Results for the Year Ended 30 th June 2007 Brett Godfrey Chief Eecutive Officer 21 August 2007
New World Strategy Delivering RASK up 13.0% 10.02 CASK (underlying) up 2.6% 8.24 Net Profit up 92.9% $216M PBT Margin up 5.4pts 14.2% Operating Cash Days up 15 Days 139 days 1
Financial Highlights 12 months to 30 June 2007 $m Total Revenue 2,169 2006 $m Increase / Decrease 1,865 + 16.3 % EBITDAR 548 388 + 41.2 % EBIT 324 176 + 84.0 % Profit Before Ta Net Profit After Ta 309 216 165 112 + 87.3 % + 92.9 % Earnings Per Share 20.6 10.7 + 92.5 % Dividends Per Share 4.0 25.0 2
Operating Highlights % 12 months to 30 June 2007 2006 Increase/ Decrease ASK s capacity 21.6 bn 21.0 bn + 2.9 % Aircraft average held 53.0 50.8 + 4.3 % RPK s - demand 17.6 bn 16.4 bn + 7.3 % Guests carried 15.3 m 14.2 m + 7.7 % Load Factor 81.2% 77.9% + 3.3 pts RASK 10.02 8.87 + 13.0 % CASK Underlying 8.24 8.03 + 2.6 % Fuel US$bbl avg price 81.23 75.28 + 7.9 % 3
Quality of Revenue Stream RASK Growth AN eits 10.5 10 10.17 VB capacity +56% 9.74 Cents 9.5 9 8.5 JQ launch 8.29 8.17 NWC 8.34 9.39 8 7.5 7 FY02 FY03 FY04 FY05 FY06 FY07 Note: Net Scheduled revenue RASK FY02, 03, 04 MAR. FY05 SEP, FY06, 07 JUN 4
The Bottom Line - Profitability Profit Margin Before Ta 25% 20% 21.0% 20.2% PBT Margin (%) 15% 10% 5% 14.2% 13.5% 11.1% 9.3% 8.7% 8.0% 6.8% 4.9% 0.4% 0% GOL Ryanair Virgin Blue AirAsia Emirates WestJet Southwest easyjet Qantas Air New Zealand JetBlue Note: Virgin Blue, Qantas for year ended 30 June 2007. AirNZ for half year ended Dec 2006. GOL, Jet Blue, Southwest, easyjet full year ended Dec 2006. AirAsia full year ended Aug 2006. Ryanair, Emirates & WestJet, full year ended 31 March 2007 5
Virgin Blue - Domestic Epanding rapidly into traditional corporate markets yield growth Underlying cost base well controlled, but remains fleible Margin growth ahead of competition Embraer platform to maimise returns, matching capacity and demand by flight. First aircraft in service October 07 Continued product development Carbon emissions reduced by 13.2% over the past 5 years, from 118.52 to 102.87 Co2-e/RPK 6
7 A market that is unprofitable B737-700 with 144 seats Embraer 190 with 104 seats 1 1. 106 seat E190 configuration shown in diagram, Virgin Blue configuration will be 104 seats
Jet and Large Turboprop Routes Not Presently Contested Large Turboprop Routes Jet Routes Not Contested by Virgin Blue Note: Shows eisting routes only. New route possibilities (e.g. Kalgoorlie-Melbourne, Adelaide-Launceston not shown) 8
Virgin Blue s Competitors In Domestic Market How Important Competitors are to Virgin Blue (Proportion of Our Capacity Competing Against Them) Virgin Blue s Competitive Landscape (Domestic Australia) 120% 100% 80% 60% 40% 20% 0% Re Bubble Size 10b ASKs Skywest Virgin Blue Jetstar Tiger Qantas 0% 20% 40% 60% 80% 100% 120% How Important Virgin Blue is to Competitors (Proportion of Their Capacity Competing Against Us) Source: APG Data, Tiger press releases as at 20 July 2007, Virgin Blue analysis Note: Qantas includes QantasLink 9
Driving RASK - Product Initiatives High frequency on trunk routes and increased interlining Fleible fares and smarter revenue management Higher market share in corporate and government markets Velocity Over 1 million members in 18 months The 4 Lounges cover 80% of our traffic streams CBR this year. New Products: LiveTV, Kiosks, Web Check-In, and more to come 10
Virgin Blue Increased YIELD Faster Than Qantas Domestic Businesses Change In YIELD From Prior Year Change from prior year (%) 10% 8% 6% 4% 2% 0% 8.1% 3.5% -1.7% -2% Virgin Blue - Full Year Qantas Domestic - Half Year Jetstar A320 - Half Year Source: Estimates from Qantas Results for the half year 31 December 2006 11
Our Two Models provide Fleibility Cask 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Airline CASK 'opportunites' 8.24 5.93 One Targets Revenue. And The Other Cost. PBH is a Pure LCC management has already done it once VB PB 12
Pacific Blue Profitability up again in the black from launch Outsource strategy preserves LCC business model - CASK remains below 6 cents (including fuel) Close integration with wider Group (flying) network Domestic Network - Announcement in Wellington Thursday Polynesian Blue strong performance, more opportunities 13
V Australia On target for 4Q08 launch, and within budget Regulatory approval process underway strong support Product and network planning advanced Integration with domestic network Interline and alliance opportunities 14
Ancillary Revenue Freight partnership with Toll launched maimise return on belly space Lounge membership & casual visits eceeding epectations Launched new website enhanced functionality Velocity membership past 1.1 million - new Tiering structure will drive further penetration 15
Fleet Summary - Group At 30 June 2007 + - 2008 2009 737-700 NG 22-1 21 20 737-800 NG 31 6-37 38 EMB-170 LR - 4-4 6 EMB-190 LR - 5-5 14 777-300 ER - - - - 3 53 15 1 67 81 Leased 30 2 1 31 - Owned 23 13-36 - 53 15 1 67 81 16
Capital Management Final dividend 2 cents per share. Record date - September 5, 2007 Net cash inflow from operations up 74% to $406 million Capital ependiture FY07 $317m, up 43%. Forecast for 2008 $674m, including pre-delivery payments Gearing, including operating leased aircraft, was 57.5%, down from 65.0% at June 2006 Average days cash cover increased 15 days to 139 days 17
Risk Management - Hedging Currency Hedging FY08 - cover for 77% using swaps and options at rates in ecess of 0.77 (after premiums) Fuel Hedging FY08 currently 49% hedged using mainly options with caps on crude oil in range US$63-75 bbl 18
Outlook Embraer/737 platform enables right sizing - by flight as opposed to by market Significant growth in net 18 months, but over three years in line with historic demand growth rate Underlying non-fuel cost base, under control but significant ependiture on new platforms underway. ULCC remains a competitive response strategy. Strong 2007 performance to be maintained in 2008 despite eceptional capacity growth and new competitors. 19