Aeroflot Group Q1 2018 Financial Results
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1881537-001.pptx Aeroflot Group Q1 2018 Financial Results Shamil Kurmashov, Deputy CEO for Commerce and Finance Ivan Batanov, Head of Revenue Management Andrey Napolnov, Head of Investor Relations Moscow, Russian Federation 30 May, 2018 1 Disclaimer This document has been prepared by PJSC “Aeroflot” (the “Company”). By attending the meeting where the presentation is made, or by reading the presentation slides, you agree to the following. This document does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any securities of the Company in any jurisdiction, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. No reliance may be placed for any purpose whatsoever on the information contained in this document or on assumptions made as to its completeness. No representation or warranty, express or implied, is given by the Company, its subsidiaries or any of their respective advisers, officers, employees or agents, as to the accuracy of the information or opinions or for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents. This document may include forward-looking statements. These forward-looking statements include matters that are not historical facts or statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the market in which the Company operates. By their nature, forwarding-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that the Company’s actual results of operations, financial condition and liquidity and the development of the market in which the Company operates may differ materially from those made in or suggested by the forward- looking statements contained in this document. The Company does not undertake any obligation to review or confirm expectations or estimates or to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this presentation. 2 Aeroflot Group Q1 2018 Highlights + 6.6 % + 6.1 % + 0.4 p.p. + 8.5 % 112 bn 103 bn 11.0 mln 36.6 bn 78.0% 78.5% 10.3 mln 34.5 bn PASSENGER LOAD PAX ASK Revenue (RUB) FACTOR¹ Q1 2017 Q1 2018 • In Q1 2018, Aeroflot Group has continued operational development via expanding capacity on the back of opportunities provided by the market. • Capacity growth allowed Aeroflot to increase number of passengers transported as well as boost revenues while keeping PLF in the positive territory. 3 ¹ Immaterial deviations throughout the presentation are explained by rounding Aeroflot Group Business Seasonality Passenger Traffic Passenger Revenue (Sch. + Charter) Blended yield (Sch. + Charter) Million PAX Billion RUB RUB/RPK 15.4 149.7 3.74 12.7 3.50 3.50 11.8 113.6 11.0 107.9 3.37 10.3 96.9 3.24 87.2 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Passenger traffic, million PAX Passenger revenue, billion RUB Passenger yield (blended), RUB/RPK Share of each quarter in 12M 2017 results Share of each quarter in 12M 2017 results Q1 2018 yield deviation Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 21% 25% 31% 24% n/m 19% 25% 33% 24% n/m 4% (4)% (10)% (4)% - Source: Company data • Russian air transportation market shows highly pronounced seasonality which influences quarterly results of Aeroflot Group business. 4 1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 5 Competitive Dynamics Passenger Traffic: Market vs Aeroflot Group Change in Airlines’ Passenger Numbers Russian Air Transportation Market (million PAX) International Routes mln PAX, Q1 2018 Increase in PAX million inc. PAX of Russian and Foreign Carriers and int. transit PAX Domestic Routes +0.7 20.3% 11.0 123.7 12.9% 102.8 +1.0 31.7% +0.5 61.1 +0.2 46.4 25.6 +0.3 +0.2 4.6 22.6 15.3% 3.2 3.4 10.9% 1.6 1.8 10.4 12.0 56.4 62.6 10.8% 12.2 13.5 Aeroflot S7 Group Ural Airlines UTair Group1 Foreign Others 2016 2017 Q1 2017 Q1 2018 Group Carriers Aeroflot Group (million PAX) Source: TCH, Rosaviatsia, Company estimates / 1 UTair Group includes UTair, Utair-Cargo and Turuhan 15.4% Market Share (PAX) Q1 2017 Q1 2018 50.1 6.6% 43.4 15.9% 17.9% 23.3% 22.6 11.0 18.3 10.3 6.8% -2.5 p.p. 13.0% 45.5% 43.0% 9.7% 4.6 4.9 13.4% 25.2 27.6 6.5% 5.9% 5.7 6.1 6.5% 6.8% 6.9% 2016 2017 Q1 2017 Q1 2018 12.9% 12.4% Market Dynamics Net of Aeroflot Group “Clean” Market Share of Aeroflot Group (Net of Intl.-Intl. Transit Traffic) 23.9% Total Market 18.1% 42.9% Aeroflot Group 40.3% 37.1% International 22.0% 12.0% Domestic 14.7% Foreign Airlines Other Russian Airlines Source: TCH, Company estimates Note: Incl. foreign carriers’ traffic. • Aeroflot Group continued to deliver growth on further recovering market increasing PAX by 6.6% with acceleration on both 6 domestic and international routes. Continuing Market Recovery Passenger Traffic (Russian and Foreign Carriers) Capacity (Russian and Foreign Carriers) Change in PAX traffic y-o-y, % Change in ASK y-o-y, % 18.6% 25.7% 20.5% 16.4% 12.9% 21.0% 21.8% 19.6% 42.5 % 16.9% 17.2% 16.4% 36.1 % 14.6% 13.0% 11.9% 25.3 % 20.7 % 15.3 % 13.4% 12.7% 12.2% 10.8% 7.4% (2.5)% Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 International Domestic Total market Foreign carriers Russian carriers Source: SRS for foreign carriers, Rosaviatsia for domestic carriers, Company calculations Source: TCH, Company calculations ASK is calculated based on published RPK and PLF data Capacity (Russian Carriers) Passenger Load Factor (Russian Carriers) Change in ASK y-o-y, % Change in PLF y-o-y, percentage points 33.4% 5.0 28.8% 3.8 3.7 24.7% 1.6 17.6% 16.4% 16.4% 0.9 0.8 0.3 0.3 14.0% 9.3% (0.3) 5.9% 6.2% (3.5) Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 International Domestic International Domestic Source: Rosaviatsia, Company calculations Source: Rosaviatsia, Company calculations ASK is calculated based on published RPK and PLF data Quarterly PLF is calculated based on published RPK and PLF data • Beginning of 2018 is marked by further market recovery on the back of higher demand in both international and 7 domestic segments. 1. Market Update 2. Aeroflot Group Overview 3. Network and Schedule Overview 4. Fleet Overview 5. Financial Performance 6. Capital Structure and Liquidity 7. Appendix 8 Aeroflot Group Multi-Brand Strategy Brand Business Model Focus Airport PAX Contribution1 PAX Growth Q1 2018 • Flagship carrier • Moscow +5.4% • Premium product (4 Stars) (Sheremetyevo) 7.0 7.4 • High income and middle class Premium 7.4 67.3% • Hub and spoke model 3M 2017 3M 2018 • Regional and leisure product • Saint-Petersburg (6.7)% Focus on domestic flights (Pulkovo) 2.0 1.9 Regional • Selected international routes, • Moscow (Vnukovo) 1.9 17.0% and Charter mostly out of VKO airport in Moscow • Charter operations 3M 2017 3M 2018 • Moscow (Vnukovo) • Short and mid-haul flights +42.2% • Mostly domestic segment, 1.4 12.8% Low Cost selected international 1.4 routes 1.0 • Point-to-point carriage 3M 2017 3M 2018 • Vladivostok, • The Far East airline flying on Khabarovsk, +7.8% short- and mid-haul direct Regional / Yuzhno-Sakhalinsk 0.30 0.33 international and domestic 0.3 3.0% Far-East routes • Flights to remote cities (local flights) 3M 2017 3M 2018 • Simplified multi-brand product offering to capture customers in every market segment: from premium to low-cost. • Aeroflot and Pobeda – key engines of the Group – both increased traffic by approximately 0.4 million PAX 9 1 PAX contribution as of 3M 2018. Absolute number of passengers in million in green circle Pobeda Airline: Three Full Years of Successful Operations Overview of Pobeda Pobeda’s Network (Summer 2018) • Operating from Vnukovo airport (3rd Moscow airport by PAX) Network • Network comprising 62 routes (38 unique for the Group) Surgut • Additional expansion to international destinations (10 countries) Saint Petersburg • 18 Boeing 737-800 NG (31.03.2018) Moscow Perm Tyumen Krasnoyarsk • Plans for 6 more aircraft to be delivered in 2018 Cheboksary Ekaterinburg Fleet Kazan Nab. Chelny • Single class cabin Kaliningrad Chelyabinsk Novosibirsk Ufa • 189 seats per plane Samara Cologne Leipzig Ulan-Ude, • 1.4 million PAX in Q1 2018 (+42.2% y-o-y) Karlovy Vary Irkutsk Key features Baden-Baden Volgograd • Record high Q1 PLF of 93.1% (+1.5 p.p.