Avianca Holdings S.A. Corporate Presentation May 2019 Disclaimer
The material that follows comprises information about Avianca Holdings S.A. (the “Company”) and its subsidiaries, as of the date of the presentation. It has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities and should not be treated as giving legal, tax, investment or other advice to potential investors. The information presented or contained herein is in summary form and does not purport to be complete.
No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, or completeness of this information. Neither the Company nor any of its affiliates, advisers or representatives accepts any responsibility whatsoever for any loss or damage arising from any information presented or contained in this presentation. The information presented or contained in this presentation is current as of the date hereof and is subject to change without notice, and its accuracy is not guaranteed. Neither the Company nor any of its affiliates, advisers or representatives makes any undertaking to update any such information subsequent to the date hereof.
This presentation contains forward-looking statements, which are based upon the Company and/or its management’s current expectations and projections about future events. When used in this presentation, the words “believe,” “anticipate,” “intend,” “estimate,” “expect,” “should,” “may” and similar expressions, or the negative of such words and expressions, are intended to identify forward-looking statements, although not all forward-looking statements contain such words or expressions. Additionally, all information, other than historical facts included in this presentation is forward-looking information. Such statements and information are subject to a number of risks, uncertainties and assumptions. Forward-looking statements are not guarantees of future performance and actual results may differ materially from those anticipated due to many factors. As for forward-looking statements that relate to future financial results and other projections, actual results may be different due to the inherent uncertainty of estimates, forecasts and projections. Because of these uncertainties, potential investors should not rely on these forward-looking statements. Neither the Company nor any of its affiliates, directors, officers, agents or employees, nor any of the shareholders or initial purchasers shall be liable, in any event, before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or for any consequential, special or similar damages.
Certain data in this presentation was obtained from various external sources, and neither the Company nor its affiliates, advisers or representatives has verified such data with independent sources. Accordingly, neither the Company nor any of its affiliates, advisers or representatives makes any representations as to the accuracy or completeness of that data, and such data involves risks and uncertainties and is subject to change based on various factors.
In addition to IFRS financials, this presentation includes certain non-IFRS financial measures, including Adjusted EBITDAR, which is commonly used in the airline industry to view operating results before depreciation, amortization and aircraft operating lease charges, as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other asset acquisitions. However, Adjusted EBITDAR should not be considered as an alternative measure to operating profit, as an indicator of operating performance, as an alternative to operating cash flows or as a measure of the Company’s liquidity. Adjusted EBITDAR as calculated by the Company and as presented in this document may differ materially from similarly titled measures reported by other companies due to differences in the way these measures are calculated. Adjusted EBITDAR has important limitations as an analytical tool and should not be considered in isolation from, or as a substitute for an analysis of, the Company’s operating results as reported under IFRS.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or services of the Company or this proposed offering. 2 Agenda
1 Company Overview and Track Record
Leading Airline in Latin America focused on 2 service excellence
3 Strong Operational and Financial Performance
Diversified Sources of Revenue with Growing 4 Non-Passenger Businesses
5 Strategic Projects and Full Year Outlook
3 Company Overview and Track Record Successful Integration with Further Synergy Generation Potential
Well-Defined Integration Plan
Total Realized Revenue Synergies: $219MM Revenue’17: $4,890 MM LifeMiles 2019 Maximization Single Ancillary Revenue Commercial Code Revenue 2018 Single Brand Management Optimization Star Alliance Single Web Page Network 2017 Optimization Single Loyalty Program Core Systems Migration Cost Control Initiatives Network & Total Revenue’ 2016 Deliver solid (1) Commercial Integration Non-Core Assets 10: $2,815MM Operational Efficiency: Single Management 2015 Divesting Plan: Team 2014 (3) Single Operations MRO and CEO Adjust the fleet plan 2013 Management to slower growth 2010 2011 2012 Improve operating profit: ERP Fleet Airport Optimization Model Interchangeability Intra Hub Connectivity Strengthen the capital structure:
Potential Cost-Reduction Synergies: US$80MM
EBIT (2) 5.5% - 7.5% Margin: ~4.5% 5.3% 6.6% 8.4% 6.2% 5.9% 7.2% 9.4% 7.0%
Shared Values and Strengths
Homogeneous Experience operating widebody aircraft Customer Both airlines shared similar brand and • Complementary networks offer a unique growth Complementary & Complementary offers new opportunities for traffic from Service customer strategies, providing a high proposition in Central and South America Routes Fleet Central America and Lima Approach standard of service • Only 2 routes overlapped before combination 5 Source: Company. / (1). Consolidated figures for the eleven months ended December 31, 2010. (2). Includes EBIT contribution of Avianca S.A. and GTH. (3). Maintenance, Repair and Overhaul providers (“MRO”) and Operational Excellence Center (“CEO”). Leading Airline with Strategic Footprint in the Americas
Geographic Footprint US$4,890 mm Total Revenues* in 2018
US$ 950 mm Total EBITDAR* in 2018
190 Aircraft Fleet (178 Pax and 12 Fre Aircraft1) as of 1Q19. Avrg Jet Fleet Age of 7.4 Years as of Mar-19. Intra-Home Markets(4) 3 Hubs: Bogota, San Salvador and Lima #1 Home Markets to Spain
105+ Destinations and 6,000+ Weekly Departures 63.9% Market Share(3) #1
Colombia Domestic 33.3% Market Share(3) Leading Loyalty Coalition Program with 9.0+ mm Members #1
Complementary Business Lines – 54.6% Market Share(3) ~17% of Consolidated Revenues in 2018
✓ Single commercial code ✓ Single website Single Avianca brand ✓ Interchangeability of aircraft Courier ✓
Source: Company, Aeronáutica Civil de Colombia, and internal data derived from Travelport Marketing Information Data Tapes (“MIDT”). Note: market shares based on number of passengers (3). International traffic within our Home Markets (Colombia, Ecuador, Peru, El Salvador, Costa Rica, Nicaragua, Honduras, Guatemala, Belize, excluding Central American & 6 (1). 5 Airbus 330F, 5 Airbus 300F and 2 Boeing 767F Caribbean (non-regional)). *When indicated the figures are adjusted by one-time items during 2018 (2). Sourced from Company, 2017 for Colombia Domestic, as of Dec 2017 for Intra-Home Markets and Home Markets To Spain Leading Airline in Latin America focused on service excellence Leading Airline in Latin America…
Leading Position in Latin American Markets(1) Significant Market Share Gains in Key Markets – Passenger Evolution (MM)
Colombia(3) Central America(3) Domestic Operations
#1 #3
Leading Airline with Strategic Footprint in the Americas(4) Central America Colombia Domestic Domestic 54,6% Market Share ▪ Unparalleled route network connecting the Americas 60,3% Market Share
▪ Leadership position in the markets served:
#2 ~54.6% domestic market share in Colombia
Ecuador Domestic ~63.9% market share in Intra-Home Markets(5) 24,0% Market Share
~33.3% market share in Home Markets to Spain routes
Source: Company and local regulators. Undisputed leadership connecting passengers across our home markets with (1) Market share based on number of passengers. Colombia: 1Q19, Central America: 1Q19, Ecuador: Dec-18 (2) Brazilian operations reflect the code-share agreement with Oceanair (“Avianca Brasil”), including the licensing of the Avianca trademark to 2016 (3) Based on domestic and international passengers. Colombia and Peru, as of 1Q19 one another and with North America, Europe and South America 8 (4) Market shares sourced from Company. (5) International traffic within our Home Markets (Colombia, Ecuador, Peru, El Salvador, Costa Rica, Nicaragua, Honduras, Guatemala, Belize, excluding Central American & Caribbean (non-regional). Successful Fleet Optimization Leading to Reduced Complexity
2010 – 9 Families 2017 – 7 Families Long Term Fleet – 4 Families by 2020 Average Jet Fleet Age of 10.1 Years
A330 B737 F100 Boeing 787 B767F Boeing 787 A320 Neo
✓ More fuel efficient than ✓ 15% less fuel consumption A320 Family(1) E190 many similarly sized ✓ Up to 500nm of additional airplanes A320 B767 Regional ✓ Range & Up to 3% cost savings
ATR 72 / 42 Cessna 208 ATR72 A330F
E190 MD83 B757 A330 Pax / 330F /300F ✓ ATR72s for improved ✓ 40% more cargo capacity vs. regional capacity previous cargo fleet
Backlog Designed to Enhance Fleet Efficiency(2)
✓Increased fuel efficiency & Improved ✓New B787-9: 250-290 passengers. This technical dispatch reliability variant differs from the 787-8, a greater Modern capacity of fuel, a greater maximum 2019 2020 2021 2022 2023+ Total ✓Reduced training costs and maintenance fleet weight to the takeoff (MTOW). expenses B787 - 1 2 - - 3 providing A320-NEO 3 3 - - 79 85 platform for ✓Improved range and network higher performance A321-NEO - 3 4 4 15 26 profitability ✓Opportunity to up gage in congested Total(1) 3 7 6 4 24 114 Jet passenger operative 9 markets & Increased regional capacity Fleet average age: 7.4 years
Fuente: Compañía. Strong Operational and Financial Performance Demand outgrows capacity deployment resulting in record Load Factor
Región 1Q19 RPK Growth 1Q19 ASK Growth 1Q19 Load Factor
3.00% 6.03% 81.4% Domestic*
Intra Home 5.60% 3.13% Markets1 82.1%
Home Markets to 17.44% 22.32% North America2 81.7%
Home Markets to -6.64% -3.72% South America3 84.8%
Central America & 3.04% 4.26% Caribbean4 78.3%
Home Markets 7.89% 5.72% to Europe 82.4%
Total RPK 6.6% ASK 8.5% Load Factor 82.1%
*Domestic Market: Colombia, Peru, Ecuador 1 Local Intra-Markets: Colombia, Peru, Ecuador, Salvador, Costa Rica, Guatemala; 2 From Local Markets to North América including México 3 From Colombia, Perú, Ecuador and Costa Rica to Bolivia, Chile, Argentina, Brazil and Uruguay, 4 Belize, Cuba Curazao, Republica Dominicana, 11 Panamá, Costa Rica, Guatemala, Honduras, Nicaragua Demand recovery in core markets drive yield improvement
1Q RPKs – Millions 1Q Load Factor
+6.5%
+1.6% -150 bps 11.341 10.647 9.972 43.730 44.423 83,6% 9.060 83,1% 82,7% 81,9% 82,1% 78,8%
1Q16 1Q17 1Q18 1Q19 2018 LTM 1Q16 1Q17 1Q18 1Q19 2018 LTM
1Q ASKs – Millions 1Q Yield - US¢
+8.5% +2.0%
13.811 53.701 9,1 9,3 9,2 12.180 12.734 52.624 8,7 8,6 8,6 11.504
1Q16 1Q17 1Q18 1Q19 2018 LTM 1Q16 1Q17 1Q18 1Q19 2018 LTM 12 Quarterly Full Year Ex-Strike Avianca remains committed to pursue a leaner cost structure (Unadjusted)
1Q Revenues – US millions 1Q EBITDAR – US millions 9,2 8,7 8,8 8,3 227 9,3 215 216 9,1 889 170 832 197 180 21,4% 205 20,3% 18,2% 213 811 794 19,4%
14,7% 17,1% 972 970 792 862 4.080 4.079
1Q16 1Q17 1Q18 1Q19 2018 LTM 1Q16 1Q17 1Q18 1Q19 2018 LTM 1Q CASK and CASK ex Fuel - US¢ 1Q EBIT – US millions
7,2% 6,5% 2016 6,4% 8,9 8,7 4,7% 8,6 72 76 8,1 8,2 8,2 69 232 3,6% 6,7 6,5 6,4 6,4 6,4 6,0 2017 175
1,6% 18
1Q16 1Q17 1Q18 1Q19 2018 LTM 1Q16 1Q17 1Q18 1Q19 2018 LTM 13 Quarterly Full Year Ex-Strike Non-passanger Revenues EBIT/EBITDAR Margin RASK Debt Overview and Deleveraging Plan
1Q19 Debt Profile By Type(1) By Currency
(1) Bonds COP Type Currency Avg. Rate Bonds 1.85% 3.26% 0.60% COP EUR USD Aircraft Debt USD 4.2% 11.90%
Bonds COP 9.69% Aircraft 22.43% Debt USD Bonds USD 7.95% USD 65.06% Corporate Corporate USD 6.9% Debt Debt USD Total 5.20% 94.89%
1Q19 Debt Amortization Schedule (US$MM)
AIRCRAFT CORPORATE DEBT BONDS 1.495 10 1.296
550.0 740 788 678 1,485 47.0 240 272 369 242
505.0 389.0 468.0 419.0
______Source: Company. 2019 2020 2021 2022 2023 (1) Excludes US$6.3 Millions of corporate debt in COP and US$128.2 Millions of aircraft debt in EUR. (2) Current installments of long term debt + long term debt – cash. Cash includes cash and cash equivalents + restricted cash + available for sale securities + short term certificates of bank deposits + long term restricted cash. (3) Current installments of long term debt + long term debt + (aircraft rentals 12M x 7) – cash. Cash includes cash and cash equivalents + restricted cash + available for sale securities + short term certificates of bank deposits + long term restricted cash. 4) Consolidated net profit for the period plus the sum of income tax expense, depreciation, amortization and 14 impairment and aircraft rentals, minus interest expense, minus interest income, minus derivative instruments, minus foreign exchange. ( (5) EBITDAR coverage ratio calculated as EBITDAR divided by the sum of aircraft leases and interest expense. Diversified Sources of Revenue with Growing Non - P a s s e n g e r B u s i n e s s e s Avianca Cargo: Financial and Operative Results
Segment Overview Key Metrics (Cargo and Courier)
Revenue (US$MM)(2) ATK (MM) (3) -1.0% ▪ Strong performance: 147.9242 +9.3% 617.9 611.6 • Throughout Valentines day peak season we transported more 139.8749 656.6 2,487 2,543 than 11,600 Tons of flowers (+ 5% vs 2018) 600.8
• 2.4% growth in the volume of cargo transported (vs 2018) 1Q18 1Q19 2018 UDM 1Q18 1Q19 2018 LTM • 7.4% growth in Kg On Board In & Out MIA and 2.4% In & Out RTK (MM)(3) Load Factor Colombia 5.8% -49 pbs ▪ Network improvements 358.9 1,424 1,444 57.3% 56.8% • Own operation Consolidation of MIA-BRU-MIA in A330F 339.4 56.5% 54.7%
1Q18 1Q19 2018 LTM 1Q18 1Q19 2018 LTM Market Share Colombia (1Q19)4 Market Share Miami (1Q19)5 38.4% 33.7% 34%
15% 14% 12% 9.7% 11% 7.8% 08% 5.6% 4.8% 06%
AVH Atlas Latam Skylease Cargolux Others Atlas Latam AVH UPS Amerijet American Others Source: Company. (1) On a per trip basis. (2) Includes consolidated revenues from the cargo operation in Mexico and Deprisa (Other Business Unit) (3) Includes bellies and excludes Colombia domestic operations. Includes commercial agreements with OceanAir Linhas Aereas, not included in official statistics. Airlines 16 (4) International Cargo – Aeronáutica Civil de Colombia (as of Mar 2019) (5) Miami-Dade Aviation Statistics, by airline group (as of Mar 2019) LIFEMILES COMPAÑÍA DE LEALTAD
Strong and Growing Network Commercial Partners Strong Brand Recognition Co-Branded Credit Cards Selected Air Companies
LifeMiles won 2 categories in the 2017 Freddie Awards Selected Financial Institutions
Best Redemption Ability, Best Promotion, Up-and-Coming Program
2015 2016 2017 ~70 banks with active contracts 1 Best Promotion 1 Redemption Ability 1 Best Promotion Selected Regional Hotels
1 Up and Coming 1 Best Promotion 1 Up and Coming Program Program Other Selected Commercial Partners 1 Up and Coming Program
Robust Financial and Performance and Leading Market Positions
Members (MM) Geographic Presence Quarterly Highlights
• 1Q19 Gross Billings decreased by 5.2% vs 8.9 9.0 1Q19 7.8 • 7 Approximately 9.0 million members, 6.5 6 +12.0% increase vs. 1Q19 5.4 4.9 • 515 commercial partners, +48.4% vs 1Q19 4.4 • The black-out period related to our new core system cutover in February 2019 resulted in fewer miles redeemed and a Home temporary freeze of commercial partner Markets(1) onboarding 2011 2012 2013 2014 2015 2016 2017 2018 1Q19 Source: Company 17 (1) LifeMiles home markets include Colombia, Peru, Ecuador and Central America. Flight Plan 2019 1Q 2019 2019 OUTLOOK
PAX 4.3% 0.0% - 2.0%
ASK 8.5% 0.0% - 2.0%
LF 82.1% 81.0% – 83.0%
5.5% – 7.5% EBIT 1.6% From 7.0% – 9.0% Thank You Contact Information: Investor Relations Office [email protected] T: (57) 1 – 5877700 www.aviancaholdings.com