WEBINAR | Survivor

Survivors: What are airlines doing to be ready for recovery? 17-3-21

WWW.OAG.COM SURVIVORS: WHAT ARE AIRLINES DOING TO BE READY FOR RECOVERY? A deeper look at the current state of airline operations, finances and fleet

We aim to consider Review of Q1 and prospects for Q2 Why have we seen so few airline failures? What strategies are helping airlines survive? Can airlines look forward to summer?

Followed by your Questions and Answers MAKE SMARTER MOVES SPEAKERS SPEAKER MODERATOR GUEST SPEAKER GUEST

Brendan Sobie John Grant Becca Rowland Sobie Aviation Senior Analyst, OAG Partner, MIDAS Aviation

Brendan is an independent analyst With a wealth of experience Becca is a partner in an and consultant based in Singapore. He across the global aviation aviation consultancy has over 20 years experience in the industry, John provides expert providing meaningful insight industry, including eight years as Chief commentary on market and analysis to clients Analyst for CAPA – Centre for Aviation developments for OAG, making around the world. She and 10 years at Flightglobal. Brendan connections between what the works closely with OAG on has extensive experience covering data is telling us and the trends their data analysis and emerging markets globally and now and events occurring in the publications. provides analysis throughout Asia sector. Pacific, the Middle East, Africa and the CIS.

Scheduled seats by month compared with equivalent month in previous year Scheduled seats by week compared to same week in 2019

Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 25-Jan 01-Feb 08-Feb 15-Feb 22-Feb 01-Mar 08-Mar 15-Mar AfricaLatin America-72% -77% -79%-41.3%-76% -68% -63%-41.3%-57% -55% -43.0%-49% -48% -52%-45.3%-42% Africa -48.7% -47.6% -48.8% -49.5% -50.8% -50.4% -51.5% -51.2% Asia -56% -49% -46% -40% -37% -35% -32% -33% -32% -37% -27% 3% Asia -40.6% -40.8% -49.7% -38.6% -36.5% -28.4% -28.2% -26.3% Europe -86% -84% -82% -64% -51% -57% -60% -69% -67% -69% -76% -65% Europe -74.8% -74.8% -75.6% -75.3% -75.4% -74.6% -75.3% -74.8% Latin America -77% -85% -82% -74% -72% -65% -58% -49% -43% -41% -47% -41% Latin America -41.3% -41.3% -43.0% -45.3% -44.9% -42.0% -46.1% -48.2% Middle East -67% -80% -70% -66% -65% -62% -61% -58% -58% -56% -57% -42% Middle East -56.0% -54.5% -55.3% -54.7% -55.7% -54.7% -55.4% -55.4% North America -57% -77% -70% -54% -50% -53% -51% -45% -45% -47% -48% -37% North America -46.3% -46.9% -45.3% -44.8% -45.8% -43.8% -39.0% -36.5% Southwest Pacific -86% -87% -81% -75% -75% -74% -71% -68% -53% -58% -56% -40% Southwest Pacific -61.1% -60.2% -56.7% -52.3% -54.6% -49.7% -48.8% -47.2% Global -67% -70% -67% -55% -49% -50% -48% -48% -46% -48% -49% -31% Global -51.0% -51.2% -54.5% -50.3% -50.0% -46.1% -45.6% -44.4%

• Schedule currently expects capacity to be 12% below 2019 levels at end of Q2 • Unlikely given scale of ongoing travel restrictions • 22% of the capacity shown in the schedule for the last week of June is transatlantic or international capacity to/from UK, Japan, China, New Zealand which are all essentially closed

Seats CHINA Seats INDIA Seats JAPAN 80,000,000 18,000,000 16,000,000 70,000,000 16,000,000 14,000,000 60,000,000 14,000,000 12,000,000 12,000,000 50,000,000 10,000,000 10,000,000 40,000,000 8,000,000 8,000,000 30,000,000 6,000,000 6,000,000 20,000,000 4,000,000 4,000,000 10,000,000 2,000,000 2,000,000 - - - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2019 2020 2021 2019 2020 2021 2019 2020 2021

Seats AUSTRALIA Seats VIET NAM Seats THAILAND 8,000,000 6,000,000 5,000,000 7,000,000 4,500,000 5,000,000 4,000,000 6,000,000 4,000,000 3,500,000 5,000,000 3,000,000 4,000,000 3,000,000 2,500,000 3,000,000 2,000,000 2,000,000 1,500,000 2,000,000 1,000,000 1,000,000 1,000,000 500,000 - - - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2019 2020 2021 2019 2020 2021 2019 2020 2021

7 Asia Pacific airlines were among Top 25 in 2019 for capacity

Performance in 2020 vs 2019 Seats Traffic Top 7 Asia Pacific airlines -28% -41% Of which … Chinese carriers -26% -37% Of which … Other carriers -33% -47%

• February 2021 saw a large dip in capacity • Large adjustments to capacity continue as the government reined in travel over month by month Chinese New Year • US Majors have large increases in • China Express Airlines – now ranked 12th capacity still in the schedule for Q2 globally for capacity but wasn’t in Top 100 in 2019 WWW.OAG.COM © 2021 OAG Aviation Worldwide Limited. All rights reserved TOP AIRLINES OF 2019 – WHERE ARE THEY NOW? Still managing capacity on a month-by-month basis

• Turkish Airlines benefitting from sizeable • IndiGo now only 8% below March 2020 domestic market • Other majors still operating at around • Q1 capacity very low in Western Europe half the capacity of a year ago • Schedules still holding much higher level of capacity for Q2 WWW.OAG.COM © 2021 OAG Aviation Worldwide Limited. All rights reserved TOP 25 AIRLINES NOW Rankings changed dramatically from 2 years ago – will this stick? • 8 of Top 25 airlines now based in US • No European airlines • 10 of Top 25 airlines now based in • IndiGo, Lion Air and Azul climbing rankings China

TOP US AIRLINES TOP CHINESE AIRLINES TOP OTHER AIRLINES Rank Rank Rank Rank Rank Rank March March Airline Seats March March Airline Seats March March Airline Seats 2021 2019 2021 2019 2021 2019 China 1 (1) American 15,348,994 4 (5) 8 (12) IndiGo Southern 2 (2) Delta 14,258,194 5 (7) China Eastern 9 (11) Turkish

3 (3) Southwest 12,691,602 7 (9) Air China 11 (13) LATAM

6 (4) United 9,252,130 12 (-) China Express 16 (34) Lion Air

10 (18) Alaska 3,662,735 13 (36) Sichuan 22 (24) Qatar

19 (28) Spirit 3,040,115 14 (27) Shenzhen 23 (44) Azul

20 (22) JetBlue 2,811,404 15 (23) Hainan 24 (15) All Nippon

25 (62) Frontier 2,211,982 17 (33) Xiamen

18 (38) Shandong

Cathay Pacific latest results for 2020 show: Singapore Airlines Group results for 9 months to • Passenger revenues down 84%, load factor December 2020 show: down 24% • Group revenues down 79% • Cargo revenues up 16%, cargo yield up 58% • Operating loss of SGD 2,194m • Financial loss of HKD 17.4bn • Costs down by 59% • Costs down by 39% • $12.7bn in fresh liquidity • HKSAR Government committed HK$27.3bn WWW.OAG.COM © 2021 OAG Aviation Worldwide Limited. All rights reserved JET FUEL PRICE 75% OVER PAST 4 MONTHS US$73 per barrel and rising • Flying less through pandemic means proportion of costs which are fuel may be lower. • Fuel is a major cost item for airlines and so fuel price rise makes it harder for airlines to reduce cash burn • Price rises caused by: • Texas winter storms disrupted oil production, refining and transportation • Attack on Saudi oil exporting facility • United OPEC

Proportion of Operating Costs that are fuel 2019 2020 Spirit Airlines 30% 19% Ryanair (year to 31st March) 38% Lufthansa 9% 18% WWW.OAG.COM © 2021 OAG Aviation Worldwide Limited. All rights reserved AIRLINE FAILURES & BANKRUPTCY PROTECTION Why so few? • While many airlines have struggled, relatively few have failed • High profile failures include NokScoot, Level Europe, CityJet, LIAT

• Many airlines in some sort of bankruptcy protections • High profile cases include LATAM, Virgin Atlantic, SAA, Thai Airways, Avianca

• M&A activity may be rising • Air Canada may acquire Air Transat • Cathay Dragon being absorbed in Cathay Pacific • Korean Air parent acquiring Asiana

• Points to success by airlines in raising liquidity

• Low cost of borrowing

• Recovery will be hampered by high levels of debt financing

Strategy Strategy Example Area Business Maintain liquidity British Airways Pivot to leisure KLM starting tour operator Restructuring Malaysian Airlines restructure completed Government support Aid, furlough, Australia’s 50% discount on 800,000 domestic flights

Cost reductions Cathay Pacific reducing headcount, implementing voluntary unpaid leave, pay cuts, cuts to discretionary spending, expenditure deferral Start ups Lion Air creating new start-up airline Network Enter markets where people will fly Eurowings (Lufthansa) to fly to UK from Malaga base

Competitive tender for routes restarts

Constant capacity changes Fleet Aircraft orders cancelled/deferred Norwegian cancelled orders for 88 aircraft and Cathay Pacific deferred A321neo and A350 deliveries

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

UK End January End March End May Early August USA Spain Singapore Portugal Poland Greece Germany Italy France Canada Netherlands Russian Federation Mexico India Indonesia UAE Turkey Switzerland

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