Investor Day November 2018 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.
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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.
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2 Todays speakers
Hernán Rincon Silvia Mosquera Santiago Aldana Chief Executive Officer Chief Commercial Officer Chief Digital and Technology Officer
■ Longstanding trajectory in the technology and ■ Over 12 years experience in Aviation industry ■ Extensive experience in the transformation of telecommunications sectors, holding leadership ■ Previously served as Chief Commercial Officer of the companies and the use of mobile and digital positions at Microsoft, Ferag Americas, Cocelco Iberia express technologies and Grupo Unysis ■ Served as Director of Strategy, Network and ■ Founding Partner and CEO of UFF Mobile before ■ Previously served as CEO of Microsoft Latin Revenue Management at Vueling joining AV America
Gerardo Grajales Roberto Held Executive of Strategic Business Units Chief Financial Officer
■ With Avianca since 2002 ■ Served as CFO of Juan Valdez prior to joining ■ 25+ years of management experience Avianca ■ Previously served as CEO for two thermal power ■ Extensive experience in Banking and Capital plants in Colombia operated by AES and as CFO Markets for Baxter Pharmaceutical ■ Worked at Colombian Stock Exchange on the development of the value markets Agenda
1 Avianca – 100 years of operation
2 Pax – The backbone of Avianca
3 Digitalizing Avianca
4 Non-Passenger Businesses Proven Value Creation
5 Deleveraging and Cash generation Hernan Rincon CEO Avianca 100 years The longest flight in the world Avianca is the world's second oldest operating airline
2004 – 2005 1919 1940 2002 Synergy Aerospace 1994 becomes Avianca’s major 2008 2010 The Sociedad Colombo Avianca and SAM, Avianca System is shareholder. Avianca The Avianca and Taca Alemana de Transporte SCADTA and SACO created as result of a along with Aerolíneas establishes a new strategic Avianca acquires Tampa combination Aéreo (“SCADTA”) is merge into Aerovías strategic alliance Centrales de Colombia north and renews its Cargo, a freighter strengthens their founded in Barranquilla, Nacionales de Colombia between Avianca, (ACES), merge into image, initiating a new era operation with 35 years of strategic position in the Colombia on December 5, S.A. (Avianca) SAM and HELICOL Alianza Summa of consolidation and experience in the region and enhances 1919 expansion Colombian market their growth potential
2011 2012 2011 – 2014 2013 2013 2015 2017 Avianca executes its IPO Avianca acquires Avianca launches its Avianca prices its Advent acquires AVH begins in the Colombian Avianca joins Star 100% of Ecuador’s new image and IPO of ADR listed minority stake in negotiations of Stock Exchange and Alliance AeroGal and 25% of unifies all member on the NYSE LifeMiles strategic alliance establishment of Life Mexican freight airlines under the (“AVH”) Miles as a separate specialist, single Avianca entity AeroUnion commercial brand
6 6 Source: Company. A customer-centric focus throughout the organization drives our success
567 Avianca's best in class product is tailored to customer preferences
Avianca's full service product and focus on impeccable customer service… The latest additions to Avianca's expanding network
…make Avianca our customers' undisputed preference for travel within the Americas Intra-Home Home Markets Home Markets Home Markets Markets(2) to N. America To S. America to Spain
#1 #1 #1 #1
64.1% Market Share 23.1% Market Share 33.3% Market Share 32.6% Market Share “Best “Best “Best Regional Airline “Best Airlines in “Best Airlines in Latam Airline ” Economy Class” in Latam” Latam” Latam” 8 Avianca was quick to adapt to the 2017 pilot strike- however, this significantly but temporarily disrupted important positive operational trends
Strong RPK trends ensure improving load factors
14,5% 84,6% 84,2% ▪ Thoughtful capacity deployment ensured that RPKs 83,5% 83,8% 83,6% 10,0% 10,1% outgrew ASK by 2.1% since 2016 8,7% 82,0% 82,3% 6,5% 6,8% 5,9% 81,9% 4,9% 9,0% 9,0% 7,4% 3,0% On average, transported passengers grew by 5.2% year 78,8% 5,9% ▪ 78,1% 4,6% 4,5% 3,1% 3,5% 2,6% over year until the pilot strike 6,9%
▪ Avianca quickly adapted to the strike by streamlining its -7,3% 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 operations, enabling the company to: Load Factor Total Total ASK Var% Total RPK Var%
Post Strike passenger numbers have not fully recovered • Reconfigure its crew schedule 7.666 7.706 7.609 7.521 7.617 7.421 7.351 • Substitute small seat capacity Aircraft with high seat 7.132 7.073 capacity Aircraft 6.615
• Optimize its network
▪ Avianca estimates that it transported approximately 1.8
million fewer passengers due to the pilot's strike 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 9 (-11% YoY) Total Pax (Thousands) Avianca has demonstrated its resilience despite short-term headwinds
Despite strike impact, unitary profit shows positive development
▪ Although yield reflects a strong upward trend, fuel 1,5 1,1 price increase and pilot strike effect have 0,8 0,8 0,9 0,7 impacted profitability 0,6 0,6 0,7 0,6 0,5 0,6 0,3 0,6 0,6 0,4 0,5 0,5 ▪ Margin impact of pilot strike US 245 million in the last 0,2 12 months 0,2 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Rask - CASK Spread Adj Rask - CASK Spread Lineal (Rask - CASK Spread Adj) ▪ Additional fuel costs were offset by ticket price Profitability remains under pressure despite positive yield trend increase of 15% on average 9,2%
7,9% 9,3 7,2% 7,0% 9,3 ▪ Avianca maintains EBIT margin guidance of 6-8% for 6,4% 9,1 5,7% 8,9 6,5% full year 2018 8,8 5,0% 8,7 8,6 8,6 8,5
8,2 1,7% 2,6%
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 10 EBIT % Yield 3Q 2018 2018 OUTLOOK
PAX 4.6% 5.0% – 7.0% from 7.0% - 9.0%
ASK 2.6% - 5.0% 8.0% – 10.0%
LF 82.3% 81.0% – 83.0% from 80.0% - 82.0%
EBIT¹ 6.0% - 8.0% 6.0% – 8.0% EBIT 4.5 – 6.5%
11 (1) Estimated range adjusted for the Pilot Strike Silvia Mosquera Chief Commercial Officer PAX – Avianca's Backbone
14 Commercial Overview 2018
Launch Revenue 12 new premium routes to peers
Enhance Additional customer growth in preference ancillaries
Reduce Increase cost of direct sales sales
1315 Solid Revenue Performance
KPIs 1H- 2017 1H-2018 Var. YoY (%)
ASKs (M) 24,801.4 25,687.0 3.6%
RPKs (M) 20,317.3 21,302.6 4.8%
Passenger Revenues* (USD M) 1,737.4 1,964.4 13.1%
RASK* (¢) 7.0 7.6 9.2%
Yield (¢) 8.6 9.2 7.8%
LF 81.9% 82.9% 1.2 pp
CASK sales & marketing** (¢) 0.85 0.82 -3,5%
*Includes: ticket sales, ancillaries, charters, write-offs and loyalty redemptions 1427 **Cask sales & marketing: direct costs of VP sales, marketing and revenue (distribution, commissions, etc.) + indirect costs (credit card fees, AV Tours, Fraud, etc.) excludes intercompany charges Ancillary revenue growth
Optimize ancillary Growth product Digital portfolio portfolio Transformation
• Upgrade your meal • Dynamic pricing • Omni channel approach • Fare lock AV.com • Channel pricing • Real time merchandising • WiFi • Incentives • Online conversion optimization • Digital duty free • Communications • Insurance portfolio
• Neighbor free seat
• Trip packages
Expected Growth (2019 Vs 2017) 15%-20% Revenue/Pax USD $30-$40M Ancillary Revenue 1528 Channel Mix Strategy
Channel Distribution Mix * Channel Growth – Sales (1H18 vs 1H17)
OTH Fastest 8,0% AGY growing 49,4% channel
OTA 11,40% 20,1% 7,90% 6,80% 5,30% 2,10%
COM AGY COM OTA OTH Total 22,4%
Objective: increase share of direct channel sales, as well as revenue per pax
1629 *AGY: Agency, OTA: Online Travel Agency, COM: Avianca website, OTH: Others AV Global Capacity Exposure
Capacity by region (ASK 2018 1H)
SAM CAM 9% 13% Ciudad de Guatemala San Salvador PER CAR 11% 2% Medellín
Bogotá NAM 12% COL INTER 27% Lima EUR 9% ECU DOM CO 2% 15%
Change in Capacity YoY (2018 vs 2017)
Hub 14,8% 10,4% 8,8% 4,6% 4,8% Focus City 2,6% 3,8% 3,6%
-0,5%
-8,3% CAM CAR COL DOM CO ECU EUR NAM PER SAM Newtork INTER 1731 *SAM: South America, NAM: North America, CAM: Central America, CAR: Caribbean, PER: Peru, ECU: Equator, EUR: Europe, DOM DO: Colombia Domestic, COL Inter: Colombia International Our brand promise
“Avianca has built its culture on a foundation of impeccable service and on investing in our client-facing team- focused on every aspect of our interactions to ensure our customers' satisfaction. ”
We give We strive We listen We go to the extra mile We surprise even more
Makes me fall in love
We are detail-oriented We innovate We address mistakes
Means End 20 1832 Ongoing improvement of customer experience
imagine experience & enjoy remember
Moment: Moment: IN FLIGHT IN FLIGHT
Business Class Europe new Service Standard Business Class • More space New express menu • Better ergonomics Warm desserts • 11,6” HD screens New menu design Improved food presentation
Moment: Moment: Economy Class VIP LOUNGES IN FLIGHT • Chairs with greater angle of inclination VIP Lounges Entertainment • Adjustable head-rest Total investment: 6,7MM USD • 10,1” screens with USB port We improved our offering from 56 movies to 140, 146 New and improved VIP Lounges in: TV episodes to 360 and • Bogotá (Diamond and Gold) 9 records to 288 • Cali (International) • Bucaramanga • Santa Marta This year we According to the category (premium, basic, will begin medium) we offer a great variety of services: offering live-cooking, showers, connectivity, business Inflight Wi-Fi centre, family rooms, Service staff and others 1933 What have we achieved in Spontaneous Awareness (H1-2018)?
Total Spontaneous Awareness (TSA): +14pp +17pp 56% +14pp +7pp
+0pp +0pp
+18pp +5pp
+7pp
+7pp
Source: Strategic Study 2018 - Brand Tracking Study. IPSOS 2034 *In EUR and NAM tracking was modified, we are now evaluating those individuals interested only in travel to Latin America Awards and Recognitions of Excellence
2018
2018
SKYTRAX Trip Advisor APEX KAYAK World travel Effie Awards Effie Awards Best Airline in South Included as one of the Best Airline in South Included as one of Awards Colombia Latin America America and Best best Airlines in Latin America the best Airlines in South America’s Gold award in Gold award in Economy Class in America and one of the (2018) Latin America with Leading Airline Brand activations and transport, trips South America Best Economy Class in Best Boarding, Best (2018) services & and tourism & (2018) Latin America Comfort, Best Crew, Transport, trips Corporate (2018) Best Entertainment and tourism reputation and Best Food. (2018) (2018) (2018)
2017
SKYTRAX Trip Advisor Consumer and Business Ecommerce Effie Awards Effie Awards Best South American Best airline in Latin User Organization Traveller Awards Awards Colombia Colombia Airline and best America Second best airline Best airline in Best mobile initiative Silver award in Gold award in regional Airline (2017) in the world South America for Ecommerce activations and activations and (2017) (2017) (2017) (2017) services services (2017) (2017) 2134 2019 Focus
• Branded Fares/Personalization
• Dynamic pricing
• Expand Direct Connect Channel /NDC
• Keep growing ancillary revenue
• Continue optimizing cost of sales: direct sales, GDS, incentives
• New routes
• 100 year anniversary
2236 Santiago Aldana Chief Digital and Technology Officer Digitizing Avianca
25 A look into Avianca's past...
✓ Optimization and financial recovery • Digital Technology will be used to: ✓ TACA integration process ✓ Strong fleet management ✓ Competitive position Improve customer experience ✓ Stock market participation ✓ Low investment in technology:
- Obsolete Architecture and applications - Null adoption of new technologies such as cloud Increase team's productivity - No ERP, no CRM
2016
24 Why a digital transformation?
Path to digital mastery Revenue Generation Efficiency Profitability Revenue Generation Efficiency
Fashionistas Digital Masters Fashionistas Digital Masters +6% +6% -11% +26% Integrated Digital Masters
Experience
Capability Capability
Experience Beginners Conservatives Beginners Conservatives Digital Digital -4% -10% Digital -24% +9% Silos and Industrialized complexity
Efficiency Leadership Capability Leadership Capability
Source: Leading Digital: Turning technology into bussiness 5325 Source: MIT SMR Article: Is your company ready for a digital future? Avianca's challenge: building a digitized and digital organization
DIGITIZED DIGITAL
Integration/Standardization of entreprise processes Organizing Principle Digital Offerings
Funding Centralized investments in programs and projects New offerings funded locally; Digital business unit funding
Quality control Release management Customer co-creation; Formalized QA Test, learn, enhance or discard
Key role Process owners Product or service owners
Business case Process efficiencies, cost reductions New revenues from new value propositions
OPERATIONAL EXCELLENCE RAPID BUSINESS INNOVATION
2654 Source: Ross, Beath, Sebastian, “Digitized vs. Digital”, MIT, CISR Research briefing The challenge is to transform the customer’s experience exponentially
Get to Flow from Lobby to Flight airport Checkin Investigate Boarding Plan Leave VIP Lounges Claims Baggage Registration Prepare Return Remember Imagine Purchase Security, Migration, Customs
BEFORE DURING AFTER
Agile, Consistent and Personalized
Supported by an Operational Digital Journey
2755 KEY ACHIEVEMENTS
2860 We defined and implemented projects to clean house, and take control of our operations
Journey to Software Cloud Factories
Process Data Center Management, Key Elements to Outsourcing/ User Corporate risks Access and Enterprise achieve DT management Architecture
Network, TELCO and IT service and security Help Desk Outsourcing transformation Status MAURO 2965 31 reflects an exponential change in Avianca´s culture
$700.000,00 8mill. 7,5mill.
$600.000,00 7mill. 6,3mill. 6mill. $500.000,00 4,9mill. 5mill. 4,4mill. $400.000,00 4mill. 3,2mill. $300.000,00 3mill.
$200.000,00 2mill. 0,3mill. $100.000,00 1mill. 0,5mill. 0,0mill. 0,0mill. 0,1mill. 0,1mill. 0,1mill. 0,1mill. $- 0mill. 2017-Q1 2017-Q2 2017-Q3 2017-Q4 2017-Q1 2017-Q2 2017-Q3 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018
SFB – Conference Organizer SFB – Conference Participant
350
300
250
200
150
100
50
0 2Q2017 3Q2017 4Q2017 1Q2018 2Q2018 3Q2018 3062 Have also implemented important projects to enable our digital transformation
• CRM (Sales and customer care) • Fleet and crew management and optimization • New App • App for Crew interaction • New Website Av.com • Fleet asset management • Campaign Management • Electronic Flight Bag • Direct Connect/ NDC • Turn around management system • Irregular operations DIGITAL CUSTOMER • New Website Av Cargo DIGITAL DIGITAL CUSTOMER OPERATIONS
DIGITAL DIGITAL OPERATIONS TRANSFORMATION
DIGITAL • Work2gether- 0365-Intranet ENTERPRISE • Success Factors • SAP-Ariba DIGITAL ENTERPRISE • Electronic Billing • Documentary Management • Project Online 3166 TECHNOLOGY SHOULD SHIFT FROM ENABLING TRANSFORMATION…
…TO INSPIRING IT
3268 35 Gerardo Grajales VP of Business Units Proven Value Creation
37 Business Units will increase its contribution to AVH total revenues: From 18% in 2018 to 25% in 2022
2017 Servicios Aeroportuarios Integrados SAI
2016 1996-2015 25%(1) ❑ Deprisa (1996) Creation of Strategic Business Units ❑ Avianca Services (2002) 2022 ❑ Avianca Cargo (2008) New business ❑ LifeMiles (2011) ❑ OneLink Getcom (2013) ❑ Avianca Tours ❑ Sansa – La Costeña (2013) ❑ Simulators ❑ Aerounión (2014) ❑ Academy ❑ Viajes Éxito (2015) 2018 ❑ Regions 23% 18%
36 (1) % of AVH forecasted revenues Airline industry growth requires innovative solutions and strategic geographical location
SBUs operation supported by Avianca’s entrenched position Key Highlights
Headquarters in 5 countries
Operation in 12 countries
Presence in 6 industries
11 operating companies
More than 10,000 workers Headquarters Operation
37 38 Avianca Cargo at a Glance
Business Overiew Network
• Cargo airline with a unique network in Latin America that offers a diverse BOS portfolio of products and services based on freighters and bellies of the ORD JFK PAX airline LAX • Through 4 HUBS (Passenger and Cargo) serving 24 countries MUC • With 29 offline stations in Asia and Europe (GSAs), 92 Interline MIA MEX HAV Agreements, we reach more than 400 destinations PUJ, SDQ SJU GDL GUA • 143 points of sales in 52 countries AUA, CUR SJO SAL PTY
MDE Product portfolio is an affiliated BOG company UIO GYE Valuables Live Animals & Pet Care MAO
Courier LIM CoolCare & Pharma LPB
GIG VCP
Products GRU Dangerous Goods Oversized & Overweight ASU CWB
EZE MVD SCL commercial agreement Perishable Goods Human Remains with Ocean Air Cargo HUB Passenger HUB
Premium Cargo Must Go Cargo and Passenger HUB 39 Services Avianca Cargo leverages its diverse network and partnerships to connect Latin America with key European & Asian destinations
Fleet Strategic Partnerships
12 Freighter aircraft give AVH in the most modern mid- Avianca Cargo has a Hard Block Space Agreement in a size freighter fleet in Latin America freighter operated by Ocean Air under the brand Avianca 4 A330-200F from Tampa Brazil. 1 A330-200F from Taca Peru Shanghai (PVG) – Santiago de Chile (SCL) operation twice a week, connecting in the MIA HUB, to increase Avianca 5 A300F from AeroUnion Cargo’s participation in the Asian market 2 B767-300F from AeroUnion GSA for El Al in the MIA-TLV route and GHA service for +150 Passenger aircraft (WB and NB) the airlines in MIA
Market Share & Market Position* Performance
Highlights Jan-Sep 2018 1.7 bil ATK 2017 and 2017 Cargo Airline RTK of the Year by Miami Dade 1.0 bil Aviation Department 60% Load Factor
+11.2% Revenue vs. 2017
*Jan-Aug 2018 40 41 LifeMiles: Industry Leader at the Center of the Loyalty Ecosystem
Largest Banks
Premier Gross Billings Airlines ~8.3 Million Members 16.0% YoY Growth
1 Exclusive Loyalty Best Hotels Program for Avianca (until 2040) Auto/Gas Award Winning Program
Renowned Restaurants +359 +666K & Eateries Active Active Co-branded Commercial Partners Credit Cards Apparel (+12.2% YoY Growth) (+12.5% YoY Growth)
Note: data as of June 2018. 42 Ongoing innovation enhancing our members’ experience
New Booking Engine Credit Card on File Geolocation in LifeMiles App
• Shorter redemption process • Mapping of commercial • Ability to store partners and push • Discount coupons for cobrands credit card notifications information for • Improved visibility of LifeMiles + Money future purchases • Option of automatic • Simpler redemption summary payment through application
Cardless
• Accrual and redemption transactions • Miles purchase subscription plans, enabling members to accumulate and save using ID number only • Qualifying miles can be purchased when more miles over time redeeming miles on sponsor airline (e.g. • Rolled-out to POS terminals in Colombia & El Avianca) Salvador • Enables members to maintain and improve their Elite Status more quickly
43 Roberto Held CFO Deleveraging & Cash Generation Executing cost savings and efficiency initiatives since 2017 CASK Ex Fuel reduction target: 5% YoY
Cost Performance Improvement Program (CPI) IMPACT
>80 initiatives in 2017 Fleet Maintenance
US$121M in 2017 General & Admin Operations
>50 initiatives beyond 2018 Business Units Airports
+US$190M Beyond 2018
Technology Customer Experience
45 Sales & Marketing AVH Fleet Plan, decelerate aircraft incorporation optimizing level of indebtedness
Target Fleet Plan Target Fleet Plan AVH 2018 2019 2020 2021 2022 Total Fleet 188 187 193 198 201 Narrow Body 126 129 134 137 138 Wide Body 21 20 21 23 25 Other 41 38 38 38 38 • A-Check & Maintenance Optimization: fewer new aircraft required to support operations
• Young fleet enables new strategy: current average fleet age (6.7 years) enables a deceleration of new aircraft incorporation and of lease extensions
• Fleet incorporation pace reduction: currently negotiating Avianca’s proposed* deferral of up to 50 aircraft, reviewing and reassessing status of 50 additional aircraft
• Targeted Net aircraft growth from 2018 to 2022: 13
• Reduce ASK growth rates: network deployment allows a reduced pace of ASKs growth rate to levels of 6.3% in 2018-2022
• Target PDPs reduction of +$500M from 2019 to 2022
• Proposed reduction/reorganization of current order would reduce indebtedness requirements and enhance cash optimization by more than US$1bn in the immediate term (subsequent three years) 46
*currently under negotiation, final plan may differ from target plan MRO: Capturing efficiencies at our maintenance facility
• MRO Slot Optimization: planning and utilization based on airline operational requirements, passenger/cargo seasonality.
• Labor Costs: efficiency due to low-cost, highly technically skilled labor force, creating an aviation cluster in Colombia
• Strategically Located: conveniently located within the José María Córdova International Airport, centrally located within the Americas
• Cost optimization: two consecutive years of MRO operation has resulted in $25M-$30M in cost reduction
• MRO capacity: Increased to six narrow body aircraft bays. 787 heavy checks rating also granted by FAA.
• Reduction of Turn Around Time (TAT): 6Y/12Y checks on A320 fleets reduced to 3 days, increasing aircraft available for commercial operation. 2447 The targeted fleet plan will accelerate debt reduction…
Net Debt additions and repayments
122
(360)
2016 2017 2018* 2019 2020 2022
Note: Graphical representations for future years are to be considered as approximate estimates only 2048 …and significantly reduce future fleet CAPEX requirements
147 Fleet Capex Other* Average Fleet Age*
10,8 8,8
154 6,9 6,7 6,8 10,0 6,2 5,8 5,4 8,40 241 6,80 889 503 147 303 113 27 109 47 69 2014 2015 2016 2017 1Q18** 2Q18** 2018 2020 2022
2018 2022
Fleet and engines 16,4% Fleet and Other Fixed Overhaul engines… Assets Capex 42,2% 7,9% Rotables Overhaul 7,5% 63,7% Intangibles Other Fixed 4,5% RotablesAssets Capex 8,0% 9,9% Intangibles 6,6% 2149 * Other: Includes overhaul capex, intangible and other; Average Fleet Age only includes Jets, 2018, 2019 and 2020 are estimated numbers ** Adjusted information by TransAsia transaction. YTD information. Note: Graphical representations for future years are to be considered as approximate estimates only Avianca's strong ongoing focus on capital structure improvement
2Q18 Debt Amortization Schedule (US$MM) Debt Profile 1,693 Type Currency Avg. Rate 359,6
Aircraft Debt USD 3.93% 990 Bonds COP 10.58%
549,9 1.333 Bonds USD 7.95% 480 420.5 352.4 30,6 29,8 148 148 148 139 Corporate Debt USD 6.52% 300,7 291,9 183,6 272,5 Total 5.26% 2018 2019 2020 2021 2022+
AIRCRAFT CORPORATE DEBT BONDS Debt Term Debt Rate Debt Currency
Fixed USD COP 79% 85% 14%
5% EUR Long Term 81% 15% Short Debt 21% Term Variable Debt 1650
Note: Graphical representations for future years are to be considered as approximate estimates only Innovative financing solutions are a key strategic pillar
Debt Type Aircraft Debt Structure Aircraft Debt Structure Priv. Corp. Aircraft Placement 24% JOLCO Debt 24% Debt 9% 28% Priv. ECA & Placement EXIM 2Q18 2Q17 2Q18 20% 61% 62% 15% 10% Bonds Comm Comm 48% ECA & EXIM
Corporate Debt Aircraft Debt
▪ COMMERCIAL DEAL (Deutsche Bank) AVH seeks only highly competitive financing terms in ▪ RCF AVH closed USD 80 MM in one transaction with competitive rates in the range of 5-7% the commercial financing markets ▪ JOLCO Since same quarter last year AVH increased it’s portion of JOLCOs (Japanese Corporate Bonds Operating Lease with a Call Option) from 0% to 9% as part of it’s financing solutions with competitive low rates. ▪ Avianca’s local currency bond (COP) matures in August 2019, will not be rolled over ▪ BANKS COMMERCIAL ARRENGEMENTS AVH continually finds competitive deals in the The company remains focused on evaluating market opportunities to optimize its capital ▪ commercial banks market structure 1851
Note: Graphical representations for future years are to be considered as approximate estimates only Debt Indicators
Adjusted Debt (USD $000)
5.882 5.696 5.704
5.476
5.265
2014 2015 2016 2017 1Q18 2018 2020 2022
Adjusted Net Debt / EBITDAR (X)
6,69 5,88 5,98 5,79 5,86 6,16
2014 2015 2016 2017 1Q18 2Q18 2018 2020 2022
5453
Note: Graphical representations for future years are to be considered as approximate estimates only Cash % Revenue & Revenue Sources
Cash % Revenue
14,8% 13,8% 12,9% 12,9%
10,5% 10,4%
2014 2015 2016 2017 1Q18 2Q18 2018 2020 2022
Cash % Revenue Company Goal Total Revenue by Source
4.657 4.597 4.446 4.561 4.234 4.074
760 874 880 886 782 783
3.837 3.675 3.783 3.452 3.291 3.566
2252 2014 2015 2016 2017 1Q18 2Q18 2018 2020 2022 Note: Graphical representations for future years are to be considered as approximate estimates only Passenger Revenue Cargo and Other Correlation between WTI and EM Currencies: has it been disrupted?
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
WTI USDCOP
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
WTI USDARS USDBRL 54
Note: Graphical representations for future years are to be considered as approximate estimates only EBIT Margin Perspectives
• Widebody operation: 787-8 fleet 100% fully operational since September 1, 2018 – No more wet leases required
• Pilot Training: Staff requirements fully covered 9,2% • Fuel impact: Fares & Pricing have absorbed oil & jet fuel price 7,9% 9,3 increases 7,2% 7,0% 9,3 6,4% 9,1 5,7% 8,9 6,5% 8,8 5,0% • High Load Factors: Record high load factors (~83%) are 8,7 delivering strong results 8,6 8,6 8,5
8,2 1,7% • Optimization Program: Capturing and delivering efficiencies 2,6% throughout our operations
1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 • Network planning: focused on moving towards more profitable routes EBIT % Yield
• Technology driving efficiencies: Digitalization of processes
• Strong Business Unit Results: Value creation across the holding organization 55
Note: Graphical representations for future years are to be considered as approximate estimates only Contact Information:
Investor Relations [email protected] Thank You T: (57) 1 – 5877700 www.aviancaholdings.com
60