Cebu Air, Inc. (CEB) 2013 Results of Operations › Presentations › CEB FY2013 Inv… · CEB...
Transcript of Cebu Air, Inc. (CEB) 2013 Results of Operations › Presentations › CEB FY2013 Inv… · CEB...
Cebu Air, Inc. (CEB)2013 Results of Operations
Strictly Private and Confidential
March 13, 2014
1. Business Updates
10.3 11.0
2.7 2.6
3.0 3.3
0.8 0.8
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2012 2013 4Q2012 4Q2013
Domestic International
No.
of P
asse
nger
s (in
mil)
Passenger traffic increased 8.3% to 14.4 million in 2013
3 Source: Based on Company data.
13.314.4
3.5 3.4
2013 YOY 4Q13 YOY
Passenger 8.3% -1.1%
Domestic 7.6% -2.8%
International 10.7% 4.8%
Seats 9.2% 7.1%
Domestic 8.2% 5.3%
International 12.8% 12.8%
RPK 12.1% 7.2%
Domestic 8.2% -1.4%
International 15.9% 15.9%
ASK 14.3% 20.2%
Domestic 8.2% 6.6%
International 19.9% 32.1%
Load Factor
82.6% 81.9% 85.2% 78.7%
Seat capacity grew by 9.2% YOY in 2013, resulting to 81.9% seat load factor Flights grew 6.3% to 115,005 sectors, while ASK grew 14.3% as we began long haul operations in 4th qtr. Typhoon Yolanda slowed 4th qtr passenger travel to 3.4M, resulting in 4th qtr seat load factor of 78.7%. We utilized our airbus fleet about 12.5 hours per day and turned them 7x per day. On-time performance was at 74.5%, slightly lower than 75.9% in 2012.
CEB gained from both domestic consolidation and regional growth.
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CEB’s Int’l Market Share – FY2013
Source: Civil Aeronautics Board, Company data(1) As of December 31, 2013.
CEB’s Domestic Market Share – FY2013
Most number of passengers carried Highest seat load factor and competitive performance
index (1.05). Most extensive network 33 destinations, 60 routes, 1,838 weekly flights(1)
New routes: CEB-Camiguin, CEB-Masbate, MNL-Surigao
Flew more passengers within Visayas and Mindanao
CEB defended its dominance in the domestic market with a 50.4% share, as industry faces a consolidation trend. CEB continued to grow in the international market with 16.3% overall share , and a 23.8% share on routes we operate.
Singapore, Hong Kong and Korea are largest markets Increased flight frequencies pushes growth of
Cambodia, Indonesia, Korea, Brunei, China and Korea Network expansion continues: 32 routes, 22 destinations, 44 weekly flights(1)
New routes: MNL-Bali, Indonesia; MNL-Phuket, Thailand; MNL-Dubai Additional frequency: MNL-Osaka
CEB, 50.4%PAL
Group, 34.1%
AirAsiaZest,
10.6%
Seair, 4.8% CEB,
16.3%
PAL Group, 24.6%
Air Asia Zest, 4.8%
Seair, 1.6%
Foreign Carriers, 52.7%
2. Financial Results
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For the Quarters Ended For the Years Ended YOY Change31-Dec-12 31-Dec-13 31-Dec-12 31-Dec-13 4Q2013 FY2013
Total Revenue (Php Million) 10,032 10,422 37,904 41,004 3.9% 8.2%Passenger Revenue 7,778 8,072 29,579 31,663 3.8% 7.0%Ancillary Revenue 1,608 1,617 5,944 6,732 0.5% 13.3%Cargo Revenue 645 733 2,381 2,609 13.6% 9.6%
Average Yield per passenger 2,696 2,816 2,680 2,675 4.4% -0.2%Average fare 2,234 2,346 2,232 2,206 5.0% -1.1%Ancillary/passenger 462 470 448 469 1.7% 4.6%
Cargo yield per FTK 23.59 22.07 23.58 23.28 -6.5% -1.3%
(PHP million)EBITDAR 2,516 2,013 8,043 8,765 -20.0% 9.0%EBIT 1,104 232 2,663 2,404 -79.0% -9.7%Pre-tax Core Net Income 1,007 69 2,401 1,878 -93.2% -21.8%
MarginsEBITDAR Margin 25.1% 19.3% 21.2% 21.4% -5.8 ppts. 0.2 ppts.EBIT Margin 11.0% 2.2% 7.0% 5.9% -8.8 ppts. -1.2 ppts.Pre-tax Core Net Income Margin 10.0% 0.7% 6.3% 4.6% -9.4 ppts. -1.8 ppts.
Revenues up by 8.2% YOY to P41B; EBITDAR grows 9% to P8.8B, but EBIT declines 9.7% to P2.4B
EBITDAR margin is sustained at 21%, but EBIT and Pre-tax core margins decrease to 6% and 5%, respectively.
For the Quarter Ended For the Year Ended31-Dec-13 YOY Change 31-Dec-13 YOY Change
Available Seat Kilometer (ASK) (millions) 4,367 20.2% 16,207 14.3%Expense Accounts/ASKFlying Operations 1.307 -5.3% 1.340 -5.1%
Fuel 1.183 -3.2% 1.205 -2.8%Others 0.124 -21.8% 0.136 -21.7%
Maintenance 0.214 -15.3% 0.236 -3.3%Depreciation and Amortization 0.214 3.5% 0.213 9.1%Aircraft and Traffic Servicing 0.211 -11.0% 0.222 -8.2%Aircraft and Engine Lease 0.165 27.6% 0.143 -0.5%Reservation and Sales 0.101 -13.0% 0.103 -10.6%Passenger Service 0.060 8.3% 0.056 -4.0%General , Admin and Others 0.061 -22.1% 0.069 -9.6%Total Cost per ASK 2.334 -5.0% 2.382 -4.2%Total Cost per ASK ex-Fuel 1.150 -6.8% 1.177 -5.6%
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Jet Fuel averaged US$122.77/bbl(1) in 2013, 2.4% lower than 2012.
NOTE:(1) Slightly different from published MOPS due to timing of purchase
Cost initiatives improved Cost per ASK ex-fuel by 5.6% YOY
Summary of Income StatementFor the Quarter Ended For the Years Ended
Php Millions 31-Dec-12 31-Dec-13 31-Dec-12 31-Dec-13
Passenger Revenue 7,778 8,072 29,579 31,663Cargo Revenue 645 733 2,381 2,609Ancillary revenue 1,608 1,617 5,944 6,732Total Revenue 10,032 10,422 37,904 41,004
Flying Operations 5,018 5,710 20,017 21,721Fuel 4,441 5,167 17,562 19,523Others 577 543 2,455 2,198
Maintenance 918 935 3,462 3,826Depreciation and Amortization 751 934 2,768 3,455Aircraft and Traffic Servicing 863 923 3,433 3,603Aircraft and Engine Lease 471 721 2,034 2,315Reservation and Sales 423 443 1,626 1,662Passenger Service 201 261 825 906General, Administrative & Others 283 265 1,075 1,112Total Operating Expenses 8,928 10,191 35,241 38,600
EBIT 1,104 232 2,663 2,404Interest income (expense), net (100) (212) (317) (646)Equity in net income (loss) of a JV 3 49 54 119Pre-Tax Core Net Income 1,007 69 2,401 1,878MTM gains / (losses) (13) 158 264 290Foreign exchange gains / (losses) 194 (534) 1,205 (2,063)Benefit from (provision for) tax 110 155 (297) 407Net Income / (Loss) after Tax 1,299 (152) 3,573 5128
NOTE:(1) Includes LT debt and current portion of LT debt(2) Net debt is total debt less cash and cash equivalents. (3) Adjusted net debt is net debt plus capitalized lease and ARO liability
Balance Sheet
Php MillionsAs of Dec-31, As of Dec 31,
2012 2013
Cash and cash equivalents 10,728 6,056
Current assets 13,120 10,033Plant and equipment 47,561 56,412Other noncurrent assets 733 1,082Total Assets 61,414 67,527
Total debt (1) 22,924 29,407Other liabilities 16,452 17,039Total Liabilities 39,376 46,446Total Equity 22,037 21,082
Net debt-to-equity(x)(2) 0.55 1.11Adjusted net debt-to-equity(x)(3) 1.32 1.99Cash-to-sales-LTM ratio 28.3% 14.8%Forex, closing end of period 41.050 44.395
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Cash Flows
Php Millions
For the Years Ended December 31
2012 2013CASHFLOWS FROM OPERATING ACTIVITIESIncome (loss) before income tax 3,870 105Net adjustments 2,193 6,184Net changes in working capital 277 (1,493)Interest received (paid) - net (179) (545)Income taxes - paid - (35)Net cash provided by operating activities 6,161 4,216
CASHFLOWS FROM INVESTING ACTIVITIESAcquisition of property and equipment (10,422) (12,180)Proceeds from sale of financial assets 3,368 -Other noncurrent assets 124 (116)Net cash used in investing activities (6,930) (12,296)
CASHFLOWS FROM FINANCING ACTIVITIESAvailments of long term debt 5,915 7,426Repayments of long term debt (2,508) (3,011)Payment of cash dividends (606) (1,212)Net cash provided by financing activities 2,801 3,203Net foreign exchange difference (262) 205NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,770 (4,672)CASH AND CASH EQUIVALENTS, BEGINNING 8,958 10,728CASH AND EQUIVALENTS, END 10,728 6,056
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3. Outlook
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Tiger and Cebu Pacific Strategic Alliance
Tigerair and CEB have entered into a strategic alliance. This allows both companies to leverage on their extensive networks spanning from North Asia, ASEAN, Australia, India, all the way to the Middle East.
As part of the strategic alliance, on February 10, 2014, CEB signed the share purchased agreement to acquire 100% of Tigerair Philippines, including the 40% stake of Tiger Airways Holdings Limited. Total consideration for the deal is $15 million.
Tigerair Philippines current fleet of 5 aircraft will be gradually returned and replaced with aircraft from CEB’s fleet.
Common routes Both carriers will jointly operate common routes between Singapore and the Philippines.
Connectivity Both carriers will jointly sell and market their routes using codeshare and interline arrangements, thereby expanding their network coverage and enhancing connectivity.
Corporate identity Both carriers will brand themselves as partners in their respective communication materials.
Tigerair Philippines will continue to operate under the Tigerairbrand.
Highlights of Strategic Alliance
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Domestic industry faces consolidation and rationalization, while Regional competition intensifies
DOMESTIC CAPACITY REDUCTION: PAL Group recently announced the reduction of domestic flights by PAL Express starting March 1 2014. Airasia Group announced no additional aircraft into the Philippines Tiger Philippines’ fleet of 5 aircraft to be gradually returned and replaced with aircraft from CEB fleet.
INTENSIFYING INTERNATIONAL COMPETITION: Additional flights increase seat capacity in markets such as Malaysia, Singapore, China and Japan On March 30, 2014, CEB will start flying to Narita and Nagoya. Other airlines are also increasing their
networks, increasing total seat capacity for Phil-Japan routes.
DOMESTIC CONSOLIDATION: From 6 airlines to 3 – Cebu Air, PAL/PAL Express and AirAsia Zest
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FOREX:
US$ to PHP as of December 31, 2013 is Php44.395 from Php41.05 as of December 31, 2012. As of March 6, 2014, USD to PHP is at Php44.77.
Our outstanding debt, pre-delivery payments, fuel purchases, leases and some maintenance expenses are pegged on the US dollar.
LONG-HAUL
As of February 24, 2014, long-haul forward bookings (MNL-DXB-MNL) show about 22% of available seats have already been sold in the next three months.
Will take delivery of three A330 aircraft in 2014 for Saudi Arabia and Australia. Load factors are improving from 36% in October 2013 to about 60% in Jan-Feb 2014.
FUEL
As of March 6, 2014, Jet Kero’s month to date average is at US$122.69/bbl*, slightly lower than US$122.78/bbl average in 2013.
Excise taxes and VAT on fuel for international flights
Forex, long-haul and fuel remain key issues
Ave. fleet age(1)
4.23 years
Disciplined and Flexible Fleet Expansion Plan
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As of today: total remaining order book of 13 A320s, 30 A321 NEO, and 3 A330s on operating lease, with 11A320s for lease returns
5 A320, 3 A330 deliveries and 4 lease returns in 2014; 4 A320, 1 A330 deliveries and no lease returns in 2015
3 A320 deliveries and 1 lease return in 2016;
Will take delivery of 2 A320 and first 3 A321 NEO and 2 lease returns in 2017
(1) As of December 31, 2013
27 32 36 39 41 8
8 8 8 8 2
5 6 6 6 3
11 7
7 6 4
2013 2014 2015 2016 2017
A319/A320 Airbus - Finance lease ATR - Finance Lease A330 - Operating Lease A321 Neo A320 - Operating Lease
48 52 57 59 62
Disclaimer
This information provided in this presentation is provided only for your reference. Such information has not been independently verified and, as such, is not guaranteed to be accurate nor complete. Neither Cebu Air, Inc. (“CEB” or the “Company”) nor any of its affiliates, shareholders, directors, employees, agents or advisers makes expressed or implied representations or warranties as to the accuracy or completeness of the information contained herein and neither of them shall accept any responsibility or liability (including any third party liability) for any loss or damage, whether or not arising from any error or omission in compiling such information or as a result of any party’s reliance or use of such information. The information and opinions in this presentation are subject to change without notice.
EBITDAR, EBITDA, EBITDAR Margin, EBIT and core net income are not measures of performance under the Philippine Financial Reporting Standards (“PFRS”), and should not be considered in isolation or as alternatives to net income as an indicator of CEB’s operating performance or to cash flow from operating, investing and financing activities as a measure of liquidity, or any other measures of performance under PFRS. Because there are various EBITDAR, EBITDA, EBITDAR Margin, EBIT and core net income calculation methods, CEB’s presentation of these measures may not be comparable to similarly titled measures used by other companies.
This presentation also contains certain “forward-looking statements.” These forward-looking statements include words or phrases such as CEB or its management “believes”, “expects”, “anticipates”, “intends”, “plans”, “foresees”, or other words or phrases of similar import. Similarly, statements that describe CEB’s objectives, plans or goals are also forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Such forward looking statements are made based on management’s current expectations or beliefs as well as assumptions made by, and information currently available to, management. There is no assurance that expected events will occur, that projections will be achieved, or that the Company and its management’s assumptions are correct.
Thank you.