PRESENTATION 2

“The Future of Airline Business Models for post-Covid” by Mr. Matthias Kern, Associate Partner - Consulting The Future of Airline Business Models for Africa post-COVID

“Building Blocks for the Air Transport Industry Recovery” Lufthansa Consulting is a leading aviation consultancy

Post-COVID Competence Independent centers advisor and 7 member of the LH Group

Award Aviation 100 winning employees with is our core expertise 40 consultancy successful years 18 different in aviation nationalities 3500 Headquarter in aviation projects , worldwide Offices in Dedicated regional Rio de Janeiro representatives and 7 around the world

3 Even large airlines were hit hard by the pandemic; some are seeing a gradual path to recovery

Percentage of seat capacity vs corresponding month in 2019 Post-COVID Largest African airlines by scheduled seats, 2019

Initial Shock Gradual reinstatement Hope for recovery 120%

1 100 Egyptair 80 Tunisair2 Kenya Airways3 60 Air Algerie

40 SAA4

20

0 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22

1) Includes Air Sinai | 2) Includes | 3) Includes Jambojet | 4) Includes Mango Source: OAG Note: SAA and Tunisair have not yet filed full schedules for Nov and Dec 2021

4 To shape your business for the future consider your position and your purpose

Transformation approach: Strategic Options for Airlines SIMPLIFIED OVERVIEW

Lo w Turnaround & Cash burn minimization Rightsizing Tactical, drastic measures to Preparation for long-term stop the bleeding and focus on turnaround based on defined quick wins to economize Owner / governmental bail out business model Strategic partnering Process re-engineering

Zero-based budgeting / design Liquidity reserve Liquidity Continuous Organization of the Improvement future Set-up of team and processes Rethinking of business model, for continuous improvement skill requirements, and cost saving during regular organizational up and ways of ops working High Gradual Future Readiness of business model Radica l

5 In the ‘New Normal’, winning African business models will be more focused

Mission Africa to remain home to FSC, hybrid, LCC, ULCC models Strategic scope

Need to streamline heterogeneous Geographies Customers Partnerships Fleet fleets Hub and spoke Value Proposition Go-to-market model carriers to evaluate P2P Product Servic Distribution Sales opportunities e

Pricing Marketing Setup FSC to evaluate LCCs to ensure pivots to leisure Functions (Operation, Finance, Administration, etc.) genuine LCC cost and expansion of base cargo

People Process IT Infrastructure

6 How to shape your business model towards becoming a ‘master of survival’ in Africa

Be Flexible Be Lean Be Smart Design your organization Ensure competitiveness through lean Digitize operations with decision making to cost efficiently ramp up and down cost base and focus on customer value based on integrated, AI-supported systems

Be Sustainable Be Collaborative …and shape the market Convince your stakeholders Go beyond code shares, Stick together to use the crisis of your commitment to the future optimize costs through partnerships to accelerate African market liberalization

7 The impact of an airline on the economy can convince shareholders of their return on investment

Impact of aviation on economy

Example of National Carrier (Value added 2020-2025) bound

~400 mn USD ~200 mn USD ~150 mn USD ~4 bn USD

Gross Value Added Gross Value Added Gross Value Added Catalytic economic direct impact from indirect impact on local induced impact via impact including Airline Operation aviation value chain domestic expenditure inbound international of employees tourism

8 In summary…

Future ready Transformation Financing Economic impact Winning business model & business model + plan + plan + analysis = convincing story to investors

9 Contact

Matthias Kern Associate Partner Head of Solution Group Organization & Strategy Lufthansa Consulting GmbH FRA W/A Center 1 Hugo-Eckener-Ring 60546 Frankfurt/Main Germany

Phone: +49 (0)151 58940586 E-Mail: [email protected]

Disclaimer This document was created for your exclusive use only. It is only complete in conjunction with a verbal presentation by Lufthansa Consulting. With regard to the information contained herein, we appreciate your undertaking to respect and preserve the confidentiality of this document and not to disclose or otherwise make available this material to any third party or use it for any purpose other than for your internal use. Registration: Local Court of Frankfurt, Commercial Register HRB 101093 | Managing Director: Hannes Müller

10 Many airlines had to seek governmental support to survive this crisis – use this as opportunity

Examples of airlines in Africa seeking governmental support (since 03/2020) Air

Royal Air Maroc Egypt Air

Kenya Airways

Air Mauritius

South African Airways

Mango Airlines

11