Analysts and Investors conference call Q1 2013 results 15 May 2013
Management summary Key messages of Q1 2013 +6% +9% +3.3%p. Q1 2013 operational KPIs are in line with 109.7 116.2 6.5 7.1 82.3 85.6 expectations, with better yield, revenue per ASK and load factor performance Yield [EUR] However, due to non-recurring effects in Q1 2012, EBIT came out below previous year s level Taking into account charges relating to the introduction of the turnaround program and other extraordinary items, EBIT is on previous year s level Turbine is making good progress and expectations for the year end being confirmed by the Management Board Following the issuance of the convertible, cash rose 43% to EUR 470m after EUR 328m at the end of the 2012 financial year Equity turned negative due to the typical seasonally weak results, turnaround charges and other extraordinary items, however will turn positive by the end of the year Equity as of the reporting date according to IFRS represents a snapshot it has no effect on operations of the airberlin group R/ASK Load factor [%] Air Berlin PLC l Q1 2013 2
Financial Performance [EURm] Q1 2013 compared to Q1 2012 Revenue EBIT Net result Despite 11% decline in available seat kilometers, revenue only declined by 3% due to better yield and load performance 812.9-3% 791.9 EBIT in Q1 2013 was EUR 188.4m after EUR 149.3m Taking into account the non-recurring effects from asset sales in Q1 2012, EBIT would have been EUR 173.1m Taking into account non-recurring effects in Q1 2013, turnaround charges and other extraordinary items such as the strike of security personnel at several airports, EBIT in Q1 2013 was 171.2m Thus, adjusted EBIT came in on previous year s level Due to weaker noncash financial result, net result is weaker than previous year -20% -149.3-188.4-173.1-171.2-163.6-196.3 Q1/12 Q1/13 ACTUAL excl. other operating income & turnaround charges Air Berlin PLC l Audit May 2013 3
Key performance indicators Q1 2013 Operational development Q1 2013 vs. Q1 2012 Guests Capacity Number of flights -9% 6,51 5,92 Number of guests reduced, however less than capacity -12% 8.53 7.51 Capacity has been significantly reduced due to cancellation of routes -14% 52.101 45.065 In line with capacity reduction Guests [m] Capacity [m] Flights [#] Load factor Yield ASK +3.3%p. 82.3 85.6 Improvement of load factor coming from good intercontinental performance 109,7 +6% 116,2 Good yield development 12.6-11% 11.2 Reduction in available seat kilometers due to cancellation of routes Load factor, RPK/ASK [%] Yield [EUR] based on IFRS flight revenue including a/p tax revenue ASK [bn] Air Berlin PLC l Q1 2013 Q1/12 Q1/13 4
Development Revenue and Cost per ASK Q1 2013 vs. Q1 2012 Revenue 1) per ASK [EUR ct] Revenue per RPK [EUR ct] COMMENT 9% 6.50 7.10 R/ASK +6% 7,84 8,30 R/RPK Revenue per ASK is showing with an increase of 9% good performance as well as revenue per RPK which increased by 6% CASK including fuel Cost 2) per ASK [EUR ct] 8.86 8.63 6,89 7.89 6,04 6,66 +9% Q1/12 12% Q1/13 excl. turnaround charges & other extraordinary items +14% Q1/12 Q1/13 CASK exluding fuel +10% excl. turnaround charges & other extraordinary items Cost per ASK incl. fuel on EBIT level rose by 12% Taking into account turnaround charges and extraordinary items, which amount to EUR 25m, cost per ASK incl. fuel grew by 9% 1) Total revenue 2) Cost on EBIT level excluding other operating result Air Berlin PLC l Q1 2013 5
Development of expenses Q1 2012 Q1 2013 Δ Q1/12 vs Q1/13 [EURm] [EURm] [EURm] [ %] Expenses for materials and services -701.3-681.2 20.1 2.9% Fuel -230.7-220.0 10.7 4.7% A/P and handling charges -179.7-171.3 8.5 4.7% Operating leases -137.8-138.3-0.5-0.4% Navigation -53.5-49.0 4.5 8.4% Air transportation tax -34.2-30.5 3.7 10.7% Catering costs -28.0-26.3 1.7 6.1% Other -37.3-45.8-8.5-22.8% Personnel expenses -119.7-122.5-2.8-2.3% Other operation expenses -146.3-165.7-19.4-13.3% Technical cost -50.7-59.0-8.3-16.4% IT -20.6-22.6-2.0-9.7% Comments Certain direct operating cost (e.g. fuel, handling charges, navigation etc.) are in line with production and market price development Other expenses (e.g. operating leases, technical cost, personnel etc.) are in progress of adjustment to lower production levels. Hence they have not been reduced yet but will do so in the course of the year Advertising -19.5-14.0 5.5 28.2% Commission -6.1-8.0-1.9-31.1% Insurance -4.8-5.0-0.2-4.2% Other -44.6-57.1-12.5-28.0% TOTAL OPERATING EXPENSES -967.3-969.4-2.1-0.2% Air Berlin PLC l Q1 2013 6
Strategic partnership with Etihad Airways continues to grow impressively the development promises to significantly exceed 2012 Codeshare performance Etihad Airways Etihad Airways is codeshare partner No.1 for airberlin Common Guests development 2012 Q1 2013 [ 000] Portfolio of nearly 100 codeshare routes 279.9 323.2 Further extensions intended, implementation upon approval of traffic rights 198.2 240.8 Utilization of growing opportunities resulting from hub improvement (i.e. Vietnam) Adding codeshare agreements with more Etihad Airways partner airlines in 2013 (i.e. Virgin Australia, JAT) 141.2 90.3 47.0 52.2 33.4 13.4 0.2 2.2 74.5 162.4 114.9 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 Air Berlin PLC l Q1 2013 7
oneworld presents further opportunities for growth by providing airberlin with access to new destinations and additional passengers Codeshare performance oneworld Common Guests development 2012 Q1 2013 [ 000] More than 300,000 guests on joint codeshare routes in 2012 Extended codeshare network with oneworld partners cause strong increase of booking intakes demand exceeded 100,000 already in first quarter Alliance of service-orientated quality airlines Highest quality and safety standards News: American Airlines Expansion of cooperation, now including AA s hub in Chicago Planned merger with US Airways prospectively increases the route portfolio 59.5 34.4 31.6 16.3 Jan Feb 2012 310.1 279.6 253.6 222.7 189.5 157.8 126.9 103.1 98.2 74.6 56.1 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2013 Air Berlin PLC l Q1 2013 8
Fleet development Number of aircraft Total number of aircraft 165 69-16 -6 149 143-9.7% 65 61 14 13 14 A320 family A330 family 10 65 7 10 54 7 10 51 7 B737 family E190 Q400 Q1/12 Q1/13 2013e Air Berlin PLC l Q1 2013 9
Stakeholder negotiations Lean & smart What we are doing to fix our core business Turbine combines internal structural changes and negotiations with major stakeholders 1 Internal: highly efficient organisation & processes External: highly regarded by customer LEAN a Network & Fleet SMART Optimise operations Efficient structures and workflows Cost reduction b c Commercial Product / Service Focus on key markets Touristic and business segments Customer needs Brand values d Operation 2 Bring major stakeholder relationships in line with market best practice Airport & ground handling Labour and overhead Wet lease providers Lessors & OEMs TOP & distributors Maintenance suppliers Air Berlin PLC l Q1 2013 10
Stakeholder negotiations Lean & smart Turbine progress: On track 1 2 Area Organisation effectiveness Human resources Commercial / Ancillaries Network & Fleet Operations Lessors Labour Activities New airport operations, integrated network and revenue management organisations Integrated customer service entities and partial outsourcing Headcount reduction of ~250 FTEs until end of May Executive functions reduced by ~40 FTEs, pay cuts implemented New distribution strategy focused on revenue quality New ancillary revenue initiatives underway Improved sales intelligence systems Improved summer schedule Optimised winter schedule being developed New boarding procedure / baggage policy agreed; roll-out to begin in June together with SLAs Final round of negotiations with majority of stakeholders Ongoing negotiations with pilot, cabin crew and ABT unions Other stakeholders Ongoing negotiations with key third party providers (e.g., top 15 airports, top 4 catering providers, main wet lease and maintenance providers, etc.) Air Berlin PLC l Q1 2013 11
Turbine: Timeline for achieving financial targets Cumulative benefit 2013/14 (Illustrative) Target ~ EUR 400m >EUR 200m 2013 Q1 Q2 Q3 Q4 2014 Q1 Q2 Q3 Q4 Effects of >EUR 200m on EBIT level targeted in 2013 Majority of effects in 2013 ramp up from Q3 onwards Program will deliver ~EUR 400m on EBIT level compared to 2012 Realisation of network effects full on track Q1/Q2 with over proportional fix costs, i.e. aircraft, aircraft redeliveries, personnel etc. Air Berlin PLC l Q1 2013 12
Financial result and income tax development Q1 2013 [EUR m] Breakdown of financial result Net interest result Currency & derivatives effects Total income tax effect 14.3 17.1-5.8-10.7-18.0-20.6 Q1/12 Q1/13 Q1/12 Q1/13 Q1/12 Q1/13 Air Berlin PLC l Q1 2013 13
Balance sheet structure [EUR m] B/S as of Dec 31, 2012 B/S as of Mar 31, 2013 2,218 2,473 6% Equity Fixed assets 53% Fixed assets 48% Other current assets 32% 94% Debt Other current assets 33% 102% Debt Liquid assets 15% Liquid assets 19% -2% Equity Net debt: 770 Net debt: 728 Air Berlin PLC l Q1 2013 14
Dollar hedging Hedging profile [%] FX rate development [USD/EUR] 1) 100 99 75 55 100 1.40 90 1.38 80 1.36 70 60 50 1.34 1.32 1.30 1.28 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1.26 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Hedging rate 2013 (as of 07 May 2013) Hedging rate 2012 (as of 11 May 2012) Current hedge rate Market / Forward rate Hedge rate 2012 1) as of 07 May 2013 / 11 May 2012 Air Berlin PLC l Q1 2013 15
Fuel hedging Hedging profile [%] Price development [USD/t] 1) 82 94 79 76 100 1,100 95 90 85 1,050 80 75 1,000 70 65 60 950 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 550 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Hedging rate 2013 (as of 07 May 2013) Hedging rate 2012 (as of 11 May 2012) Current hedge price Market / Forward price Hedge price 2012 1) as of 07 May 2013 / 11 May 2012; excl. differentials Air Berlin PLC l Q1 2013 16
Guidance for 2013 Operational performance Capacity Increase in long haul Decrease in short and medium haul Capacity utilization and income Increasing load factor through network reduction, improved sales platform and partnerships Result Revenue Growth in revenue through yield and load factor expected despite capacity reduction Expenses Cost per ASK excl. fuel will decrease in the course of the year Structural cost increases will be offset through Turbine Result Operational profitability Balance sheet A L Balance sheet Liquidity improved through the issued convertible bond and good booking intakes Equity ratio target of 15-20% by mid term Deleveraging is the key objective for 2013; initiatives are on the way Net debt target remains to be around EUR 500 m by the end of 2013 Target: operational profitability Air Berlin PLC l Q1 2013 17