.3 2.5 67.5% 71.4% FY06 36.4 13.0 24.5 9.1 67.2% 70.1% Note: Seat factor (%) is based on passengers/seats and not as per RPKs/ASKs. 9W seat factor (%) as per RPKs/ASKs for FY06 is as follows: Q1: 76.8%, Q2: 71.8%, Q3: 72.5%, Q4: 73.6%, FY06: 73.7% Source: Company estimates 5
Traffic growth - market Domestic pax growth International pax growth CAGR: 17.4% CAGR: 16.1% 25.0 24.5 24.0 Passengers (Million) 20.0 15.0 10.0 5.0-18.6 15.3 14.0 12.9 5.8 6.4 6.9 8.0 9.1 FY02 FY03 FY04 FY05 FY06 Passengers (Million) 22.0 20.0 18.0 16.0 14.0 12.0 10.0 21.6 18.0 15.0 11.9 13.2 FY02 FY03 FY04 FY05 FY06 Jet Total Source: Published data, research estimates 6
Apr-Mar FY06 7
FY06 highlights Average market share for the year at 37.3% (vs 42.9% for FY05) Average capacity share for the year at 35.7% (vs 41.3% for FY05) Growth in company revenues to USD 1,375 million, up 39%, and in profit after tax to USD 101 million, up 15% (including profit from sale-leaseback) Profit before tax on domestic operations up by 4% (excluding profit from sale-leaseback): USD 139 million vs. USD 133 million International operations incurred start-up losses of USD 38 million Dividend of 60% (INR 6 per share) proposed 8
Company operating parameters Operating Parameters Apr 05-Mar 06 Apr 04-Mar 05 Variance Variance Number of Departures 104,833 96,417 8,416 8.7% ASKMs Million 13,300 9,808 3,492 35.6% RPKMs Million 9,576 6,992 2,585 37.0% Passenger Load Factor % 72.0% 71.3% 0.7 pts Revenue Passengers (Million) 9.56 8.14 1.41 17.4% Average Gross revenue per passenger in INR 5,394 4,904 490 10.0% Average fleet size during period 49.5 41.3 8.2 19.9% Average Head Count Gross 8,285 7,082 1,203 17.0% Aircraft Utilisation 10.2 10.2 0.0 0.5% (%) 9
Company P&L INR Million INR Million Apr 05-Mar 06 Apr 04-Mar 05 Variance % INCOME Operating Revenues 56,937 43,380 31.3% Non Operating Revenues 4,417 822 437.7% Total Revenues 61,355 44,202 38.8% In USD Million 1,375.2 1,010.4 EXPENDITURE Employees Remuneration & Benefits 5,672 3,747 51.3% Aircraft Fuel Expenses 16,789 10,517 59.6% Selling & Distribution Expenses 7,740 5,591 38.5% Other Operating Expenses 13,111 9,433 39.0% Aircraft Lease Rentals 4,340 1,986 118.6% Depreciation 4,064 4,570-11.1% Interest 2,416 2,537-4.8% Total Expenditure 54,132 38,381 41.0% In USD Million 1,213.3 877.4 PROFIT BEFORE TAXATION 7,223 5,821 24.1% In USD Million 161.9 133.1 In USD Million (excl Profit on sale of aircraft) 101.2 133.1 Provision for taxation 2,702 1,901 42.1% PROFIT AFTER TAXATION 4,520 3,920 15.3% In USD Million 101.3 89.6 EBITDAR 13,625 14,092-3.3% In USD Million 305.4 322.1 * ROE used for conversion: 1 USD = INR 44.615 for FY06 and INR 43.745 for FY05 10
Unit revenue & cost performance 5.00 11.21 USc 5.28 12.07 USc Unit in INR 3.26 3.17 7.31 USc 7.25 USc 4.48 USc 2.00 (excl fuel) 4.80 USc 2.10 (excl fuel) FY 2006 FY 2005 Revenue/RPKMS Cost/ASKMS Above data is domestic+international * ROE used for conversion: 1 USD = INR 44.615 for FY06 & INR 43.745 for FY05 11
Domestic operating parameters Operating Parameters Actuals Actuals Variance % Apr-Mar'06 Apr-Mar'05 Number of Flights 100,958 95,061 6.2 ASKMs Mio 10,683 9,666 10.5 RPKMs Mio 7,875 6,904 14.1 S.F % 73.7% 71.4% 3.2 Revenue Pax 9,115,429 8,022,116 13.6 Average Gross Revenue per passenger in INR 5,133 4,947 3.8 12
Domestic P&L INR Million INR Million Particulars Actuals Actuals Variance % Apr-Mar'06 Apr-Mar'05 Revenues Gross Operating Revenues 50,141 42,793 17.2 Non-Operating Revenues 4,417 822 437.7 Total Revenues 54,559 43,614 25.1 In USD Million 1,222.9 997.0 Expenditure Employees Remuneration and Benefits 5,179 3,734 38.7 Aircraft Fuel Expenses 14,550 10,369 40.3 Selling & Distribution Expenses 6,279 5,505 14.1 Other Operating Expenses 10,615 9,162 15.9 Lease Rentals 2,604 1,986 31.1 Depreciation- WDV 3,980 4,570 (12.9) Interest 2,416 2,537 (4.8) Total Expenses 45,623 37,862 20.5 In USD Mio 1,022.6 865.5 Profit before Tax 8,936 5,753 55.3 In USD Mio 200.3 131.5 EBITDAR 13,518 14,023 (3.6) In USD Mio 303.0 320.6 * ROE used for conversion: 1 USD = INR 44.615 for FY06 and INR 43.745 for FY05 13
Domestic fuel impact Impact of Fuel Rate / Litre: FY06 vs FY05 38.0 36.5 35.9 37.6 36.8 35.4 36.5 36.3 R ate/l itre in IN R 35.0 33.5 32.0 30.5 29.0 27.5 26.0 31.6 $ 7 Mio 34.2 $ 8 Mio 31.0 $ 4 Mio 32.9 $ 6 Mio 33.4 $ 5 Mio 26.4 $ 5 Mio 29.1 $ 6 Mio 30.1 32.9 $ 3 Mio 32.9 $ 2 Mio $ 7 Mio 30.5 26.8 26.8 $ 7 Mio $ 8 Mio 26.7 24.5 23.0 25.3 24.1 21.5 22.2 20.0 20.9 April May June July Aug Sept Oct Nov Dec Jan Feb Mar Impact for Q4: USD 22 Million; for FY06: USD 67 Million * ROE used for conversion: 1 USD = INR 44.615 14
International Operations 15
International operating parameters Operating Parameters Actuals Actuals Jan-Mar'06 Apr-Mar'06 Number of Flights 1,250 3,875 ASKMs Mio 949 2,617 RPKMs Mio 631 1,701 S.F % 66.5% 65.0% Revenue Pax 147,396 441,133 Average Gross Revenue per passenger in INR 11,311 10,783 16
International P&L INR Million INR Million PARTICULARS Actuals Actuals Jan-Mar'06 Apr-Mar'06 Revenues Total Revenues 2,315 6,796 In USD Million 51.9 152.3 Expenditure Employees Remuneration and Benefits 209 492 Aircraft Fuel Expenses 829 2,239 Selling & Distribution Expenses 372 1,461 Other Operating Expenses 881 2,497 Lease Rentals 451 1,736 Depreciation- WDV 16 84 Interest - Total Expenses 2,758 8,509 In USD Million 61.8 190.7 Profit before Tax (443) (1,713) In USD Million (9.9) (38.4) * ROE used for conversion: 1 USD = INR 44.615 for FY06 and INR 43.745 for FY05 17
Sector-wise seat factors Seat factor (%) SECTOR Q1 Q2 Q3 Q4 FY06 SAARC MAA-CMB-MAA 65.2 74.2 68.1 69.7 67.7 DEL-KTM-DEL 48.3 73.2 75.7 69.5 67.8 ASEAN BOM-SIN-BOM 66.3 50.9 66.9 61.6 61.2 MAA-KUL-MAA 67.2 63.6 71.3 69.2 67.6 MAA-SIN-MAA - - 38.6 37.8 37.8 UK BOM-LHR-BOM 59.2 73.1 69.6 72.7 70.2 DEL-LHR-DEL - - 46.8 65.2 57.6 TOTAL 61.8 68.1 62.4 65.9 65.0 18
International operations update Established routes in the process of maturing SAARC operations are profitable Mumbai-Singapore and Chennai-Kuala Lumpur profitable Mumbai-London and Delhi-London continue to incur start-up losses due to lower yields Pressure on yields Aggressive fare discounting by incumbents on all routes Significant capacity induction by competitors, particularly on the UK routes Pressure on costs Fuel prices Under-utilization of A-340 300E aircraft: impact of USD 1.7 million for Q4 19
International operations: turnaround Improved utilization of aircraft Additional London frequencies New frequencies in ASEAN routes Focus on increasing load factors Seasonal imbalances to be mitigated through advance planning of inventory New corporate deals in international markets Emphasis on increasing J class seat factor Focus on established markets Increase in cargo revenue component Directional imbalances to be corrected with improved infrastructure / logistics 20
Summary balance sheet INR Million As on 31-Mar-06 INR Million As on 31-Mar-05 I SOURCES OF FUNDS Shareholders' Funds 23,650 20,102 Subordinated Debt - 3,341 Loan Funds 48,956 26,307 Deferred Tax Liability 3,207 1,949 TOTAL SOURCES OF FUNDS 75,812 51,699 In USD Million 1,699.3 1,181.8 II. APPLICATION OF FUNDS Net Fixed Assets 47,882 26,406 Investments 1,872 15,957 Current Assets, Loans & Advances 40,775 20,444 Less: Current Liabilities & Provisions 14,717 11,109 Net Current Assets 26,058 9,335 TOTAL APPLICATION OF FUNDS 75,812 51,699 In USD Million 1,699.3 1,181.8 21
Jan Mar FY06 22
Company operating parameters Operating Parameters Jan 06-Mar 06 Jan 05-Mar 05 Variance Variance Number of Departures 28,659 24,353 4,306 17.7% ASKMs Million 3,906 2,499 1,407 56.3% RPKMs Million 2,813 1,834 979 53.4% Passenger Load Factor % 72.0% 73.4% -1.4 pts Revenue Passengers (Million) 2.67 2.16 0.52 24.0% Average Gross revenue per passenger in INR 5,361 5,217 144 2.8% Average fleet size during period 53 42 11.0 26.2% Average Head Count Gross 8,727 7,487 1,240 16.6% Aircraft Utilisation 11.0 10.4 0.6 5.6% (%) 23
Company P&L INR Million INR Million Particulars Jan 06-Mar 06 Jan 05-Mar 05 Variance % INCOME Operating Revenues 16,253 12,034 35.1% Non Operating Revenues 3,443 193 1688.3% Total Revenues 19,696 12,226 61.1% In USD Million 441.5 279.5 EXPENDITURE Employees Remuneration & Benefits 1,892 1,070 76.9% Aircraft Fuel Expenses 4,828 2,670 80.8% Selling & Distribution Expenses 2,520 1,611 56.5% Other Operating Expenses 3,936 2,407 63.5% Aircraft Lease Rentals 1,221 491 148.8% Depreciation 1,060 1,151-7.8% Interest 630 684-7.9% Total Expenditure 16,086 10,082 59.5% In USD Million 360.6 230.5 PROFIT BEFORE TAXATION 3,610 2,144 68.4% In USD Million 80.9 49.0 In USD Million (excl Profit on sale of aircraft) 20.2 49.0 Provision for taxation 1,338 814 64.4% PROFIT AFTER TAXATION 2,271 1,330 70.8% In USD Million 50.9 30.4 EBITDAR 3,078 4,276-28.0% In USD Million 69.0 97.8 * ROE used for conversion: 1 USD = INR 44.615 for FY06 and INR 43.745 for FY05 24
Unit revenue & cost performance 6.00 5.53 5.00 4.81 12.64 USc 10.78 USc 4.00 Unit in INR 3.00 3.23 3.20 7.24 USc 7.32 USc 2.00 4.47 USc 2.00 (excl fuel) 4.87 USc 2.13 (excl fuel) 1.00 - Q4 FY 2006 Q4 FY 2005 Revenue/RPKMS Cost/ASKMS Above data is domestic+international * ROE used for conversion: 1 USD = INR 44.615 for FY06 & INR 43.745 for FY05 25
Domestic operating parameters Operating Parameters Actuals Actuals Variance % Jan-Mar'06 Jan-Mar'05 Number of Flights 27,409 24,003 14.2 ASKMs Mio 2,956 2,460 20.2 RPKMs Mio 2,182 1,815 20.2 S.F % 73.8% 73.8% 0.0 Revenue Pax 2,527,440 2,130,877 18.6 Average Gross Revenue per passenger in INR 5,014 5,173 (3.1) 26
Domestic P&L INR Million INR Million Particulars Actuals Actuals Variance % Jan-Mar'06 Jan-Mar'05 Revenues Gross Operating Revenues 13,938 11,900 17.1 Non-Operating Revenues 3,443 193 ++ Total Revenues 17,381 12,093 43.7 In USD Million 389.6 276.4 Expenditure Employees Remuneration and Benefits 1,684 1,065 58.1 Aircraft Fuel Expenses 3,999 2,629 52.1 Selling & Distribution Expenses 2,148 1,595 34.7 Other Operating Expenses 3,055 2,336 30.8 Lease Rentals 769 491 56.9 Depreciation- WDV 1,044 1,150 (9.3) Interest 630 684 (7.9) Total Expenses 13,328 9,950 34.0 In USD Mio 298.7 227.5 Profit before Tax 4,053 2,142 89.2 In USD Mio 90.8 49.0 EBITDAR 3,053 4,275 (28.6) In USD Mio 68.4 97.7 * ROE used for conversion: 1 USD = INR 44.615 for FY06 and INR 43.745 for FY05 27
Domestic update Launch of 2 Mega-sale offers: 100,000 tickets sold 10 additional frequencies added during Q4, including 4 new night frequencies BOM/CCU, BOM/MAA, DEL/CCU, BOM/AMD On-line bookings consistently moving upwards in Q4; 8% of total bookings during March 2006 28
On-line bookings 78,207 56,272 50,808 No. of Bookings 24,711 30,403 27,799 33,935 36,530 11,869 12,323 15,023 18,690 582 4,008 4,331 4,740 4,937 7,679 9,582 9,522 9,906 10,069 8,987 12,750 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 2005-06 2004-05 29
Summary: key negative factors Factor Q4 Impact FY06 Impact USD Mio USD Mio High fuel rates 22 67 International Startup losses 10 38 Impact of floods in Mumbai - July 2005-6 (Direct costs and contribution losses) Impact of 1,000 flt cancellations in Q3-6 (Contribution losses) Increased fuel consumption- Higher flying time 4 8 (Average increased flying time of 3-4%) One time Leave encashment to staff 5 5 TOTAL 41 130 Note: Impact of change in passenger mix not quantified as a large part of the same is made up by increased volumes 30
Sahara acquisition update 31
Status of transaction Term of SPA and escrow account extended by 90 days from March 23 to June 21 to enable obtaining of requisite approvals Approval received from Department of Company Affairs; pending approval from DGCA INR 5.0 bn paid as advance to the Selling Shareholders against a pledge of 100% of Air Sahara shares. This amount is refundable in the event the transaction is not consummated Air Sahara to be operated as a 100% subsidiary, following receipt of regulatory approvals and pending completion of the merger process Jet Airways personnel assisting Air Sahara management as consultants in upgrading of the product and improving operational efficiency and reliability 32
Key measures undertaken Improving asset utilization and technical reliability of fleet C check program for CRJ and 737 fleet underway Lufthansa Technik team already in India to provide support Vendor support restored in respect of spare parts Network rationalization plan prepared; to be implemented in current quarter Rationalization of market practices Common Jet Airways ticket stock, corporate and agency agreements, GDS cost reduction, interline agreements In addition to pilots, engineers, cabin crew and key managerial personnel, other Sahara personnel to be absorbed are being identified 33
Outlook 34
Fleet plan 100 No of Aircraft 90 80 70 60 50 40 53 3 8 63 6 8 79 10 8 8 84 10 10 8 30 20 42 49 53 56 10 0 Mar '06 Mar '07 Mar '08 Mar '09 BOEING 737s ATR A340-300/A330s B777-300ER 35
Outlook Commercial induction of 8 additional aircraft in 2006-07 5 B-737s for domestic operations 2 A-330s and 1 B-737 for international operations Consolidation of operations on UK / ASEAN routes Second daily BOM-LHR frequency beginning July 10 Amritsar-London, Heathrow from July India-Bangkok from October Domestic and international yields will remain under pressure; fuel surcharge to help mitigate impact Successful integration of Air Sahara operations Improving productivity and efficiency of operations Deriving benefits of economies of scale 36
Thank You 37
Disclaimer Certain statements in this presentation concerning Jet Airways future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in the aviation business including those factors which may affect our cost advantage, wage increases, our ability to attract and retain professionals, time and cost overruns on various parameters, our ability to manage our international operations, liability for damages, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital, and general economic conditions affecting our industry. Jet Airways may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. Jet Airways does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company. 38