AIR BERLIN PLC Q2 RESULTS, APRIL JUNE 2011 Berlin, August 18 th, 2011
MANAGEMENT SUMMARY 1/5 Management Summary Yield 1) [EUR] +7.9% 99.75 107.68 Q2/10 PF Q2/11 ACT Measures: Increase of fuel surcharge Uplift price curve More restrictive price curve Increase in ancillary revenue Cost/ASK* [EUR ct] -1.7% 4.02 3.95 Q2/10 PF Q2/11 ACT Measures: Decrease DOCs Leveraging fixed cost basis ~ EUR 111.0m Seat load factor +4.9% +73.8% +77.4% Q2/10 PF Q2/11 ACT Measures: Increasing capacity as compared to Q2/10 pro forma only in the magnitude of lost seats due to volcano impact Adjusting distribution mix Aviation tax & fuel [EURm] EUR-5.0m EBIT 116.0 111.0 Operational improvement was not sufficient to offset cost increase coming from aviation tax and fuel Cost increase Achievements 1) based on flight revenue incl. aviation tax * EBITDAR-level excl. fuel and aviation tax 2
MANAGEMENT SUMMARY 2/5 3 Impact of aviation tax and impact of the crisis in North Africa Impact of Aviation tax q Limitation of price increases in smaller catchments Demand in airports near foreign airports decreases significantly Bigger price/demand elasticity in hubs Impact of the crisis On top of problems resulting from the aviation tax, touristic/leisure operations continue to suffer: from weak demand to North Africa Pressure on yields to core touristic destinations such as Spain as overcapacity was build up given the fact that a lot of carriers shifted capacity form North Africa to Spain Reduction in network initiated to cope with change in behavior pattern due to aviation tax Shape & Size with two dimensions Short term measures to limit negative impact especially in Winter 2011/12 Structural measures to realign the network for profitability in 2012 8 short-haul 25 mediumhaul p 45 long-haul Price Demand Price & Aviation Tax Aviation tax
MANAGEMENT SUMMARY 3/5 4 Initiatives: SHAPE & SIZE 1 ) Network EUR Cancellation of DB1 + DB2 negative and strategic unimportant routes Aggregation of high frequency routes Increase of hub utilization + - BH Reducing flights from smaller airports for scheduled services to cope with price-and-demand elasticity patterns due to aviation tax q p Price Demand Price + Aviation Tax TARGET: Focusing on four continental hubs (Berlin, Dusseldorf, Vienna and Palma) and gain connecting traffic Focusing on two long-haul hubs with moderate growth targets together with oneworld partners Touristic / leisure flights in smaller airports will remain where feasible
MANAGEMENT SUMMARY 4/5 5 Initiatives: SHAPE & SIZE 2) Fleet 171 163 177 164 old fleet plan new fleet plan 2011 2012 Reduction of 1.1 million seats and more than 7,500 flights Reduction of 2.2 million seats and more than 16,000 flights TARGET: Reduction in network growth to a nearly flat scenario, unless a) otherwise supported by profitable business opportunities or b) driven by productivity increase
MANAGEMENT SUMMARY 5/5 6 SHAPE & SIZE: Network adjustments mainly in second half of 2011 Net adjustments Cityshuttle Balearic / Iberia Domestic Spain Domestic Germany International Charter Intercontinental Seats -520,741-293,015-58,413-260,095-41,214-21,267 Flights -2,774-1,780-396 -1,068-374 -47 Cancellation Frequencies Seats ['000] Examples Seats ['000] Examples Seats ['000] Examples Seats ['000] Examples Seats ['000] Examples Seats ['000] Examples -70 FKB-VIE -13 DUS-BIO -8 PMI-MJV -43 HAM-FRA -21 RJK -3 DUS-LIR -93 HAJ-LGW -51 VIE-MAD -9 PRN -5 AUA -14 PAD-MAN -8 SCN-PMI -14 STR-LED -14 FMO-VIE -10 FMO-STN -18 DUS-DME -4 HAM-AGP -11 PMI-SCQ -12 TXL-CGN -48 SSH -1 DUS-LAX -24 DUS-VIE -16 DUS-BCN -8 PMI-SVQ -26 DUS-MUC -41 HRG -5 SDQ -17 NUE-VIE -14 DUS-PMI -6 PMI-XRY -18 DUS-TXL -13 PRN -12 VIE-ARN -10 FRA-PMI -22 HAM-NUE -29 VIE-MXP -10 HAJ-PMI -15 TXL-STR -12 TXL-BSL -13 MUC-PMI
Result of airberlin [in EURm] Q2 2011 Total Revenue EBITDAR Margin [%] 13.5 12.7 16.8 Revenue slightly up compared to pro forma, mainly driven by volcano disruption last year 957.9 +16.5% 1,116.2 Excluding aviation tax EBITDAR margin increased to 16.8%; including aviation tax EBITDAR margin below previous year 129.6 142.3 187.0 EBIT Margin [%] Q2/10 PF Q2/11 ACT 1.1 12.5 Net Profit Q2/10 PF Q2/11 ACT Q2/11 ACT incl. excl. aiviation tax aiviation tax EBIT development in line with EBITDAR Net profit higher than previous year due to higher tax credit -12.8-27.8-32.2-57.2-43.9 Q2/10 PF Q2/11 ACT Q2/11 ACT incl. excl. aiviation tax aiviation tax Q2/10 PF Q2/11 ACT Q2/11 ACT incl. excl. aiviation tax aiviation tax PF= pro forma (incl. HG) 7
Result of airberlin [in EURm] 1 st half 2011 Total Revenue +12.0% EBITDAR Margin [%] 10.0 6.1 10.1 1,694.5 1,897.8 169.7 191.0 116.6 H1/10 PF H1/11 ACT H1/10 PF H1/11 ACT incl. aiviation tax H1/11 ACT excl. aiviation tax EBIT Net Profit -134.3-146.1-112.4-220.5-159.6-164.5 H1/10 PF H1/11 ACT incl. aiviation tax H1/11 ACT excl. aiviation tax H1/10 PF H1/11 ACT incl. aiviation tax H1/11 ACT excl. aiviation tax PF= pro forma (incl. HG) 8
Overall market development 2011 Pax development across the industry year-on-year* [%] Q1/10 Q2/10 Q1/11 Q2/11 22.5 28.8 2.6 3.1 1.1 4.8 4.3 1.8 3.0 3.4 2.6 5.7 6.9 1.0 5.8 3.1 3.9 8.3 4.0 6.1-1.1-0.2-16.5-17.4 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun airberlin AEA Source: AEA (region Geographical Europe and Domestic) 9
Capacity, passengers, seat load factor and yield development Development of operational KPIs Capacity [m] Passengers [m] SLF [%] Yield 1) [EUR] Revenue 2) per seat kilometer RASK [EUR ct] +3.8% +8.8% +3.6%p +7.9% +10.9% 11.90 12.35 8.78 9.55 73.8 77.4 99.75 107.68 6.07 6.73 Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT Passenger number up as compared to pro forma Capacity utilization above previous year pro forma seat load factor Yields above previous year pro forma; challenging market conditions for touristic business Higher yield and seat load factor brought RASK up 1) based on flight revenue incl. aviation tax 2) based on total revenue incl. aviation tax PF= pro forma (incl. HG) 10
KPI development in business segments Operational performance by business segment Q2 2010 pro forma vs. Q2 2011 actual DOMESTIC EURO SCHEDULE EURO CHARTER INTERCONT TOTAL Q2/10 Q2/11 Q2/10 Q2/11 Q2/10 Q2/11 Q2/10 Q2/11 Q2/10 Q2/11 PF ACT PF ACT PF ACT PF ACT PF ACT Demand Pax [m] 1.80 2.02 12.53% 4.92 5.44 10.49% 1.79 1.73-3.07% 0.25 0.34 32.16% 8.78 9.55 8.76% SLF [%] 65.4 70.1 4.8%p 72.0 76.3 4.3%p 89.6 90.2 0.6%p 84.4 87.1 2.7%p 73.8 77.4 3.6%p Supply Seats [m] 2.75 2.89 4.87% 6.83 7.12 4.30% 1.99 1.92-3.68% 0.30 0.38 28.11% 11.90 12.35 3.72% ASK [bn] 1.29 1.35 4.60% 7.39 7.72 4.51% 4.62 4.56-1.37% 2.35 2.89 22.69% 15.77 16.59 5.25% PF = pro forma incl. HG 11
airberlin's revenue increased by 17% in Q2/11 as compared to previous year on a pro forma basis Revenue split [EURm] Change from PF Q2 2010 +18.2% +0.9% +17.4% +3.0% +7.6% +16.5% Charter revenue slightly recovered 682.6 301.2 44.5 1,028.3 10.3 77.7 1,116.3 On-board revenue increased due to better long-haul business Recovery in cargo business drove other revenue Seat only Charter Aviation tax Flight revenue In-flight sales Ancillary revenues Total revenue PF= pro forma (incl. HG) 12
13 Overview of corporate agreements and business Development of company agreements No. of company agreements No. of business points 1,057 912 7,915 Decrease of number of company agreements in Q1 was fully compensated in Q2 2011. 314 286-51 +58 1,448 1,296 1,780 Number of business point agreements constantly increases 348 2,306 330 163 564 2006 2007 2008 2009 2010 Q1 Q2 Total 2011 2011 Q1/10Q2/10Q3/10 Q4/10 Q1 2011 Q2 2011 Total
Overview of operating expenses Development of expenses [EURm] Expenses for materials & services 1) Personnel expenses Other operating expenses +22.3% 707.8 578.9 233.3 0.0% 144.0 +4.6% 150.6 227.5 206.2 75.5 34.3 35.4 277.2 79.6 44.5 38.3 34.9 Airport charges Fuel Navigation Aviation tax Catering Others 117.9 117.9 54.7 4.3 18.3 5.3 61.4 57.6 13.2 7.1 67.6 5.1 MRO Insurance Marketing Commission Other Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT 1) excl. leases and depreciation PF= pro forma (incl. HG) 14
Development of costs per ASK including and excluding fuel Cost/ASK incl. fuel 1) [EUR ct.] Cost/ASK excl. fuel 1) [EUR ct.] Cost/ASK excl. fuel & excl. avitation tax [EUR ct.] +10.6% 5.90 5.33 25.4% 22.9% 4.02 +4.8% 4.21 4.02-1.8% 3.95 27.1% 14.0% 9.0% 24.5% 28.5% 12.1% 8.2% 28.4% 27.9% 29.7% 15.4% 9.9% 26.3% 32.6% 13.8% 9.3% 27.9% 29.7% 15.4% 9.9% 34.2% 35.6% 18.0% 12.2% Others Airport charge Personnel expenses. Navigation Fuel Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT Q2/10 PF Q2/11 ACT 1) excl. leasing and depreciations and incl. Aviation tax PF= pro forma (incl. HG) 15
Cost of aircraft ownership & airberlin fleet Average number of aircraft grew by 4% as compared to previous pro forma quarter; Leases increase driven by stronger USD Leases [EUR m] 130.6 +17.2% 153.0 Change from PF Q2 2010 +3 +/-0-4 +2 +1 168 Q2/10 PF Q2/11 ACT Depreciation [EUR m] 87-19.8% 64 26.8 21.5 7 10 Q2/10 PF Q2/11 ACT E190 Q400 Airbus Boeing Total PF= pro forma (incl. HG) 16
Fuel hedging 2011 Fuel hedging profile and fuel price development, 2010 vs. 2011 Hedging profile [%] 105 100 95 90 85 [%] 90 98 93 1,100 1,000 900 800 Price 1) development [USD/t] [USD/t] 80 75 70 0 Apr May Jun Jul Aug Sep Oct Nov Dec 700 600 500 Apr May Jun Jul Aug Sep Oct Nov Dec Hedge rate 2011 (as of 08/12/11) Hedge rate 2010 (as of 08/12/10) Current hedge price Best case hedge price Worst case hedge price Effective price 2010 Market / Forward price 08/12/11 Market / Forward price 08/12/10 1) excl. differentials as of August 12 th, 2011 / 2010 17
Dollar hedging 2011 Dollar hedging profile and FX rate development, 2010 vs. 2011 Hedging profile [%] FX rate development [USD/EUR] 100 95 90 85 80 75 70 [%] 100 98 85 1.44 1.42 1.40 1.38 1.36 1.34 1.32 1.30 [USD/EUR] 0 Apr May Jun Jul Aug Sep Oct Nov Dec 0.00 Apr May Jun Jul Aug Sep Oct Nov Dec Hedge rate 2011 (as of 08/12/11) Hedge rate 2010 (as of 08/12/10) Current hedge price Best case hedge price Worst case hedge price Effective price 2010 Market / Forward price 08/12/11 Market / Forward price 08/12/10 as of August 12 th, 2011 / 2010 18
19 Financial result Q2 2010 vs. Q2 2011 Breakdown of financial result [EUR m] Income Expenses Currency & derivatives effects +271% 0.7 2.6 +5% -46% -17.7-16.8-22.6-33.1 Q2 2010 Q2 2011 Q2 2010 Q2 2011 Q2 2010 Q2 2011 Interest expenses decreased due to sale of AC in 2010 Highest impact by changes in fair value of fuel options Positive impact of changes in USD on financing of aircraft
20 Tightening of balance sheet ratios in the second quarter 2011 Balance sheet structure, Dec 31, 2010 vs. June 30, 2011 [EUR m] B/S as of Dec 31, 2010 B/S as of June 30, 2011 2,370 2,636 21% Equity 12% Equity Decrease in equity due to H1 result Net Debt increase due to financing of on balance aircraft Fixed assets 64% Fixed assets 62% Other current assets Liquid assets 19% 17% 79% Debt Other current assets Liquid assets 22% 16% 88% Debt Net debt: 489 Net debt: 616
21 Outlook Expectations for fiscal year 2011 Operational performance Result Balance sheet A L Capacity Following network reduction in second half capacity yearon-year expected to remain stable (no growth) Utilizing capacity within optimized hub concept Capacity utilization and income Increasing load expected along with improving yields due to focus on profitable routes Revenue Growth in revenue expected Expenses Stringent cost control to offset price increases One-off costs from network reduction/fleet reduction can be expected Result Measures in 2011 may not be sufficient to reach positive EBIT Assets Stabilizing cash on current level Liabilities Further actions planned to reduce net debt Equity ratio will strengthen from positive results in H2 and reduction of total assets
Thank you for your attention. 22