Air China Limited 2014 Annual Results Under IFRS
March 2015
Agenda
Part 1 Results Highlights Part 2 Business Overview Part 3 Financial Overview Part 4 Outlook
Part 1 Results Highlights
0%
6%
12%
18%
24%
Global RPK China's RPK
Gradual Global Economic Recovery, Slower Economic Growth in China
Steady Growth in Passenger Market Air Cargo Traffic showed recovery
4
Sources:IMF, IATA, CEIC, CAAC
3.0%
0.0%
5.4%
4.1%
3.4%
3.3% 3.3%
9.0% 8.7%
10.3% 9.2%
7.8% 7.7% 7.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
2008 2009 2010 2011 2012 2013 2014E Global GDP Growth Rate China's GDP Growth Rate
-2%
2%
6%
10%
14%
18%
Global RFTK China's RFTK
Results Highlights
Key Operational Metrics 2014 Annual YoY Change
ATK (million) 27,616.1 12.67%
RTK (million) 19,437.6 10.12%
ATK Load Factor (%) 70.4 -1.63pts
ASK (million) 193,631.5 10.22%
RPK (million) 154,683.9 8.96%
Passenger Load Factor (%) 79.9 -0.93pts
Key Financial Metrics 2014 Annual YoY Change
Turnover (RMB million) 105,844.3 7.85%
Operating Expenses (RMB million) 98,622.7 4.85%
Profit for the period (RMB million) 4,285.0 18.54%
Profits Attributable to Shareholders (RMB million) 3,817.5 16.97%
EPS (RMB/share) 0.31 16.95%
Dividend(RMB/10 shares) 0.5223 15.27%
5
Part 2 Business Overview
Total 2014 YoY Change
Revenue (RMB million) 67,263.3 6.57%
ASK (million) 138,442.6 8.77%
RPK (million) 110,739.2 7.45%
Load Factor (%) 80.0 -0.99pts
Yield (RMB/RPK) 0.61 -0.82%
Domestic 2014 YoY Change
Revenue (RMB million) 40,036.4 2.82%
ASK (million) 75,307.4 3.21%
RPK (million) 61,280.4 2.90%
Load Factor (%) 81.4 -0.25pts
Yield (RMB/RPK) 0.65 -0.08%
International 2014 YoY Change
Revenue (RMB million) 23,853.1 12.85%
ASK (million) 57,894.6 16.44%
RPK (million) 45,311.1 13.50%
Load Factor (%) 78.3 -2.03pts
Yield (RMB/RPK) 0.53 -0.57%
Regional (HK, Macau and Taiwan)
2014 YoY Change
Revenue (RMB million) 3,373.8 10.96%
ASK (million) 5,240.6 14.12%
RPK (million) 4,147.7 15.65%
Load Factor (%) 79.1 1.05pts
Yield (RMB/RPK) 0.81 -4.06%
Air China
7
57.33% 39.06%
3.61%
Domestic International Regional
Total (as of December 31, 2013) 316
Introduced in 2014 40
B737-800(13)、B747-8(4)、B777-300ER (4)、A321/320(11)、A330(8)
Retired in 2014 22
B757-200(5)、B737-300(5)、B737-800(6)、B747-400C(4)、B767-300ER(1)、A340(1)
Total (as of December 31, 2014) 334
16.4%
3.2%
14.1% 13.5%
15.7%
-2.0pts 1.1pts
2014 2013
Optimised Capacity Allocation to Align with Market Demands
8
54.40%
41.82%
3.79%
Fleet
-2%
2%
6%
10%
14%
18%
ASK Change RPK Change Passenger Load Factor Change
International Domestic Regional
2014 YoY Change in Capacity & Passenger Traffic 2013-2014 Capacity Distribution
-0.3pts 2.9%
Transfer Passengers and Revenue in Different Hubs RMB 100 million
Strengthened Hub Construction and Improved Network Value
Beijing hub network coverage continued to expand through the launch of new international routes from Beijing to Washington, Vienna (Barcelona) , Yangon and Jeju etc.. Flight banks have been optimized to increase the number of connecting flights. The number of transfer passengers reached 4.88 million The Chengdu regional hub introduced a new international route from Kunming to Yangon and several domestic routes including Chengdu-Ghulja/Yulin. Increased capacity in exclusive routes at the hub. The number of transfer passengers reached 620,000 At the Shanghai international gateway, the new Shanghai-Munich long-haul route was introduced, hence increase Shanghai International routes to 14. Through check-in service expanded to 14 routes for international transfers to Europe via Shanghai. The number of transfer passengers reached 270,000
9
10 thousand persons
Capacity Change in Beijing, Chengdu & Shanghai
7.7% 7.4% 6.8% 11.0%
7.4%
38.2%
0%
10%
20%
30%
40%
50%
Beijing Chengdu Shanghai
ASK YOY Growth AFTK YOY Growth
488
62 27
56
5 3 0
10
20
30
40
50
60
0
100
200
300
400
500
Beijing Chengdu Shanghai
Transfer Passengers Transfer Revenue
Enhanced Restructuring of Marketing Model and Innovation of Services
10
Upgraded Yield Management (O&D) System and Customer Relationship Management (CRM) System Strengthened marketing management to boost the yield of main base Optimised passenger profile to improve revenue from premium classes Enhanced e-commerce capability, upgraded overseas website and expanded mobile APP functions
Proportion of revenue from premium classes in passenger transportation
Continuous Revenue Growth of Premium Classes
11.9%
27.9%
17.6% 11.5%
29.0%
18.3%
0%
10%
20%
30%
40%
2013 2014
RMB 100 million RMB 100 million 1.4% 14.8%
13.6%
11
Fine tuning Marketing initiatives and making Innovation of Services
Introduced a number of new products, such as Upgrade Coupon, Seat Selection Fee, Pre-paid Luggage service, and thus established a product system generating ancillary revenue
Developed and implemented Advance Check-in, “Security check with ID card only”, as well as full self-service offerings such as Check-in, Baggage Check-in, and Boarding.
12
Enhanced Restructuring of Marketing Model and Innovation of Services
Successful trial flight with in-flight internet connection
Initiated and rolled out new cabin interior designs
Air China Cargo
13
Change in air cargo fleet (aircraft) Change in freighter utilisation rate Hour/ aircraft, day
8.05
8.85 9.4
5
6
7
8
9
10
2012 2013 2014
5
4
3
1
1
7
777F
757F
747F
2013 2014
2014 YoY Change
AFTK (million) 9,438.0 17.59%
Freighter AFTK (million) 2,494.8 16.32%
RFTK (million) 5,180.5 14.08%
Freighter RFTK (million) 2,023.8 15.44%
Tonnage Carried (tonne) 1,230,091.5 6.28%
Freighter Tonnage Carried (tonne) 355,703.6 10.23%
Load Factor (%) 54.9% -1.69pts
Freighter Load Factor (%) 81.1% -0.62pts
Yield (RMB/RFTK) 1.56 -1.18%
Shenzhen Airlines
2014 YoY Change
ASK (million) 47,874.9 12.53%
RPK (million) 38,668.4 11.36%
ATK (million) 4,902.4 12.06%
RTK (million) 3,895.1 10.58%
Passengers carried (thousand) 26,251.4 10.15 %
Passenger load factor (%) 80.8% -0.85pts
ATK load factor (%) 79.5% -1.06pts
Passenger Yield (RMB/RPK) 0.55 -4.85%
14
2014 YoY Change
ASK (million) 5,161.9 16.53%
RPK (million) 3,520.7 17.03%
ATK (million) 597.1 16.71%
RTK (million) 376.1 17.04%
Passengers carried (thousand) 2,121.1 16.17%
Passenger load factor (%) 68.2% 0.29pts
ATK load factor (%) 63.0% 0.18pts
Passenger Yield (RMB/RPK) 0.73 -11.39%
Air Macau
15
Part 3 Financial Overview
RMB million 2014 2013 YoY Change
Turnover 105,884 98,181 7.85%
Air traffic revenue 101,385 94,603 7.17%
Operating expenses 98,623 94,063 4.85%
Operating expenses ex-fuel cost 64,080 60,340 6.20%
Profit from operations 7,262 4,118 76.34%
Finance cost 3,071 423 626.33%
Share of profit of associates 754 647 16.52%
Profit before tax 5,065 4,518 12.10%
Profit for the period 4,285 3,615 18.54%
Profit attributable to shareholders 3,817 3,264 16.97%
EPS (RMB /share) 0.31 0.27 16.95%
Operating Performance Recorded Growth, Profit Improved
17
18
Operating Performance Recorded Growth, Profit Improved
4,518 5,065
+ 7,704 - 820 - 1,489 - 556 -981 +653 -2,298
+107 -1,772
0
2000
4000
6000
8000
10000
12000
62.83%
6.10%
31.07%
(RMB million) Passenger Services YoY Change
Cargo Services YoY Change Total YoY Change
Domestic 61,672 4.21% 2,032 13.21% 63,704
4.48% (%) 66.60 -1.63pts 23.13 0.34pts 62.83 -1.62pts
International 25,099 12.26% 6,400 10.65% 31,499
11.93% (%) 27.10 1.33pts 72.85 -0.59pts 31.07 1.32pts
Regional 5,829 12.29% 354 18.88% 6,182
12.64% (%) 6.30 0.31pts 4.02 0.25pts 6.10 0.30pts
RMB Million Changes on Passenger and Cargo Revenue
2013 2014
29.75% 64.45%
5.80%
Steady Revenue Growth in Air Passenger Business and Turnaround in Air Cargo Business
19
Regional International Domestic
0
20,000
40,000
60,000
80,000
100,000
120,000
2013 2014 Passenger Revenue Cargo Revenue
91.17%
8.33%
91.33%
8.67%
(RMB million) 2014 2013 YoY Change
Jet Fuel 34,542 33,722 2.43%
Take-off, landing and depot charges 10,566 9,585 10.24%
Depreciation 11,323 10,937 3.53%
Maintenance 3,588 3,064 17.10%
Staff 15,513 14,024 10.62%
Aircraft and engine operating lease expenses 4,537 4,006 13.24%
Air Catering 2,756 2,572 7.16%
Other flight operation expenses 8,390 8,257 1.61%
Others 7,408 7,897 -6.18%
Total 98,623 94,063 4.85%
Managed Pace of Operation to Control Costs
20
2014
2013
Jet Fuel 35.9%
Take-off, landing and
depot charges 10.2%
Depreciation 11.6%
Maintenance 3.3% Staff
14.9% Lease
expenses 4.3%
Other flight operation expenses
8.8%
Air Catering 2.7% Others
7.9%
Jet Fuel 35.0%
Take-off, landing and
depot charges 10.7%
Depreciation 11.5%
Maintenance 3.6% Staff
15.7% Lease
expenses 4.6%
Other flight operation expenses
8.5%
Air Catering 2.8% Others
7.9%
RMB/Tonne RMB/Tonne Average Domestic International
2014 Average:6,910
2013 Average:7,210
2014 Domestic:7,188
2013 Average:7,441
2014 Average:5,931
2013 Average:6,327
RMB Billion
RMB/Tonne
YoY Drop in Procurement Cost for Jet Fuel
21
22.6
14.5
24.1
34.7 35.6 33.7 34.5
8.7 4
7.7
13.9 15.1 14.5 15.2
0
10
20
30
40
2008 2009 2010 2011 2012 2013 2014
Fuel Cost Jet Fuel Surcharge
Fuel Cost and Jet Fuel Surcharge
Changes in Jet Fuel Purchase Price
0
1,500
3,000
4,500
6,000
7,500
9,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 2013
0
1500
3000
4500
6000
7500
9000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 2013
0
1500
3000
4500
6000
7500
9000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2014 2013
Ex-fuel Unit Cost
Unit Cost
Cost as Percentage of Revenue
RMB Million RMB
RMB
62,715
45,892
71,560
92,151 94,063 98,623
Strengthened Cost Control
22
91,064
118.54%
89.30% 86.75% 93.64% 91.55%
95.81% 93.18%
75.79%
61.15% 57.54% 58.38% 55.72% 61.46% 60.56%
40%
60%
80%
100%
120%
2008 2009 2010 2011 2012 2013 2014 Operating Cost as % of Revenue
Ex-fuel Operating Cost as % of Revenue
0.44 0.32 0.36 0.38 0.34 0.34 0.33
2.74
2.04 2.3 2.52 2.41 2.46 2.32
0
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014
Cost per ASK Cost per ATK
0.68 0.47 0.54 0.61 0.56 0.54 0.51
4.28
2.98 3.46
4.04 3.96 3.84 3.57
0
1
2
3
4
5
2008 2009 2010 2011 2012 2013 2014
Cost per ASK Cost per ATK
Fuel Cost and Non-fuel Operating Cost
40,101 31,426 47,464 57,447 55,424 60,340 64,120
22,614 14,466
24,096
34,703 35,640 33,722 34,542
0
20,000
40,000
60,000
80,000
100,000
2008 2009 2010 2011 2012 2013 2014 Operating Cost excluded Fuel Cost Fuel Cost
RMB Million
(X) Asset to Liability Ratio
(X)
%
Healthy Financial Position
23
19,943 23,916
41,438 46,203
49,944 53,757 53,978
0
10,000
20,000
30,000
40,000
50,000
60,000
2008 2009 2010 2011 2012 2013 2014
79.63 77.8
73.94 72.52
71.23 71.94 71.76
64
68
72
76
80
84
2008 2009 2010 2011 2012 2013 2014
EBITDA Interest Protection Multiples Net Assets (Excludes minority interest)
2.5 2.54
1.72 1.53 1.63 1.67 1.77
0
0.5
1
1.5
2
2.5
3
2008 2009 2010 2011 2012 2013 2014
Net Debt-to-Equity Ratio
-1.63
8.89
12.12
7.2 6.47 4.75 5.48
-4 -2 0 2 4 6 8
10 12 14
2008 2009 2010 2011 2012 2013 2014
Interest Bearing Debt
24
(RMB Million) 2014 % 2013 %
USD 83,334 72.81 78,197 70.07
RMB 30,164 26.35 33,239 29.78
EUR 146 0.13 165 0.15
JPY 814 0.71 - -
Total 114,458 100.00 111,601 100.00
38.85%
61.15%
29.87%
70.13%
短期带息负债 长期带息负债
31 Dec, 2014 31 Dec, 2013
Short term Interest Bearing Debt
Long term Interest Bearing Debt
Part 4 Outlook
2015: New Normal
26
Shift from high-speed growth to
mid-speed growth
Structural changes in the economy
Development mode focuses more
on quality and efficiency
New Normal in China’s Economy
Slower industry growth
Structural changes in the market
-Higher growth rate in international markets than in domestic
market
-Number of travelers from government organizations decreased
while business travellers and general leisure travellers have
huge growth potential
Diverse growth drivers
-Mobile internet drives innovation and transformation of
business models adopted by the airlines
-Upgraded consumption, outbound travel became a key driver
New Normal in China’s Aviation Industry
27
2015: New Business Focus
Enhance competitiveness of the hubs in order to maximise value of the network; Focus on customers’ needs to implement innovative marketing strategy and activities; Strengthen service management and boost product competitiveness to improve customer experience; Maintain industry-leading cost structure; Improve capability of informatisation; Enhance business synergies with associated corporations in the Group
Appendix 2014 Other Financial and Operational Data
1. Fleet – the Group
29
31 December 2014 Delivery
Sub-total Owned Finance
Lease Operating
Lease Average
Age 2015 2016 2017
A319 40 24 9 7 9.68 3 - - A320/A321 163 59 66 38 4.52 16 17 17 A330 49 10 18 21 4.27 4 - - A340 4 4 - - 16.26 - - - B737 223 105 47 71 6.41 37 14 16 B747 8 8 - - 9.71 3 - - B757 2 2 - - 22.37 - - - B777 30 14 13 3 6.32 - - - B787 - - - - - - 5 5 B747F 3 3 - - 12.53 - - - B757F 4 4 - - 18.35 - - - B777F 5 3 - - 0.69 3 - - Business Jets 9 1 - 8 3.63 - 2 - TOTAL 540 237 155 148 6.08 66 38 38
*Wet lease aircraft excluded in calculation of average ages
2. Fleet – Air China
30
31 December 2014 Delivery
Sub-total Owned Finance
Lease Operating
Lease Average
Age 2015 2016 2017
A319 30 21 9 - 9.44 3 - - A320/A321 87 16 60 11 3.87 5 10 11 A330 49 10 18 21 4.27 4 - - A340 4 4 - - 16.26 - - - B737 124 51 27 46 6.58 22 14 14 B747 8 8 - - 9.71 3 - - B757 2 2 - - 22.37 - - - B777 30 14 13 3 6.32 - - - B787 - - - - - - 5 5 Total 334 126 127 81 6.04 37 29 30
*Wet lease aircraft excluded in calculation of average ages
3. Profitability Ratio
31
2014 2013 同比
EBITDA (RMB million) 18,651 15,141 23.18%
EBITDA margin 17.61% 15.42% 2.19pts
EBITDAR (RMB million) 24,128 20,062 20.27%
EBITDAR margin 22.79% 20.43% 2.36pts
Operating profit margin 6.86% 4.19% 2.66pts
Pre-tax profit margin 4.78% 4.60% 0.18pts
Net profit margin 3.61% 3.32% 0.29pts
ROE 7.09% 6.29% 0.80pts
(RMB million) 31 Dec 2014 31 Dec 2013 Change
Non-current assets 148,180 132,806 11.58%
- Aircraft and flight equipment 130,844 115,918 12.88%
- Property and plant 5,549 5,082 9.19%
Current assets 21,053 25,817 -18.45%
- Cash and cash equivalents 9,660 14,762 -34.56%
Total assets 209,311 205,083 2.06%
Current liabilities 60,843 70,074 -13.17%
Non- Current liabilities 89,358 77,463 15.36%
Total liabilities 150,201 147,537 1.81%
Total equity attributable to equity Shareholders of the Company 53,978 53,757 0.41%
4. Consolidated Balance Sheet (Condensed)
32
(RMB million) 2014 2013 YoY Change
Net cash flow from operating activities 14,064 14,608 -3.73%
Net cash flow from investing activities 10,313 20,638 -50.03%
Net cash flow from financing activities -8,859 9,271 -195.56%
Net increase/(decrease) in cash and cash equivalents -5,108 3,241 -257.62%
Cash and cash equivalents at beginning of year 14,762 11,788 25.23%
Effect of exchange rate changes on cash and cash equivalents 7 -267 102.45%
Cash and cash equivalents at 31 December 9,660 14,762 -34.56%
5. Consolidated Cash Flow Statement
33
Fan Heyun Tel: +8610-6146 2799 Fax: +8610-6146 2805 E-mail: [email protected] Cao Yu Tel: +8610-6146 2788 Fax: +8610-6146 2805 E-mail: [email protected] 公司网址:www.airchina.com.cn
Investor Relations - Beijing
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