Corporate Presentation July 2019 AirAsia Group Berhad Investor Deck 2019-07.pdf · AirAsia...

AirAsia Group BerhadCorporate Presentation July 2019

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.

Agenda

Achieving the unthinkable

Strengthening our underlying airline business

Digitalising the airline

AirAsia 3.0

Leveraging our data to create platforms

2 airlines6 airlines

*Fleet size and data as at 30 June 2019

265 aircrafts, in 8 airlines

152 destinationsacross 22 Countries

100 million passengers flown annually>500 million total passengers flown

24 hubs

Over 10,000 flights per week

Over 388 routes, including 114 unique routes

The largest LCC in Asia The fourth largest airline in Asia

2.9% annual conversion rate

Over 560 millionannual unique (web&app) visitors

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

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

PositiveEBITDA

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

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

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

Agenda




AirAsia 3.0


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

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

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

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

Agenda




AirAsia 3.0


Data-driven organisation

DATA USERS COE

DATA GOVERNANCE

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

We have a lot of Data to drive ecosystem expansionBIG Data and Real-time Insights

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

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

Media cost on a downtrend with personalisation

Agenda




AirAsia 3.0


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

Growth in 2019 and beyond: AirAsia 3.0

AirAsia BIG Loyalty points - BIGLIFE

Data

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)

Fabrice Marie, Group Head of Information Security

(Formerly from Lazada)

Agenda




AirAsia 3.0


AirAsia.com - All-in One Travel and Lifestyle Marketplace

New enhanced homepage UX/UI on web & mobile

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

Source: 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

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

AirAsia Group Belly Space Consolidation/Partnerships

2

Jan 2019 Aug 2018

May 2018 Jul 2018 1Q 2020 1Q 2020

Feb 2019

7-8 Airlines in pipeline


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

Building Teleport to enable direct businesses and consumersOpening our logistics infrastructure to social sellers

2Note: 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

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

Source: e-Conomy Southeast Asia 2018 report by Google and Temasek

560mn

Go-Jek

AirAsia vs other platforms

2

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&

Appendix

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

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%

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

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

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

• 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 77.22 76.61

Average Hedge Cost (2019) - Total 79.40

Only 9% of USD borrowings are totally unhedged:

Fuel & Currency Hedging

Note: As at 24 July 2019

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

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

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


Jan 2019 Aug 2018

May 2018 Jul 2018 1Q 2020 1Q 2020

Feb 2019

7-8 Airlines in pipeline

Apr 2019

Apr 2019

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

Corporate Presentation July 2019 AirAsia Group Berhad Investor Deck 2019-07.pdf · AirAsia...

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