Air Berlin PLC Frankfurt, 29 August 2012 DVFA Small Cap Conference
2012 is the transition year business transformation airberlin on its journey to sharpen its profile in the scheduled business Shape & Size efficiency program Topline Network & Fleet Costs Maintenance Etihad Airways partnership Oneworld membership New revenue management system and passenger service system Introduction of fare classes Organizational structure Guest experience Measures taken to improve profitability Initiatives with short term negative impacts in H1 2012 Developing new hubs and investment of new routes Enhancing the long-haul product Lounge development Frequency reduction Route cancellation Investment in staff training Migration process in booking systems Temporary higher FTE needs 2
First improvements in H1/2012 full effects of transition come into force in 2013 2012 is the transition year Selected improvements already established in R/ASK development Decrease C/ASK ex fuel Seat load factor increase Aircraft utilization Effects Transition process comes along with investments and costs at first hand First improvements can be seen in 6.47 +3.6% 6.70 5.61-2.5% 5.47 Full positive impact of taken initiatives is projected for 2013ff. R/ASK [EUR ct.] +1.93%p C/ASK excl fuel [EUR ct] 75.27 77.20 +5% 2012 2013 SLF [%] a/c utilization 3
Despite all short-term impacts, positive effects are visible in H1/2012 strong increase in fuel price could be offset [EUR m] Revenue development +50.3 Revenue increase of 2.7% despite 7.6% less capacity (1.7 m seats have been reduced) 1,897.8 1,948.1 +2.7% Fuel development +63.7 Initiatives did not only compensate for the negative effects from the transition but also the higher fuel price (EUR 63.7 m) 472.7 536.4 +13.5% EBIT development Improved performance on certain cost line items helped to offset fuel price increase and achieve better EBIT (EUR 41.8 m) +41.8-178.7-19.0% H1/11-220.5 4
With the continuous development of our partnership plus the effective usage of new systems airberlin is on the right track for the second half Update on partnerships Code-shares in place (except for bilaterally constrained markets) Abu Dhabi to Phuket flight revenue management by Etihad (70% of cap.) Joint OEM 1) negotiations Joint sales calls to TMCs 2), agents and corporates Codeshares with seven oneworld partners successfully implemented (AA, AY, BA, IB, JAL, RJ, S7) Codeshare pax volumes H1/2012 vs. H1/2011 +140% Joint marketing campaign in Germany Joint procurement of: +136% ULD 3) (7 year lease) Fuel at common stations 1) Original Equipment Manufacturer 2) Travel Management Companies 3) Unit Load Device Partner AB 2011 2012 5
Key highlights H1 2012 Total revenue development Yield Seat load factor +8.4% +3.6% 115.56 125.22 +6.6% 102.61 +8.7% 111.53 75.27 +1.93%p 77.20 6.47 6.70 7.87 8.39 R/ASK [EUR ct.] Revenue/Pax [EUR] Revenue/RPK [EUR ct] Yield [EUR] SLF [%] Cost 1) per ASK incl. & excl. fuel Operational KPIs +5% +1.4% 7.22 7.32 5.61-2.5% 5.47-2.5% C/ASK incl fuel [EUR ct] C/ASK excl fuel [EUR ct] a/c utilization Fuel burn/100 ASK [ltr.] 1) Cost on EBIT level 6
Financial Performance [EUR m] H1 2012 Revenue EBITDAR EBIT Net result Good revenue performance especially in Q1 delivered good H1 rolling increase despite capacity reduction Revenue increase and cost control helped to offset fuel price increase (EUR 70 m) and still achieve higher EBITDAR EBIT increase in line with EBITDAR development Higher non cash financial result increased net loss +2.7% 1,897.8 1,948.1 H1/11 +33.2% 116.6 155.3 +19.0% -2.9% -220.5-178.7-164.5-169.2 7
EBIT development: H1 2011 to H1 2012 incl. view Shape & Size [EUR m] Revenue Effects Cost Effects 21.1 22.2 191.9-150.3 75.8 33.7-125.2-79.9 29.4 23.0-178.7-220.5 EBIT ACT 2011 Routes cxl Top Line Revenue Price Revenue Capacity Revenue SLF Costs Network MRO Fuel Other Expenses EBIT ACT 2012 Shape & Size = EUR 100.0 m over four clusters Revenue Price = +9.9% Capacity = -1.465k seats (-6,7%) whilst pax reduced by 725k (-4.4%); seat load factor +1.9pP Fuel = Fuel Price/metric tonne = $1,077 (2011: $916 -> +$161; +17,6%); 1.331 USD/EUR (+1.7%) 8
Cost of aircraft ownership H1 2012 Fleet development [number of aircraft] Net cost of leases & depreciation [EUR m] -13-1.6% 165 69 152 63-7.9% 330.4 325.2 Effective dollar rate [EUR/USD] 14 14 287.9 287.5 +2.7% 65 58 1.327 1.362 10 7 10 7 42.5 37.7 Q2/11 Q2/12 H1/11 H1/11 A320 family A330 family B737 family E190 Q400 9
Contribution to full year EBIT improvement more than EUR 100 m in the first half of 2012 [EUR m] H1 2012 Shape & Size performance H1 H1 > 40.5 > 6.0 5 Cost initiatives MRO 4 H1 6 Process improvement Yield & Rev. mgmt Profitability Improvement EUR 2 Network reduction & productivity H1 > 1.9 Alliances 3 > 10.8 1 H1 H1 > 34.3 > 7.0 SHAPE & SIZE profitability improvement in > EUR 100 m 1 Enhanced yield development 2 Codeshare effects from partnership with Etihad Airways and oneworld 3 Aircraft sourcing and improvement of network productivity 4 Strategic procurement and reduction of maintenance cost 5 Several cost measures EBIT values without effects from cost avoidance 10
In the course of 2012, increasing impact on EBIT current improvement > EUR 230 m [EUR m] Share of Total 26% 30% >60 >70 >230 >50 >50 Q1 Q2 Q3 Q4 2012 Implementation Realization 11
Financial result H1 2012 vs. H1 2011 [EUR m] Breakdown of financial result Income Expenses Currency & derivatives effects -14.9% 5.3-87% -236.2% H1/11 0.7-32.2 H1/11-37.0-5.8 H1/11-19.5 Due to USD rate development 12
Balance sheet structure [EUR m] B/S as of Dec 31, 2011 B/S as of Jun 30, 2012 2,264 2,528 Fixed assets 66% 11% Equity Fixed assets 55% 4% Equity Other current assets 24% 89% Debt Other current assets 33% 96% Debt Liquid assets 10% Liquid assets 12% 813 812 Based on changes in market value from end of June to end of July additional EUR 60 m were accounted for in the adjusted view on equity EUR 320 m Balance negatively impacted by changes in market valuation Target is to achieve a better equity ratio at the end of the year 2012 Net debt target is around EUR 500 m 13
Strong earning improvement envisaged Operational performance Capacity Moderate increase in long haul business Capacity utilization and income Increasing load factor through network reduction, improved sales platform and partnerships Result Revenue Growth in revenue through yield and SLF growth expected Expenses Cost per ASK excl. fuel will be kept stable; structural cost increases will be offset through Shape & Size Result Improvement in profitability Balance sheet Target 2012 A L Balance sheet Equity and liquidity stabilized through Etihad Airways investment Equity ratio better than previous year at year end 2012 Deleveraging is the key objective for 2012; initiatives are on the way Net debt target around EUR 500 m by year end 2012 Strong earnings improvement targeted for 2012 14