1 Air Berlin PLC 14 th German and Austrian Corporate Conference Frankfurt, May 19 th / 20 th 2011
2 AGENDA page A Introduction 3 B Performance Q1 2011 8 C 19 Outlook and Initiatives 2011
3 airberlin s growth path from a charter carrier to a rewarded and accepted scheduled airline Foundation for growth success Long-term revenue and passenger development airberlin [in m] PHASE I PHASE II PHASE III 1992-1997: Foundation Opportunities for growth at secondary airports airberlin introduces PMI- Hub ; from now on a full year operation possible Constantly gaining market share BUSINESS FOCUS: Charter 1998-2005 Organic Growth airberlin introduces Seat Only Sale Network expansion due to new city connections: Euro Shuttle New technologies enable direct sales via GDS Further gaining market share BUSINESS FOCUS: Scheduled traffic specializing on holiday destinations 2006-2009 M&As 2006 Air Berlin PLC goes public Network expansion through acquisition of dba, LTU, TUIfly city ops and share in belair 2006 2007 2009 BUSINESS FOCUS: Becoming a service orientated high class affordable scheduled airline 2,540 3,389 3,240 3,724 55 89 112 127 151 169 213 291 3.0 407 4.1 568 5.5 695 6.7 863 10.0 1,034 12.1 1,215 13.5 1,575 20.0 27.0 28.5 27.9 33.6 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Revenue Passengers
4 Driver for growth and success: airberlin s USP High quality and outstanding service at attractive prices PRODUCT NETWORK Unique and clear brand strategy: Hybrid Multi-award-winning frequent flyer program with its unique benefit: my route Attractive route network Young and modern fleet with low fuel burn SERVICE airberlin operates a worldwide route network More than 163 destination in 39 countries 4 Hubs (TXL, DUS, NUE, PMI) 1 st Choice BEST VALUE-FOR-MONEY airberlin combines attractive prices with outstanding service on ground an in the air to offer a price / performance ratio which is unique in the industry Free snacks, sandwiches or warm meals depending on the stage length Award for our long-haul Amenity Kits: Gold Award in the "Best Business Class Unisex Kit" category and "Best Economy Class Amenity Kit" Free newspapers and magazines, Sansibar gourmet meals, bonbons and chocolate hearts
5 airberlin`s hybrid strategy is well-established throughout Europe and its customers March 2011: airberlin received the award for its successful launch in the business travel sector BEST BRAND AWARD airberlin is the only European carrier that occupies the gap between the classic full fare airlines an low-cost carriers With the successful hybrid business model airberlin sets standards in international competition 2010 2011 The marketing magazine "absatzwirtschaft" and the Germany Marketing Association (DMV) have awarded the Brand Award 2011 in the "Best Brand Expansion" category to airberlin. The jury was made up of thirteen marketing experts "The company's positioning as a personal airline for everybody wanting to fly for leisure or business scored heavily."
Solid market position in Germany airberlin is the second largest German airline Market share at selected German airports 2010 1) #1 HAJ 27.0% (-2.8%p) #2 HAM 27.8 % (-0.5%p) #1 DUS 35.3% (-1.6%p) #1 TXL 46.6% (+0.2%p) HUB PMI #2 CGN 28.7% # 4 (-3.3%p) #1 STR 22.0% (+1.8%p) #2 ZRH 9.0% (+1.4%p) # 2 #2 MUC 12.4 % (- 0.6%p) #1 NUE 58.7% (-0.8%p) #2 VIE 17.9% (+1.0%p) # 1 PMI 33.0% (+1.0%p) 1) DACH = Germany, Austria, Switzerland; flown passengers 2010 AB group compared to AB group 2009 (incl. Tuifly & NIKI) * Source: Paxstat 2010/2011; ADV aero, AENA 6
Solid market position in Europe #6 in the European air travel market counted by passengers transported airberlin`s passenger growth impacted by TUIfly City business & NIKI Passenger in FY 2010 2) [m] 2010 Pax development across the industry year-on-year* [%] CAGR: +20% Lufthansa group 90 13.5 2005 16.8 14.8 2.0 2006 25.0 0.7 18.2 6.1 2007 28.6 1.6 19.9 7.1 2008 27.9 1.2 19.6 7.1 2009 33.6 1.2 24.4 8.0 2010 Ryanair Air France/KLM British Airways & Iberia easyjet airberlin Turkish Airlines Scandinavian Airlines Alitalia Aeroflot 31 14 26 34 29 25 21 50 56 73 71 Intercont Europe Domestic 1) 01/01/2010-12/31/2010; according to company websites (except Alitalia) 2) Pax incl. dba 09/06, LTU 08/07, belair 11/07, Tuifly 10/25/09, NIKI 07/10 7
8 B Performance Q1 2011
airberlin Q1 2011 financial result [EURm] Total Revenue Revenue slightly up, mainly driven by higher load factor though lower than expected due to the crisis in North Africa and missing Easter holiday effect in Q1 736.6 +2.0% 751.6 EBITDAR EBITDAR drop mainly due to a sharp increase in fuel prices 40.2-25.7 Q1/10 PF Q1/11 ACT Q1/10 PF Q1/11 ACT EBIT Net Profit EBIT development analog EBITDAR development -106.5 Net loss influenced by better financial result -188.3-102.4-120.6 Q1/10 PF Q1/11 ACT Q1/10 PF Q1/11 ACT PF = pro forma incl. NIKI // ACT = actual 9
The crisis in North Africa and the nuclear reactor catastrophe in Japan changed the overall demand for travel 2010 Pax development across the industry year-on-year* [%] -1% Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 airberlin`s loss of passengers in the month of February is 5% 4% 3% 3% 1% 8% 9% 9% 8% 8% 9% 6% 7% 7% 5% 6% 6% 3% 5% 3% 2% 3% 3% 1% 1% 3% -0.21% significant compared to the industry development This is mainly due to the crisis in North Africa Jan Feb -16% -17% Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar airberlin owns a big market share of the tour operator business to Egypt airberlin AEA Source: AEA (region Geographical Europe and Domestic) 10
Passengers, seat load factor and yield development Development of operational KPIs Passengers [m] Seat load factor [%] Yield 1) [EUR] +1.9% +2.2%p -1.8% 6.74 6.87 70.3 % 72.5 % 99.79 97.97 Q1/10 PF Q1/11 ACT Q1/10 PF Q1/11 ACT Q1/10 PF Q1/11 ACT Passenger number slightly increased; due to the North Africa crisis increase though limited Seat load factor higher because of decrease in capacity Yields below previous year due to the North Africa crisis and missing Easter holiday in Q1 1) based on flight revenue PF = pro forma incl. NIKI // ACT = actual 11
KPI development in business segments Operational performance by business segment Q1 2010 pro forma vs. Q1 2011 actual DOMESTIC EURO SCHEDULE EURO CHARTER INTERCONT TOTAL Q1/10 Q1/11 Q1/10 Q1/11 Q1/10 Q1/11 Q1/10 Q1/11 Q1/10 Q1/11 PF ACT PF ACT PF ACT PF ACT PF ACT Demand Pax 1.99 1.99-0.22% 3.26 3.33 2.36% 1.15 1.15 0.28% 0.32 0.37 15.24% 6.74 6.87 1.92% SLF 65.0 67.8 2.8% 66.1 68.6 2.5% 94.8 92.6-2.2% 90.6 93.1 2.5% 70.3 72.5 2.2% Supply Seats 3.06 2.93-4.29% 4.93 4.86-1.42% 1.21 1.24 2.66% 0.36 0.40 12.16% 9.59 9.47-1.20% ASK 1.41 1.35-4.43% 4.69 4.66-0.62% 3.31 3.52 6.35% 2.87 3.16 10.32% 12.39 12.76 2.97% PF = pro forma incl. NIKI // ACT = actual 12
13 airberlin's revenue increased by 2.0% in Q1/11 compared to previous year on a pro forma basis Revenue split [EUR m] Change from PF Q1 2010 +1.9% -3.6% +0.06% +4.1% +25.3% +2.0% Charter revenue dropped due to crisis in North Africa 457.3 215.9 673.2 7.6 70.8 751.6 On-board revenue increased due to better long-haul business Recovery in cargo business drove other revenue Seat only Charter Flight revenue Onboard sales Other revenue Total revenue
14 Introducing the SME program caused a shift from corporate agreements to business points by mid-sized companies in Q1/2011 Development of company agreements No. of company agreements No. of business points 1,057 7,003 Number of company agreements decreased by 51 in Q1 due to switch to business point agreements by medium sized companies 286 51 1,390 314 348 330 163 564 2006 2007 2008 2009 2010 Q1/11 Total Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Total
Cost development Development of expenses, Q1 2010 pro forma vs. Q1 2011 actual [EUR m] Direct operating expenses 1) Personnel expenses 2) Other operating expenses 2) +12.2% 516.0 460.0 +18.8% Airport charges 188.8 199.0 126.3 150.0 53.1 Fuel Navigation Onboard service Others 160.0 56.7 27.7 26.8 195.5 59.5 28.3 33.7 Wages, salaries and benefits 114.0-0.9% 113.0 MRO Insurance Marketing Commission Others 45.4 5.1 15.1 5.0 55.7 5.3 21.0 4.8 65.8 Q1/10 PF Q1/11 ACT Q1/10 PF Q1/11 ACT Q1/10 PF Q1/11 ACT 1) excl. leasing and depreciations 2) excl. CMIO PF = pro forma incl. NIKI // ACT = actual 15
Cost of aircraft ownership Development of expenses [EUR m] Lease & CMIO expenses 141.6 118.3 26.4 CMIO 14.7 Depreciation Average number of a/c grew by 4% compared to pro forma Q1/2010 Overall A/C capital costs increase by 11% including the effect of a strengthening of the US dollar (+6%) Leases 103.6 115.2 28.4 21.0 Depreciation Q1/10 PF Q1/11 ACT Q1/10 PF Q1/11 ACT PF = pro forma incl. NIKI // ACT = actual 16
Fuel hedging 2011 Fuel hedging profile and fuel price development, 2010 vs. 2011 Hedging profile [%] Price 1) development [USD/t] 100 90 80 70 60 50 40 30 20 10 0 [%] 90 77 40 Apr May Jun Jul Aug Sep Oct Nov Dec 1,200 1,100 1,000 900 800 700 600 500 [USD/t] Apr May Jun Jul Aug Sep Oct Nov Dec Hedge rate 2011 (as of 04/28/11) Hedge rate 2010 (as of 02/26/10) Current hedge price Best case hedge price Worst case hedge price Effective price 2010 Market / Forward price 1) excl. differentials 2011: as of April 28 th, 2011 // 2010: as of February 26 th,2010 // Market curve as of May 10 th, 2011 17
Dollar hedging 2011 Dollar hedging profile and FX rate development, 2010 vs. 2011 Hedging profile [%] FX rate development [USD/EUR] [%] 100 88 74 [USD/EUR] 100 90 80 70 1.48 1.46 1.44 1.42 60 1.40 50 40 30 20 10 1.38 1.36 1.34 1.32 0 0.00 Apr May Jun Jul Aug Sep Oct Nov Dec Apr May Jun Jul Aug Sep Oct Nov Dec Hedge rate 2011 (as of 04/28/11) Hedge rate 2010 (as of 02/26/10) Current hedge price Best case hedge price Worst case hedge price Effective price 2010 Market / Forward price 2011: as of April 28 th, 2011 // 2010: as of February 26 th,2010 // Market curve as of May 10 th, 2011 18
19 C Outlook & Initiatives 2011
20 Increase marketed base price to push yield curve previous marketing base price from December 8 th, 2010 BS 1 Cityshuttle 29. - EUR 44.99 EUR BS 2 Balearic/ Iberia 49.- EUR 69.99 EUR from summer 2011 BS 3 Domestic Spain 19.- EUR 29.99 EUR BS 4 Domestic Germany 29.- EUR 44.99 EUR BS 5 International Charter./../. BS 6 Intercontinental 199.- EUR 249.- EUR
21 Fuel surcharge development Fuel surcharge increased by since 06/01/10 since 01/20/11 since 04/05/11 Short-haul (BS 1, BS 4, PMI-Portugal) 27.- 30.- 33.- Short & medium-haul (PMI, IBZ, MAH, KEF) 30.- 33.- 35.- Longer medium-haul (Canaries, Madiera, Egypt) 40.- 43.- 45.- Long-haul (BS 6) 87.- 92.- 100.- Service Charge per booking and passenger since 2010 since 01/20/11 Direct debit 10.- 10.- CC payment 15.- 17.-
22 Stimulating international markets works well Year-on-Year growth Q1 2011 YoY Growth International vs. DACH [%] Selected International markets 12.3% 40.8% 44.7% 44.1% 57.7% 1.0% 9.5% Abs. Rev. [Mio. EUR] -1.9% DACH International Total 333.9 98.6 432.5 Nordics Europe US North America 16.0 88.0 3.7 4.0 1.4 Thailand
23 Top-down defined targets with EUR +135m P&L impact to secure cost performance Accelerate targets 2011 by module (AB Group) [FC I] 1) 20.0 8.0 8.0 8.5 9.0 11.8 11.9 135.3 16.0 42.1 Handling, Landing, Nav. Fuel Payroll Travel Exp. Crew & Comp. Payments Advertising/ Marketing Distr. Costs/ Sales Comm. Catering/ OBS2) Technical Costs/ CAMO Leasing/ OOP/ Other3) Accelerate Target 2011 FC I 1 2 3 4 5 6 7 8 9 1) Including revenue targets of ~7 EUR m 2) OBS: On Board Sales 3) OOP: Other Operating Profit, Other: Other Revenue etc.
24 oneworld drives changes Sharpening hybrid business model and improving efficiency Strategic initiatives Snap-shot 2011-2015 A Extend seat only capabilities Fully use of oneworld upside potential Grow route portfolio long haul/middle east and further develop hubs TXL, DUS, VIE Exploit effects from revenue management upgrade Optimize sales approach C Hybrid Improve performance efficiency Secure tour operator potential Adapt tour operator sales-strategy considering fewer guarantees Harvest on trend to dynamic packaging Use BINOLI platform to discriminate against other channels Develop new types of cooperation to ensure best market access and positioning (e.g. Pegasus) Introduce AMADEUS infrastructure to enhance sales capabilities and to optimize revenue management Generate significant effects from PSS migration and improved revenue management tools Optimize capacities to provide optimal fleet for business model, sharpen product and positioning Continuous improvement of cost and productivity in operations B
25 Outlook Expectations for fiscal year 2011 Operational performance Result Balance sheet A L Capacity Growth in selected European areas and on intercont destinations Utilizing capacity within optimized hub concept Capacity utilization and income Increasing load expected along with slightly improving yields Revenue Growth in revenue expected Increase in fuel price will be passed on Expenses Stringent cost control to offset price increases Result Positive EBIT targeted for 2011 Assets Stabilizing cash on current level Liabilities Further actions planned to stabilize net debt Positive EBIT for 2011 is key target, but quantifying is currently difficult due to culmination of external factors
26 THANK YOU and AUF WIEDERSEHEN!