Upload
others
View
5
Download
0
Embed Size (px)
Citation preview
28 February 2012
2011 Preliminary Full Year Results
2011 Preliminary Results | February 2012
Disclaimer | Forward looking information
Certain information included in these statements is forward-looking and involves risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward looking statements.
Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions and the Company's plans and objectives for future operations, including, without limitation, discussions of the Company's Business Plan programs, expected future revenues, financing plans and expected expenditures and divestments. All forward-looking statements in this report are based upon information known to the Company on the date of this report. Due to such uncertainties and risks, you should not place undue reliance on such forward-looking statements, which speak only as at the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law or by any appropriate regulatory authority.
It is not reasonably possible to itemise all of the many factors and specific events that could cause the Company's forward looking statements to be incorrect or that could otherwise have a material adverse effect on the future operations or results of an airline operating in the global economy. Among the factors that are subject to change and could significantly impact the Company’s expected results are the fuel costs, competition from new and existing carriers, costs associated with environmental, safety and security measures, actions of governments and regulatory authorities, fluctuations in currency exchange rates and interest rates, airport access and charges, industrial relations, the economic environment of the airline industry and the general economic environment in the markets to which the Company operates.
2
2011 Preliminary Results | February 20123
Positive trading performance in 2011
• Total passengers carried with Aer Lingus increased by 5.4%; AerLingus mainline passengers up 1.8%
• Operating profit of €49.1m better than anticipated at start of 2011
• Capacity discipline maintained; we focused on profitably servingexisting demand
• Average yield per seat up 4.7%; average yield per passenger up 4.8%
• Average retail revenue per passenger held stable despite challengingconsumer environment
• 2011 revenue increased by 6.0% vs. 2010; both short & long haulrevenues up vs. 2010
• Gross cash increased by €9.8m vs. 2010; robust balance sheet withgross cash of €894.8m at end of 2011
Capacity
Passengers
Unit revenue
Revenue
Profitability
Retail
Cash
Second year of profitability under new strategy
2011 Preliminary Results | February 2012
15.0%
7.8%
4.7% 4.6%
2.9% 2.8% 2.6%1.6%
(0.3%)
(2.9%)
(4.2%)
Rya Ezy AL Norweg Lhansa IAG Vuelg SAS AFKLM Finnair Air Ber
4
Substantial turnaround in financial performance since 2008
+€70m
Source: companies’ reported financial results for latest available common reporting period for all carriers named above, i.e. LTM Sept 2011
¹ Pre-exceptional items
+€69m
+€206m
Significant improvement in profitability 2008 – 2011 (€m)
Swing since 2008:
Delivering top tier EBIT margin performance (%)
103
58
192
173
(20)
(81)
53 49
(122)
(155)
27
84
2008 2009 2010 2011
EBITDAROperating profitProfit before tax
¹
2011 Preliminary Results | February 2012
8.0 8.69.3
10.0 10.49.3 9.5
0.50.8
0.10.1
2005 2006 2007 2008 2009 2010 2011
Aer Lingus mainline Aer Lingus RegionalExtended codeshare
5
Aer Lingus passenger volumes restored in 2011
2010Total: 9.9m
2011Total: 10.4m
2009Total: 10.4m
(4%)
(2%)
4%
(12%)(11%)
2%
2009 vs. 2008 2010 vs. 2009 YTD Nov 2011 vs. YTD Nov 2010
Aer Lingus & Aer Lingus Regional Total Rep of Irl airports
2011 passenger numbers restored to recent peak levels
Aer Lingus ticketed passengers continue to increase ahead of Irish air travel trends
Pax in millions
2011 Preliminary Results | February 2012
392,563
315,994
Jul 2008 Jul 2011
6
Aer Lingus has gained share in a contracting market
35.6%
43.5%
Jul 2008 Jul 2011
(19.5%) +7.9 ppts
¹ Dublin, Cork, Shannon & Knock airports Source: anna aero, 22 Feb 2012
Passenger capacity provided by top 10 airlines serving Irish airports ¹
Aer Lingus market share as % of top 10 airlines serving Irish airports ¹
Consistent market share gain since 2008
2011 Preliminary Results | February 2012
Note: Weekly seats for Dublin schedule for January 2012; Includes mainline Europe & Transatlantic; Ryanair secondary airports included
Duopolistic competition = 71% Oligopolistic competition = 11% No direct competitor= 18%
Our trading environment remains intensely competitive
plus other
7
Proportion of Competitive Routes Overlapping with….
82,793
15,601
35,322
18,0885,082
3,654 2,262 1,566 1,218
Ryanair, 72%
Star, 9%
SkyTeam, 9%
Other , 7% Oneworld, 3%
2011 Preliminary Results | February 20128
Cost effective network extension through partnerships
• Code share agreement on all Aer Lingus flights between Ireland and Londonfor connecting passengers
• Code share agreement on routes from Dublin and Cork to Amsterdam• Interlining agreements for transfers via Paris CDG
• Code share and interlining agreement between Ireland and the US andselected domestic routes
• 41 destinations in USA and Canada
• Sales agreement allowing Aer Lingus passengers to connect to 37 US points via Boston & New York & also allowing jetBlue customers to connect onto Aer Lingus transatlantic
• Franchise agreement on thin and new routes• 88% increase in passengers carried in 2011• Proven business model with further geographical and partnership reach
2009 2010 Growth % 2011 Growth %
Inter-line passenger volumes ¹ 629 693 10.2% 789 13.9%¹ Excludes intra Aer Lingus network transfers
Partner Mutual benefits for both parties
2011 Full Year Financial ReviewAndrew Macfarlane, Chief Financial Officer
2011 Preliminary Results | February 2012
Change in accounting policy
102011 Preliminary Results | February 2012
• In Q4 2011, we changed how we apply IAS 19:• This change would have been required next year in any event• 2010 result has been re-stated
• Previous application of IAS 19: all retirement benefit provision movements were recognised throughthe Income Statement
• New application of IAS 19: components split:• Interest Finance charges• Actuarial SOCI• Only service cost Operating profit
Full Yr Q4Operating profit 2011 2010 2011 2010Previous application of IAS 19 43.2 57.6 (23.5) (2.6)
Adjustment 5.9 (5.1) 5.9 (5.1)
New application of IAS 19 49.1 52.5 (17.6) (7.7)
Staff costs 2011 2010 2011 2010Previous application of IAS 19 266.4 258.9 70.5 61.3
Adjustment (5.9) 5.1 (5.9) 5.1
New application of IAS 19 260.5 264.0 64.6 66.4
Less volatility under new application; IASS & pilots’ pension scheme not affected
2011 Preliminary Results | February 201211
2011 financial highlights€munless otherwise indicated
Full Yr 2011
Full Yr 2010 restated Change %¹ Q4 2011 Q4 2010
restated Change %¹
Total revenue 1,288.3 1,215.6 6.0% 283.4 265.9 6.6%
Operating profit/(loss)² 49.1 52.5 (6.4%) (17.6) (7.7) 128.6%
Margin %² 3.8% 4.3% - NM ³ NM ³ -
Exceptional items 37.2 (31.0) NM ³ 22.4 (29.6) NM ³
Net interest (1.9) 5.7 NM ³ (1.0) (1.4) NM ³
Profit/ (loss) before tax 84.4 27.2 210.3% 3.8 (38.7) NM ³
ASKs (million) 18,593 18,269 1.8% 4,354 4,154 4.8%
€m 31 Dec 2011
31 Dec 2010 Change %¹
31 Dec 2011
30 Sept 2011
Change %¹
Gross cash 894.8 885.0 1.1% 894.8 927.3 (3.5%)
Debt 577.2 535.2 7.8% 577.2 572.7 0.8%¹ Sign convention: increase / (decrease) ² Pre exceptional items³ Not meaningful
2011 Preliminary Results | February 2012
2011 operating profit better than expected at start of year
2011 Preliminary Results | February 2012
53 49
15
41
(6) 1
(39)
(1)
17(23)
(4) 4
(31)3
14
(3)8
2010 op. profit
Increased capacity
Yield improvement
Load factor decrease
Other revenue
Fuel price increase
Fuel vol increase
Fuel FX impact
Airport charges
price
Airport charges volume
Airport charges FX &
other
Increase in other costs
2011 op. profit
Operating profit bridge
122011 Preliminary Results | February 2012
Revenue gains Cost increases
Good result in the face of non-controllable cost increases
SH
LH
SH
LH
OtherSHLH
2011 Preliminary Results | February 2012
Q4 avg. hedge: US$ 849/MT
Q2 avg. hedge: US$ 809
Q3 avg. hedge: US$ 826
80%65%
51%
20%35%
49%
Q2 11 Q3 11 Q4 11
% hedged % purchased at spot13
Fuel price inflation – a significant challenge in 2011Fuel analysis Q4
2011Q4
2010 % Full Yr2011
Full Yr 2010 %
Fuel burn (‘000 tonnes) 101.2 98.5 2.7% 431.3 429.9 0.3%
Avg. price per tonne (US$) 952 729 30.6% 878 762 15.2%
Avg. price per tonne incl. into-plane (US$) 1,009 785 28.5% 937 819 14.4%
Total fuel cost (US$m) 102.1 77.4 31.9% 404.1 352.3 14.7%
FX rate for period 1.35 1.35 - 1.39 1.33 4.5%
Total fuel cost (€m) 75.4 57.1 32.0% 288.7 266.2 8.5%
Fuel price inflation became a largerchallenge in second half of 2011 asavailable fuel hedging adjusted tonew oil price level
2011 Preliminary Results | February 2012
Decrease in fuel hedge protection from Q2 onwards¹
Q2 avg. spot price: US$1,057
Q3 avg. spot price: US$1,021
Q4 avg. spot price: US$1,011
¹ As at 31 March 2011
2011 Preliminary Results | February 201214
Fuel Hedging Fuel ¹ Q1 12 Q2 12 Q3 12 Q4 12 Full Yr
2011Full Yr 2012
Estimated burn (‘000 tonnes) 91.1 118.9 123.9 102.2 431.3 436.1
% hedged 86% 70% 55% 40% NM ² 62%
Avg. hedged US$ price / MT 949 961 991 1,007 NM ² 972¹ As at 31 December 2011 ² Not meaningful
Forward fuel price as at 24 February 2012
2011 Preliminary Results | February 2012
850.0880.0910.0940.0970.0
1000.01030.01060.01090.01120.01150.0
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13
Platts Jet CIF NWE (US$/MT)Historic Price Forward Curve
Forward range: US$1,106 – US$1,057
At US$1,100 & €/US$ of 1.35, fuel cost will be approx €60m higher in 2012
2011 Preliminary Results | February 2012
Airport charges in 2011
152011 Preliminary Results | February 2012
2011 airport charges overview
• Passenger volumes increased by 1.8%
• However, total airport charges increased by9.1%
• Fees paid to Dublin & Heathrow were 48%of total charges in 2011
• Dublin price levels expected to remain flatin 2012
• Heathrow price levels expected to rise byapprox. 13% in 2012
DUB airport charges 2010 to 2011
LHR airport charges 2010 to 2011
38.7
45.35.4
1.7(0.5)
2010 LHR charges
Price Vol FX 2011 LHR charges
€m
€m
72.7
87.310.9
4.5(0.8)
2010 DUB charges
Price Vol Growth incentive
2011 DUB charges
Average airport price increases of 3.6% expected for 2012
2011 Preliminary Results | February 2012
312
259 258
(15)
(34)
+5 (7) +2 (4) +4
+10 (15)
'09 staff cost '09 non-recurring
prov.
Operations Mntce DUB station & other
Other '10 prov. releases
'10 staff cost '10 non-recurring
prov. releases
'10 non-recurring savings
'10 staff exits '11 f'cast staff cost
Actuarial gain
• €10m of 2010 savings didn’t recur in 2011 (unpaid leave: €6m & ash disruption: €4m)
• €15m flow-through from 2010 exits
• 2011 out-turn:
16
Staff costs
Staff costs – actual 2009 to 2010Staff costs – what had been
expected for 2011
2010 in-yr savings of
€36m
What we said last year:
€m 2011 2010 Diff.
Staff costs expected (new policy) 259 264 (5)
Staff costs actual (new policy) 261 264 (3)
Staff costs: tightly controlled
2011 Preliminary Results | February 201217
Greenfield savings update
€m
2011 Preliminary Results | February 2012
• Significant Greenfield initiatives in 2011 were mainly non-staff related
• Notable 2011 initiatives included fuel management, procurement and “lean” initiatives in engineering& maintenance
• 2012 Greenfield initiatives will include reduction in catering wastage through improved controlprocesses, reduction in professional fees & further extraction of benefits of multi channel distribution
Confident we’ll achieve our target of €97m in 2012
50.0 55.7
97.03.9
24.7 28.6
12.75.7
2010 exit run rate 2011 new initiatives 2011 exit run rate 2012 - still to be achieved
2012 total targeted savings
Staff savings
Non-staff savings
Staff savings
Non-staff savings
Staff savings
Non-staff savings
2011 total: €84.3m
2011 Preliminary Results | February 201218
Exceptional itemsExceptional credits / (charges) - €m 2011 2010
Gain on surrender of head office site lease 21.0 -
Gain on re-measurement of frequent flier programme 4.5 -
Profit / (loss) on disposal of property, plant and equipment (2.2) 3.1
Reclassification of cash flow hedging reserve 11.6 -
Adjustment of Greenfield provision 3.1 8.6
Leave & return (0.8) (29.5)
Gain on exit of line maintenance contract - 11.8
Volcanic ash - (4.3)
ESOT (0.2) (25.7)
Other 0.2 5.0
Total exceptional credit / (charge) 37.2 (31.0)
2011 Preliminary Results | February 2012
2011 Preliminary Results | February 201219
Cash flow in 2011
• Capex primarily comprises purchase of A320s in H1 2011 net of proceeds from sale of an A330-300
2011 Preliminary Results | February 2012
€m
49.1
(24.9)
(30.0)
84.8
11.1 (13.7)
(116.1)
3.5(13.6)
Op. profit pre exceptionals
Exceptional cashflows
Depreciation Working capital
Provisions Net capex Net interest received
Other Net cashflow
2011 Preliminary Results | February 2012
accrued
20
Cash and debt
2011 Preliminary Results | February 2012
Gross cash
€m
Debt
€m
We have a strong balance sheet
(535.2)
(577.2)
(96.0)62.0
(2.9) (5.1)
Dec 2010 New debt Debt repaid FX Interest Dec 2011
885.0 894.1 894.8
(24.9)
96.0(62.0)
0.7
Dec 2010 Free cashflow New debt Debt repaid FX Dec 2010
2011 Commercial ReviewStephen Kavanagh, Chief Commercial Officer
2011 Preliminary Results | February 201222
Commercial strategy in 2011
2011 Preliminary Results | February 2012
Network planning
Fleet
Revenue management
Multi-channel distribution
Clearly differentiated customer proposition:
“Great care. Great fare.”
Serving multiple different markets simultaneously
Profitably matching capacity with demand
Competitive value proposition
Above industry average operating margin
Strong partnerships
Revenue growth Retail
Components Achievements Results
Driving business performance in 2011
2011 Preliminary Results | February 2012
62.63
66.09
2010 2011
23
Short haul yield per seat growth
2011 Preliminary Results | February 2012
12,188
12,509
2010 2011
• Demand led capacity allocation
• Schedule build focussed onfrequency and convenience
8,438
8,616
2010 2011
• Share growth in core Dublin andLondon markets
• Reduced reliance on Irishoriginating demand
2.6%
2.1%
5.5% • Combination of volume and pricedriving yield per seat strength
• Improving revenue managementcapability
Capacity (ASKs in millions)
Customers (thousands)
Fare yield per seat
(€)
Profitable short haul network
2011 Preliminary Results | February 201224
Long haul network strength
2011 Preliminary Results | February 2012
• Focus on four US gateway cities
• Schedule build focussed onconnectivity and convenience
• Improved online and offlinenetwork flows now provide 36%of total long-haul traffic
• Business Class occupancy +7%
• Absolute growth of €9.38 perseat
• Relative improvements mostnotable is off-peak Q1 and Q4
6,081 6,084
2010 2011
908 897
2010 2011
238.61247.99
2010 2011
(1.2%)
3.9%
FlatCapacity (ASKs in millions)
Customers (thousands)
Fare yield per seat
(€)
Consolidated 2010 turnaround in financial performance
2011 Preliminary Results | February 2012
Distribution strategy driving retail performance
• aerlingus.com is our primarydistribution channel
• Delivering low relative unit cost ofsales
• This direct relationship with ourcustomer allows us the opportunity toretail
• Changed buying behaviour withrespect to baggage charges evidencedin H1
• Remedial action taken in H2 tocompensate with price and productdevelopments
252011 Preliminary Results | February 2012
Customer channel mix by volume
Retail spend per customer (€)
14.97
16.7517.67 17.73
2008 2009 2010 2011
2011 Preliminary Results | February 2012
Product launches in 2011
• Strategy to offer choice and value
• Fare family options tailored tocustomer needs– Price– Convenience– Flexibility
• Introduced advance seat selectioninto on-line booking flow
• Refresh of on-board sales productwith revised menus supported byEPOS technology
26
2011 Preliminary Results | February 2012
Customer experience continues to evolve
• Convenient mobile applications– 350,000 downloads since June 2011 launch
• Online check-in capability now availableto all European destinations
• Improved terminal facilities at mainairports
• Business lounge upgrades completed atLondon Heathrow and Dublin
• Recognition of the need for continuousimprovement and innovation established
27
2011 Preliminary Results | February 2012
Network
Partnerships
Fleet
Revenue management
aerlingus.com
Retail capability
Value and Service
Our commercial strategy continues to deliver results
282011 Preliminary Results | February 2012
2012 Outlook & Closing Comments Christoph Mueller, Chief Executive Officer
2011 Preliminary Results | February 2012
8.6%
1.0%
5.1%
7.8%
0.3%
(1.2%)
(5.8%)
0.1%
6.5%
(0.3%)
10.6%
8.2%
Aer Lingus AF-KLM easyJet IAG Lufthansa Ryanair
EBITDAR margin movement ppts 2009-11 Avg. capacity growth % 2009-11
30
How will Aer Lingus deliver shareholder value in the future?
• Common sector strategy: drive margin & reduce unit costs through capacity expansion
• In contrast, Aer Lingus has:• Driven margin through cost restructuring & demand led revenue management• Not engaged in unprofitable capacity expansion in static markets
• However, there is a limit to margin expansion through yield performance & cost restructuring
• We will explore strategies which overlay additional revenue layers onto our existing cost base
• In this way, Aer Lingus intends to drive future margins & drive shareholder value creation
Airlines: FY2009 to forecast FY2011 / 12: ¹ Capacity growth used to mathematically reduce unit costs & drive margin
¹ Data sourced from: Davy Research airlines report, 19 January 2012 & company data
2011 Preliminary Results | February 2012
2012 overview
31
• People:
• 50% new senior managers in past 24months
• Balance of internal development &gaining external expertise
• Consolidation of Dublin Airport real estateonto Hangar 6
• Will drive organizational efficiencies• Co-location of our support services
within a modern office complex• Key business functions working together
in one location• Our team will be closer to the airline
operation
• Fuel costs uncertainty and increases
• IT expenditure catch-up programme
• Macroeconomic environment
• Inflated airport charges in UK and Ireland
• Internal production processes
• Fixed cost base is under-utilised
Change enablers Challenges to change
2011 Preliminary Results | February 2012
Current trading & 2012 outlook
32
• 2012 capacity deployment will be kept flat compared to 2011
• Key challenges:
• Fuel price inflation likely to be a key source of uncertainty in 2012• Increasing passenger volumes will be hard given muted markets• Higher yield per seat across the network will be difficult to achieve
• However, encouraging start to 2012, especially on long haul bookings
• 2012 expectation: to remain significantly profitable albeit below 2011 levels
Q & A