INVESTOR RELATIONS PRESENTATION Investor Relations Presentation September 2015
AEROMEXICO: MEXICO S PREMIUM REVENUE CARRIER. Mexico s only full service carrier, offering customers up to a three-class service. Operating a hub and spoke network model with main hub airports in Mexico City and Monterrey. Global Airline. Only Mexican carrier flying to long-haul markets in Europe and Asia. 85 destinations in 24 countries, over 610 daily flights. +17 million passengers transported in 2014. Founding Member of SkyTeam. Enhanced strategic alliance with Delta Air Lines. Majority shareholder in Club Premier, Mexico s largest loyalty program, partnering with AIMIA. 2
ABOUT US: AEROMEXICO TIMELINE 2014-2015. Selected to join the Sustainability Index of the BMV. Issuance of notes guaranteed by US Ex IM Bank (USD $195.8 million, 2.3 % structured notes ). Mar 15 Transaction Delta Master Trust. Tech Ops (started operations in Queretaro). Grupo Aeromexico issued $15 billion through its CBF's program. Abr/ May 14 May 14 Grupo Aeromexico celebrates 80 years as Mexico s flagship airline. Jul 14 Sep 14 Launch of new Premier Class menu. Dic 14 Feb 15 New labor agreement with flight attendants union. (Following prior agreements with pilots and ground staff). Aeromexico and Delta request authorization for joint collaboration agreement. 19 aircraft incorporation, including two Boeing 787-8s. Ene 14 3 MRO: Maintenance, repair, and operations
4.0 3.0 2.0 1.0 0.0-1.0-2.0 MEXICAN ECONOMY CONTINUES TO STRENGTHEN. Growth Opportunities for Mexican Economy (1) Air Traffic Penetration (2) Expected GDP Annual Percentage Change 2.1 2.5 1.2 1.3 0.1 0.3 2014 2015 2016 3.0 2.3 1.5 Mexico Latin America and the Caribbean Flights Per Capita for Middle & Upper Class Population (>$15K) 0.6 0.8 Mexico Brazil Europe US Favorable Demographics Growing Middle Class (3) Favorable Demographic Trends (4) Brazil 1.4 2.4 Middle Class Sources: (1) Banco de Mexico May 2015 for Mexico, IMF June 2015, World Economic Outlook for other markets (2) IMF World Economic Outlook (3) INEGI (4) CONAPO (2010 Demographics in Million) (2050 Demographics in Million) 90-95 90-95 49mm 70 mm 80-84 80-84 70-74 70-74 60-64 60-64 50-54 50-54 40-44 40-44 30-34 30-34 20-24 20-24 10-14 10-14 0-4 0-4 6 4 2 0 2 4 6 6 4 2 0 2 4 6 Men Women 4
AEROMEXICO: FINANCIAL RESULTS YTD 2015. Total Revenues Millions of Pesos +9.0% 21.95 Operating Margin Millions of Pesos 4.2% 2.6 Pts. 20.13 1.6% YTD 2014 YTD 2015 Operating Profit Millions of Pesos 194.7% 927 YTD 2014 YTD 2015 EBITDAR Millions of Pesos 50.6% 4,808 3,193 314 Source: Grupo Aeromexico Quarterly Results YTD 2014 YTD 2015 YTD 2014 YTD 2015 5
INTEREST RATES AND DEBT COMPOSITION. 2008 Debt Composition 2015 (1) 40% 31% 60% 69% Working Capital Fleet Benchmark Financial Adjusted Debt / Adjusted EBITDAR 7.9x 7.3x 6.4x 5.1x 4.8x 3.7x 2.1x 20% 80% Interjet Gol Avianca LATAM GAM Volaris Copa Low Cost Airlines Full Service Airlines (1) Information to June 2015. (2) Adjusted Net Financial Debt = [ (Financial Debt) + (7 * Revenue ) - ( Cash and equivalents ) ] / [ + profits subsidiaries EBITDAR ) ] Information UDM 2T15 Financial Results for American companies, UDM 1T15 for Avianca ( latest available information) 6
SOLID PERFORMANCE IN MEXICAN MARKET. 2Q15 Domestic Market Share 11.1% 3.0% 1.3% Domestic Passenger Growth Millions of Passengers 2.87 +9.8% 3.15 34.3% 24.1% 25.4% 2Q14 2Q15 Source: DGAC (Passenger Information, excludes Charter operations) 2Q15 International Market Share International Passenger Growth Millions of Passengers Otras 31.2% 16.1% 17.2% 1.22 +25.4% 1.53 3.6% Alaska 3.9% 5.6% 7.8% 14.2% 2Q14 2Q15 7
INVESTING IN OUR FUTURE: NETWORK ENHANCEMENT. Strengthening our network with new destinations and frequencies: Increased presence in Central & South America: Managua, Panama and Medellin. Strengthened service to USA & Canada: Mexico City to Boston, Toronto and Vancouver, as well as Monterrey to New York and Miami. Increased frequencies to London and Shanghai. Developing Monterrey Hub. Network Enhancement in 2015 Improving Connectivity % Connecting Passengers of total 30% 26% 21% c Strengthening Position in Mexico City and MTY Connecting Banks in Mexico City Airport Banks Embed Shuttle Product 2010 2012 2014 Source: Grupo Aeromexico Arrivals Departures 8
REVENUE MANAGEMENT STRATEGY FOCUSED ON RASK. Competitive pricing with better segmentation to drive volume while protecting yields. Capturing marginal VFR and leisure passengers with competitive pricing in advance purchase. USD Ancillary Revenues per Passenger $5.90 $7.90 $7.30 $7.50 Building state of the art data sources and tools. Ancillary revenues add low cost incremental margin. Strategy for the future 2012 2013 2014 1H15 Increase distribution of existing products through IT developments: Upgrades. Aeromexico Plus: choice seat in front and exit rows in economy. Excess luggage pre-payment. Concierge. Ground transportation. Discount pass. 9 VFR refers to Visiting Friends and Relatives 9
UNRELENTING FOCUS ON COSTS. Cost control has also been key in the transformation of the Mexican Airline Industry. Mexican Carriers have proven their ability to cut costs, with Aeromexico becoming the most efficient Full Service Carrier in the Americas. Airlines in Americas, CASK Stage Length Adjusted FY 2014 10.05 Low Cost Carriers Full Service Carriers 9.12 9.03 8.71 8.59 7.36 7.25 6.74 6.26 6.00 5.87 5.00 4.56 3.48 (1) Stage length adjustment @ 1,000 miles.. Source: Fourth Quarter 2014 Company s Financial Statements. *Available information (YTD September) for Latin American Airlines & Viva Aerobús 10
INVESTING IN OUR FUTURE: PEOPLE. Global Management Team that combines experience of International Airlines. New Labor Contracts for new employees. Potential Labor Cost Savings 11
INVESTING IN OUR FUTURE: AEROMEXICO FLEET PLAN. Fleet type Model 4Q14 4Q15E Average Age E-145 24 17 13.2 E-170/175/190 38 44 5.1 Regional 62 61 737-700 24 19 9.8 737-800 25 31 5.7 Narrow Body 49 50 B767 4 0 23.2 B787 5 8 0.9 B777 4 4 10.9 Wide Body 13 12 Total 124 123 8.4 12 Source: Grupo Aeromexico
INVESTING IN OUR FUTURE: AEROMEXICO FLEET PLAN. Fleet Plan renewal provides CASK efficiencies, maintaining flexibility and reducing ownership cost. Fleet Plan Today E-145 E-170/175/190 737-700 s/800 s NG 767 s 787 s Long term E-170/190 737-800 s NG/MAX Leased vs. Owned Moving towards a more balanced split of owned vs leased aircraft through our long term fleet plan. Market conditions offer several opportunities to increase business with lessors. Scales Economies from new aircrafts acquisition. 777 s Source: Grupo Aeromexico 787 s 13
INVESTING IN OUR FUTURE: EFFECTIVE RISK MANAGEMENT. Reducing exposure to external factors, building flexibility in our fleet plan. Aircrafts 300 Economic Cycle Exchange Rate Exposure Revenues 250 200 150 100 Fleet plan flexibility MXN 42% Costs USD 58% Reduced risk from exchange rate fluctuations. 50 MXN 33% 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Year USD 67% Aircraft Staggered Leases Fleet 2015 2016 2017 2018 Total Regional Total 9 15 9 3 36 Narrow Body Total 6 2 10 5 23 Fuel Hedging Strategy Over 50% of expected fuel consumption for the next 12 months is hedged with call options and call spreads. Wide Body Total 4 1 0 3 8 GAM Total 19 18 19 11 67 Fuel surcharges complement Grupo Aeromexico s hedging strategy. 14 Source: Grupo Aeromexico
INVESTING IN OUR FUTURE: DEVELOPING PARTNERSHIPS. Strategic alliances have contributed to Aeromexico s increased connectivity and premium product. Aeromexico is the only Mexican carrier in an international alliance. Club Premier Loyalty Program Delta Air Lines Alliance Strong relationship of over 20 years. Aeromexico has a 51% investment in PLM. Value of PLM in Dec 2012 US$518 Million. +3.8 million frequent flyer members. Gross billings of USD $153M in 2014. Largest Frequent Flyer Program ( FFP ) in Mexican market. Solid commercial alliances with financial institutions (i.e. Banamex, AMEX) and retailers (i.e. Soriana). Low capital requirements and stable cash flow generation. Earn kilometers with 90+ commercial partners. Shareholder of Aeromexico and member of our Board. Network-wide code sharing: 204 share codes 725 flights. JV-MRO facility in Querétaro. Potential for airports co-location. Looking forward to potential ATI/JV in the context of Open Skies for Mexico. 15
STRATEGIC ALLIANCE: Potential Joint Network in US-MEX Transborder market POTENTIAL JOINT NETWORK FOR MEXICO US TRANSBORDER MARKET AM and DL have filed an application with the US DOT and Mexican Competition Authorities (COFECE) seeking antitrust immunity for a new joint venture on flights between the US and Mexico. This joint venture would provide an enhanced customer proposition, deeper schedules and enhanced network possibilities for travelers, differentiating Delta and Aeromexico from other airlines in the market. Facilitates additional investments further improving customer experience. Currently Delta and Aeromexico offer more than 4,000 weekly codeshare flights, representing more than 80 daily trans border round-trip flights. 16
INVESTING IN OUR FUTURE: ENHANCING PRODUCT FOR OUR CUSTOMERS. New Services and Products Awards Best Airline in Mexico, 2015. By Global Traveler magazine, for the 5th consecutive year. Best Domestic Airline, 2015. Awarded in this year's first edition of the Food & Travel Reader s Choice Awards. Source: Grupo Aeromexico Socially Responsible Organization Index, 2015. First airline in Mexico listed in the Mexican Stock Exchange Sustainability Index. PAX International Readership Awards, 2015. The airline s award for Outstanding Food Service by Carrier for The Americas. Corporate Social Responsibility, 2015. From the Mexican Center for Philanthropy, for the 5th consecutive year. 17
INVESTING IN OUR FUTURE: NEW MEXICO CITY AIRPORT KEY OBJECTIVES. Strategic opportunity for Mexico to create and develop the best global hub in Latin America. Designed by award winning Architect Norman Foster, who was also architect for Hong Kong and Beijing International Airports, amongst other globally recognizable buildings. Enhanced processes to optimize connectivity and promote NAICM as the hub of a global flagship airline: Aeroméxico. Ensure that NAICM will allow profitable growth of the Mexican Aviation Industry, with competitiveness in operational costs and quality in service. Continuous consultative process in the design & construction of the new airport and establishment of a structured transition program to ensure a successful launch. 18
ONCE IN A LIFETIME OPPORTUNITIES AHEAD WITH NEW MEXICO CITY AIRPORT. Mexico City Airport is geographically well positioned to capture connecting passengers from the Americas. Total Air Passengers Origin and Destination between USA and Latin America Direct Flight 56% Connecting 44% = 31.8 mm - 4% of total connecting passengers currently transfer through Mexico City Airport. - This represents a huge opportunity for Aeromexico, particularly when the New Mexico City Airport is completed. Source: DDS, O&D passenger information for the full year period of 2014. 19
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Investor Relations Contact Information: aminvestorrelations@aeromexico.com Tel (+52) 55 9132 4477 Jonathan Wallden Contact Information: jwallden@aeromexico.com DISCLAIMER This presentation is neither an offer for sale nor a request to buy any securities. Such offer or request may only be made through an offering memorandum containing the description of the terms and conditions of such offer and shall include detailed information of the company and its management, as well as the financial statements of Grupo Aeromexico, S.A. de C.V. ( Grupo Aeromexico ), in terms of the Securities Market Law (Ley del Mercado de Valores) ( LMV ) and the General provisions applicable to securities issuers and other securities market participants (Disposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores) (the Provisions ). Statements in this presentation that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements". Such statements include, but are not limited to, statements about future financial and operating results, the Company s plans, objectives, estimates, expectations and intentions, and other statements that are not historical facts. These forwardlooking statements are based on the Company s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. 21