Corporate Presentation August 2019 AirAsia Group Berhad · 1 ppt 2 ppts 6 ppts flat FLAT 1 ppt...
Transcript of Corporate Presentation August 2019 AirAsia Group Berhad · 1 ppt 2 ppts 6 ppts flat FLAT 1 ppt...
Strictly private and confidential1
AirAsia Group BerhadCorporate Presentation August 2019
Strictly private and confidential2
LEGAL DISCLAIMER
Information contained in our presentation is intended solely for your personal reference and is strictly confidential. Such information is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the Company. Neither we nor our advisors make any representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein.
In addition, the information contains projections and forward-looking statements that reflect the Company’s current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company’s assumptions are correct. Actual results may differ materially from those projected.
This presentation is strictly not to be distributed without the explicit consent of Company’s management under any circumstances.
Strictly private and confidential
Agenda
3
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
Strictly private and confidential4
2 airlines6 airlines
*Fleet size and data as at July 2019
271 aircrafts, in 8 airlines
155 destinationsacross 22 Countries
100 million passengers flown annually>500 million total passengers flown
24 hubs
Over 10,000 flights per week
Over 393 routes, including 115 unique routes
The largest LCC in Asia The fourth largest airline in Asia
Strictly private and confidential
2.9% annual conversion rate
Over 560 millionannual unique (web&app) visitors
5
Wide digital reach via AirAsia.com, mobile app and social media
Over 15 millioncontactable members
Over 40 millionmobile app download
Hits from over
240different countries
Over
12,000,000 fans
Over
8,000,000 followers
Over
26,700,000 followers
Over
1,700,000 followers
Over
1,300,000 followers
Over
2,000,000 followers
60% Sales via web and app Over 51 million
total fans and followers*Data as at June 2019
Strictly private and confidential6
Ancillary revenue growth from data & digital initiatives
2008 2018
21% of revenue9% of revenue
RM0.23bn
RM2.06bn
9x
✔ Baggage
✔ Inflight F&B
✔ Pick-a-seat
✔ Baggage (dynamic pricing)
✔ Inflight F&B
✔ Pick-a-seat (+ hot seats)
✔ Wifi
✔ Insurance
✔ Ourshop
✔ Fly-Thru
✔ Cargo
1Q1923% of revenue(up 29% YoY)
78% 22%
Non-airlineAirline
Strictly private and confidential
PositiveEBITDA
7
1Q19 Key Highlights
For all Asean AOCs
+54%Narrowing of losses by AirAsia Indonesia as RASK up 10% and CASK down 11%
+12%Profit growth by AirAsia Philippines
>87%Load factor for all AOCs except for AirAsia Japan at 80%
+29%Ancillary revenue (airline & non-airline)
2.3xTeleport revenue RM101mn, in line with RM400mn FY target+4ppt
Improvement in Malaysia domestic market share, as seeing fruits from adding 12% capacity in FY2018
21stOncoming aircraft to be received in May 2019Lombok
Hub launched in May 2019
25mil
+66%
New website and Search Engine Optimized Pages:
+48%BigPay GTV QoQ growth
Strengthening our core Digitalising the airline Building digital platforms
ProfitableAfter three consecutive quarters of losses
+9%Airline revenue, with RASK up 3% despite adding 11% more ASK +10%
Increase in flight search after launch of website flight search enhancement in Feb 2019
RM5.8bilAirAsia.com Gross Transaction Value (GTV)
+US$7.8mil Incremental revenue
Conversion from flight select on website
Travel Doc Scanner available on app in Feb 2019
AirAsia BIG Members (+9% QoQ)
+34% Conversion from flight select on mobile
+23%Increase in flight search on mobile
Strictly private and confidential
Dividends
● 2019: special RM0.90 payable in 29 Aug 2019; 34% dividend yield
● 2018: Interim + special dividend – totaling to RM0.64 for FY2018; 21.5% dividend yield
8
Special Dividends from Monetising Our Digital/Support Assets
Ground Handling Service•Cash proceeds received in Jan 2018 SGD119.3 million
Pilot & crew training centre•Monetisation of 50% stake: Cash proceeds of USD100 million received in Mid-Nov 2017
Hotel & travel•Sold 25% stake for USD86 million in 2015•Sold remainder of 25% for USD60 million in Aug 2018
Aircraft leasing
•Sale of 79 aircraft and 14 engines concluded for USD1.085 billion in 4Q2018
•Another 25 aircraft to transact for USD768mil
Strictly private and confidential
Agenda
9
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
Strictly private and confidential
Fleet Plan
MAA TAA IAA PAA AAI AAJ Total
December 2018* 95 62 24 22 19 2 224
2019 Net Addition 2 -1 2 3 11 1 18
* December 2018 fleet excludes 2 third party leases
2
Fleet Expansion Across AOCs in 2019
10
Target aircraft financing for 2019: All on sale and leaseback.
Note: Column chart includes 2 third party leasesFleet plan is subject to changesUpdated fleet plan as at 27 May 2019
↷ ↷ ↷ ↷ ↷ ↷ ↷ ↷ ↷
+18+36
+38+32
+37+30
+30 +30+30
6 countries:
Exploring others:
Our long-term fleet plan
↷+28
New A321neo aircraft are more fuel efficient & have
lower cost per seat
Strictly private and confidential11
Growing Market Share
AirAsia’s Domestic Market Share & Rational Competition (1Q2019 vs 1Q2018)
4 ppts
1 ppt
4ppts 61% 32% 1ppt 18% 1ppt 6%2%flat
1 ppt
2 ppts
6 ppts
flat
FLAT
1 ppt
FLAT
1 ppt
3 ppts
Source : PaxIS
Strictly private and confidential12
AirAsia Indonesia
EBITDA PAT
IDR
bill
ion
176%
54%
Indonesia reported higher EBITDA of IDR181bil +176% YoY and significant narrowing losses after tax of +54% as:
○ Revenue grew 60% YoY○ Demand hike LF +7ppts○ Improved yield RASK +10%○ Well managed CASK -11%
EBITDA PAT
PH
P m
illio
n
233% 12%
Philippines EBITDA grew significantly by 233% to PHP1,538mil and profit after tax reported 12% growth due to:
○ Outstanding revenue growth of 27% YoY○ +4ppts growth in LF at the back of 17%
additional capacity○ 3% improvement in RASK○ Better cost control CASK -2%
AirAsia Philippines
Strictly private and confidential
Agenda
13
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
Data-driven organisation
DATA USERS COE
DATA GOVERNANCE
Strictly private and confidential
Cabin Baggage Weight
Passengers Movement
AerobridgeMovement
Queue Time
Terminal
Online Activity
Social Data
Contact Details
Transactions
Loyalty
Demographic
Mobile Activity
Feedback
Engine & Component
TransactionsFOMAX
Maintenance
Potential new data source
Feedback
Guests
Aircraft
Available data source
Passengers Weight
CounterTransactions
Lifestyle Data
LocationTemperature
Speed
Apron
14
We have a lot of Data to drive ecosystem expansionBIG Data and Real-time Insights
Strictly private and confidential
Data taking us to new heights
Priorities to Focus On
Cost Reduction
Verticals to Work On Fuel Cost Operations
Efficiency
Skill SetsRequired Data Science
Goalsto Achieve
Revenue Gain
Increase Fuel Cost Efficiency
Increase Cost Efficiency & Productivity
Ancillary
Increase Uptake
Pricing / Bundling
Drive Customer Retention
Promos / Rewards
Drive More Traffic
15
Strictly private and confidential
Staying true to being low-cost
Our top priority, ALWAYS.
Predictive maintenance to
increase efficiency
Driving fuel usage reduction through
data analytics
New A321neo aircraftthat are fuel efficient &
have lower cost per seat
Adoption of ‘Agile’ organisation
structure
Lower airport charges
16
Media cost on a downtrend with personalisation
Strictly private and confidential
Agenda
17
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
Strictly private and confidential
Marketplace
Logistics Digital Bank & Insurance
Lifestyle & Entertainment
Travel and financial platform of Asean
AirAsia ecosystem comprises the Group’s core airline network operations, travel and lifestyle commerce platform, financial and insurance services, logistics services, as well as lifestyle &
entertainment affiliates
18
Growth in 2019 and beyond: AirAsia 3.0
AirAsia BIG Loyalty points - BIGLIFE
Data
Strictly private and confidential
We are investing in people
2
Building blocks laid for a platform business
Lye Kong Wei, Group Head of Data (Formerly from Grab)
AirAsia Software Engineering & Technology CenterBangalore, India
Elias Vafiadis, Group Head of Software Engineering
(Formerly from Expedia)
19
Fabrice Marie, Group Head of Information Security
(Formerly from Lazada)
Strictly private and confidential
Agenda
20
Achieving the unthinkable
Strengthening our underlying airline business
Digitalising the airline
AirAsia 3.0
Leveraging our data to create platforms
Strictly private and confidential21
AirAsia.com - All-in One Travel and Lifestyle Marketplace
New enhanced homepage UX/UI on web & mobile
Strictly private and confidential
AirAsia.com addressable market
8Ride-hailing
10Online media
23E-commerce
30Online travel
72
29
Ride-hailing(Online food delivery, online transport)
31
Online media(Subscription music & video, online gaming, online advertising)
102 E-commerce
78Online travel(Online vacation rentals, Online hotels, online flights)
240
2018E
Asean internet economy market size (GMV, US$bn, By sector
2025E
22Source: e-Conomy Southeast Asia 2018 report by Google and Temasek
☑ Flights (direct & aggregator)In 2018, we estimate
we had ~10% market share of the online travel space
Before setting up AirAsia.com as a separate entity:
Now we are establishing AirAsia.com as a all-in-one travel and lifestyle marketplace
☑ Hotels
☑ Post-booking
☑ Holiday packages
☑ Transportation
☑ Activities
☑ Media
☑ Lifestyle deals
☑ OURSHOP
☑ Beauty
☑ Food delivery
☑ Community Maintaining our current ~10% market share will yield us a potential GBV of US$24bn in 2025E
☑ Insurance, fintech
THEN
OUR VISION
Strictly private and confidential23
Loans Remittancee-Money
BigPay - Financial Supermarket
Advanced money management
Asia’s Money App● Digital challenger bank
for Southeast Asian millennials and travelers
● Democratise financial services with simple and affordable solutions for e-wallet, remittances, and lending
600k users
Strictly private and confidential
AirAsia Group Belly Space Consolidation/Partnerships
2 24
Jan 2019 Aug 2018
May 2018 Jul 2018 1Q 2020 1Q 2020
Feb 2019
7-8 Airlines in pipeline
AirAsia Group Belly Space Consolidation/Partnerships
Full Year 2018 : Revenue of RM206 mil.
Target for Full Year 2019 :Revenue of RM400 mil
Existing cargo supply chain is ripe for disruption:
Apr 2019
Apr 2019
Strictly private and confidential
Building Teleport to enable direct businesses and consumersOpening our logistics infrastructure to social sellers
2 25Note: Illustrative mockup of product
Social Commerce (C2C) is growing faster than ride-hailing in Asean
ASEAN includes – MY, PH, TH, ID, VN, SG (ASEAN6)2018-2025 Social commerce estimated at ~50% of formal e-commerce segment
Sources: Google Temasek Reports, Nomura research, Euromonitor, eCommerceiQ, news runs
Strictly private and confidential
Traveloka
7.9
Key to our platform strategy is our low customer acquisition cost built over the last two decades
8Ride-hailing
10Online media
23E-commerce
30Online travel
72
29
Ride-hailing(Online food delivery, online transport)
31
Online media(Subscription music & video, online gaming, online advertising)
102 E-commerce
78
Online travel(Online vacation rentals, Online hotels, online flights)
240
2018E
Asean internet economy market size (GMV, US$bn, By sector
2025E
Asean unicorns & funding in 2016-1H18 (US$bn)
Grab 10.1
1.4
0.7
Lazada, Tokopedia, Shopee, Bukalapak, etc
Active users, from 2015 to 2018
AirAsia’s annual unique (web&app) visitors:
VNG, Razer
8mn 35mn
130mn 164mn
49mn 120mn
26Source: e-Conomy Southeast Asia 2018 report by Google and Temasek
560mn
Go-Jek
Strictly private and confidential
AirAsia vs other platforms
227
Market Dominance
Visitors (per month)
Daily active users
Hotel nights for sales
Merchants
App Downloads
Valuation
ASEAN
65 million
~2m
>500k
40m (via Mastercard)
>40 million
US$ 2.1 bil
Indonesia/ASEAN
22.2 million
0.8mn
>100k
n/a
30 million
US$ 4.0 bil
Global
750 million
n/a
352mn
n/a
>250 million
US$ 17.3 bil
Source: Publicly available company data
ASEAN
MAU: 18.6mn
Ride-hailing: 4mn
n/a
>4k
>110mn
>US$10bn
Indonesia/ASEAN
MAU: 28 million
Ride-hailing: 1.8m
n/a
303k (300k food merchants)
>100mn
~US$10bn
THANK YOU!AirAsia 3.0, starts here!
Strictly private and confidential29
1Q19 Group Financial Performance Highlights
RM
mill
ion
Airline Revenue+9%
Group EBITDA+13%
Adjusted PBT-31%
one-offs
● Airline revenue is higher 9% YoY due to 3% higher RASK despite adding 11% more ASK.
Passenger seat sales increased 15% YoY
● PBT excluding one-offs is down 31% YoY mainly due to:
○ +64% higher maintenance & overhaul cost on the back of non-cash maintenance
provisions of ~RM100m given higher number of leased aircraft post aircraft monetisation
exercise in 2018; there is a differing accounting treatment for major overhaul cost for
leased aircraft and owned aircraft (further details in Appendix);
Gains on disposal of GTR RM350mil & Remeasurement gain RM535mil
Strictly private and confidential30
2Q19 Operating Statistics by AOCs
Malaysia Indonesia Philippines Thailand India Japan
Pax +11% +58% +22% +5% +25% +79%
ASK +7% +58% +31% +12% +29% +103%
RASK +0% +10% +3% -10% +0% -1%
Domestic market share
61% (+4ppt) 2% (flat) 18% (-1ppt) 32% (flat) +6% (+1ppt) n/a
Load factor
84% (-2ppt) 82% (+1ppt) 91% (+4ppt) 83% (-2ppt) 90% (+3ppt) 78% (-1ppt)
CASK +11% -11% -2% +0% +3% -36%
We continue to grow across the board
Impressive performance by ID, PH & IN as we build momentum with our strong brand
All AOCs >82% load factor ex. Japan
Sound RASK improvement in ID & PH despite high capacity addition
Rationale pricing in MY, IN & JP.
TH impacted (-)ve YoY due to Phuket incident in July. Nonetheless RASK improved 9% QoQ
1Q
Capacity +13% +56% +18% +8% +21% +81%
RPK +6% +58% +33% +9% +32% +100%
Strictly private and confidential31
29% increase in Ancillary Revenue in 1Q19
Highlights:
● AAGB ancillary reported RM663.7mil, ↑29% YoY● Notably, ancillary revenue for PAA and IAA grew
42% and 44% YoY respectively● Among them:
○ Inflight Duty Free ↑112% to RM7.2mil○ Seat selection ↑26% to RM9.7mil○ Baggage ↑15% to RM37.1mil○ Santan ↑6% to RM2.2mil○ Teleport reported RM101mil revenue
RM663.7mil29%
RM143.6mil
161%
RM520.1mil
13%
23% of total revenue
Non-airline ancillary
Airline ancillary
*On a like to like basis
Strictly private and confidential32
1Q19 Cost per ASK (“CASK”)
CASK and CASK ex. fuel increased by 8% and 11% YoY
respectively from:
◆ Maintenance and overhaul ↑64% from
non-cash maintenance provisions of
~RM100m given higher number of leased
aircraft post SLB arrangement (further
explanation in Appendix)
◆ Ringgit and Rupiah depreciated by 5% and
3% respectively.
+11%
13.5514.57+8%
sen
Strictly private and confidential33
Digital Platforms
● Gross Transaction Value (GTV) of RM5.8bil in 1Q2019● AirAsia.com generated EBITDA of RM557k in 1Q2019
● Teleport - recorded RM101mil in revenue, 2.3x higher than cargo revenue in 1Q2018 (on like-to-like basis)
● Belly space consolidated for: Malaysia and Indonesia AOCs (completed in 2018) and Philippines AOC (completed in 1Q2019)
● Rebranding of RedCargo and RedBox to Teleport
● BigPay - over 600k signed up customers● GTV grew by 48% QoQ, with new card issuance increasing by 28%
for same period● Revenue for 1Q2019, grew 29% QoQ, rising from circa. 50%
between Feb to March alone
Strictly private and confidential
• Our Group’s fuel hedging strategy is based on our forward sales booking
• Brent – 61% hedged for FY2019 at USD63.19 per barrel; 70% hedged for FY2020 at USD60.38 per barrel; FY2021 19% at USD59.45 bbl
• Interest rates – All USD loans (for aircraft) are either fixed rate loans or have fixed interest rates via interest rate swaps
9%
91%
Loans by currency: USD (80%), MYR (13%) and EUR (7%)
0%AirAsia Group2019
Q1 Q2 Q3 Q4
Current Hedge Ratio (Brent) 53% 52% 70% 70%
Average Brent Hedge (Qtrly) 66.68 63.73 62.04 61.58
Avg Hedge Cost (Qtrly) - Total 80.57 78.23 76.74 76.62
Average Hedge Cost (2019) - Total 79.40
Only 9% of USD borrowings are totally unhedged:
34
Fuel & Currency Hedging
Note: As at 24 July 2019
Strictly private and confidential
COMMUNITYGlobal community to drive
engagement
COMMERCEBest deals for travel &
lifestyle
CONTENTCreativevisuals &stories, sharing of experience
AirAsia.com Overview
● Incorporated in 2019, AirAsia.com is a regional web and mobile app platform for travel and lifestyle bookings in Asia
● Offers consumers travel and lifestyle products that are available for purchase using various payment methods, including loyalty points
● Expanding beyond AirAsia’s airline network, AirAsia.com features global flights operated by other peer airlines and both proprietary and non-proprietary travel and lifestyle inventories for consumers to choose from
● Built travel and lifestyle ecosystem through strategic partnerships with local and regional partners working as earn and burn channels of loyalty points for consumers
Spencer Lee (CEO)Former Head of Commercial at
AirAsia Malaysia
● Flight ● Hotel / Vacation
Rental ● Flight + Hotel ● Transport ● Tours + Activities● Insurance● Itinerary Builder
● Shop ● Duty Free ● F&B● Health, Fitness● Events ● Ticketing ● Services
● Media ● Content
(Print + Digital) ● Inflight
Entertainment ● Infrastructure
(Inflight WiFi)● Podcast
● Content driven beauty marketplace
● Cosmetics● Wellness● Skincare● Fragrance● Haircare
Travel Lifestyle Content Beauty
Business Summary
Products & Services
● Marketplace for comprehensive and proprietary content and inventory for other businesses to plug-in and use
B2B
35
Strictly private and confidential
BigPay Overview
● Launched in 2018, BigPay aim to democratize financial services in Asia by building a digital bank that offers consumers e-wallet service, remittance and lending
● Value proposition includes easy user experience, usability via Mastercard’s extensive network, issuance of Big Points upon top up or use, zero foreign exchange rate charged during international travels, and zero booking fees when booking on AirAsia.com
Christopher Davison (CEO)Former Director of Clearwater Partners
Former Investment Manager at Talis Capital Limited
Business Summary
Key Features
Proprietary Licences
e-Money LendingRemittance
● Native iOS and Android build● Latest tech stack & proprietary software● Seamless, mobile-only user experience● Bank grade and biometric security● Peer-to-peer payments & split bills● Fully automated spending analytics● In-app card / account management● Issue Mastercard / Visa card
Make financial services better value, more transparent and fairer for everyone
AirAsia Big Pointsearn with daily spend
Save Moneyon AirAsia flights
Best Exchange Ratewhen spending abroad
Instant Money Transferto your friends for free
Expense Analyticsin real time
36
Strictly private and confidential
Teleport Overview
● Today, a consolidator of belly capacity for the AirAsia group of airlines, enabling cargo carriage for businesses across 110+ cities
● Global network reach through partner airlines beyond Asia covering US, Europe, Middle East and Australia/New Zealand
● Our goal is to re-order the supply chain, with the airport as the distribution center of the future, and make same-day cross-border fulfillment a reality
● We intend to open our platform and infrastructure to empower consumers and small businesses across Southeast Asia
Pete Chareonwongsak (CEO)Former COO at AirAsia PhilippinesFormer Group Head of Business
Development
Business Summary
Offering Door-to-Door Cross Border Logistics Services
Last Mile DeliveryIdentify various last mile partners based on items
First Mile CollectionParcel collection in origin country (warehouse / pick
up / drop off points)
Partner WarehouseConsolidation and sorting by consignee for final delivery
at destination country
TransportationCargo terminal and
warehouse as well as cross docking for final delivery leg
Customs ClearanceOutbound and inbound
custom clearance in origin and destination countries
Affordable Air Freight
Now: AirAsia Network
Next: 8 Major Asean Cities
Aim: 4 Capital Cities
AirAsia Group Belly Space Consolidation/Partnerships
37
Jan 2019 Aug 2018
May 2018 Jul 2018 1Q 2020 1Q 2020
Feb 2019
7-8 Airlines in pipeline
Apr 2019
Apr 2019
Strictly private and confidential
Points Exchange● Convert your other (Citi, CIMB, Maybank) points to
Big Points on Big Exchange points marketplace
Co-Branded Cards● Earn extra Big Points when spending on the
co-branded credit cards
Products & Services● Formally known as Big Loyalty and rebranded in 2019, BigLife is
AirAsia’s frequent flyer program aiming to power AirAsia’s greater ecosystem with its loyalty points as a high utility digital currency
● Offers consumers earning opportunities when transacting with an ecosystem partner and also offers consumers the option to purchase travel and lifestyle products using the user’s point balance
● Provides additional benefits for its members such as exclusive discounts and priority access to sale inventories
● Tied to AirAsia’s single sign on to maximize value for users and create a wholistic profile of users’ behavioral patterns
BigLife Overview
Business Summary
Major Customer Value Propositions
Points Earn & Burn● Earn and use points at travel and
lifestyle partner channels
TBD (CEO)
Exclusive BIG Member discounts at up to 90%
Pay with BIG Points and save more on flight bookings
24-hour priority access to AirAsia sales
Full flight redemption for free flights
Redeem short haul flights from as low as 500 BIG Points
Shop online and earn BIG Points for every cash spent
Earn and save BIG with Fave deals
Rewards differentiated by membership statuses
38