1 1
September, 2014
AEROMEXICO: MEXICO’S PREMIUM REVENUE CARRIER
Business Lounges Business Class
Leading airline in Mexico
Only Full Service Carrier / Two-class Service and Hub and Spoke Model
Enhanced strategic alliances with Delta Air Lines and AIMIA
Strongest position in slot constrained Mexico City airport
80 destinations in 20 countries, over 600 daily flights
Solid Financial and Risk Profile with Focus on Profitability
STRENGTHENING MEXICAN ECONOMY WITH STRUCTURAL REFORMS IN PLACE
Growth Opportunities for Mexican Economy(1) Air Traffic Penetration
0.6 0.6 0.8
1.4
2.4
Mexico China Brazil Europe US
Flights Per Capita for Middle & Upper Class Population (>$15K)
Millions
(1) Criterios generales de Política Económica 2014, SHCP. Source: : CONAPO, INEGI, IMF World Economic Outlook , Company filings.
26% 20%
35%
25%
17%
30%
14% 17%
7% 8%
0%
20%
40%
60%
80%
100%
2010 2025E
Percent
D/E D+ C C+ AB
Favorable Demographics
Growing Middle Class Favorable Demographic Trends
Middle Class
6 4 2 0 2 4 6
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-95
6 4 2 0 2 4 6
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-95
Women Men
49mm 70 mm
(2010 – Demographics in Million) (2050 – Demographics in Million)
3
2015 E 2016 E 2017E 2018E 2019E
Difference
6%
5%
4%
3%
2%
1%
0%
OUR FLIGHT PLAN
PRODUCTIVITY & COST CONTROL
STRATEGIC
PARTNERSHIPS
OPERATIONAL EXCELLENCE
COMMERCIAL VALUE CREATION
PROFITABLE AND SUSTAINABLE GROWTH
Uniquely Positioned to Deliver Profitable and Sustainable Growth 4
FINANCIAL STRENGTH AND RISK PROFILE
OPERATIONAL EXCELLENCE
On-Time Departure (within 15 minutes)
Source: DOT Department of Transportation for YTD May 2014 data, unless otherwise noted.
Airline Ranking
Mishandled Baggage Complaints
Completion Factor
Per 1,000
passengers
Rank US Operations YTD May-14
1 Virgin America 0.92
2 Frontier Airlines 1.85
3 Jetblue Airways 2.10
4 Hawaiian Airlines 2.28
5 Aeroméxico 2.29
6 Alaska Airlines 2.54
7 Delta Air Lines 2.63
8 American Airlines** 3.62
- US Airways 3.64
- American Airlines 3.78
9 United Airlines 3.90
10 Southwest Airlines** 4.58
- Southwest Airlines 4.55
- Airtran Airways 5.02
11 Skywest Airlines 5.22
12 Expressjet Airlines 6.43
13 American Eagle Airlines 8.42
Attributes highly valued by business passengers
5
99.81%
99.46% 99.43% 99.35%
98.97%
98.15% 97.99%
97.78%
97.47% 97.40%
96.87%
95.67%
HA AM F9 AS VX DL WN UA AA US FL B6
Color
Scheme
241 95 35
143 145 146
0 91 147
0 174 239
196 22 28
0 54 94
• Create sustainable defendable and highly
profitable position in Mexico City with
improved connecting banks
• Using partners to create low cost virtual
network:
- New Gol Alliance
• Widebody product, unrivaled service with
B787 and consolidating markets
• Strengthening Monterrey Hub
COMMERCIAL VALUE CREATION: STRENGTHENING OUR NETWORK
Improving Connectivity Securing Position in Mexico City Market Solidify Position with Shuttle Product
• Increasing connecting banks from 4 to 12 by
year end (8 actually)
• Slot portfolio gives Aeromexico strong
potential for growth through upgauging
• Replacing E-145 by year end 2014 in Mexico
City
• Launch of a shuttle product “Aeropuente” in
Mexico City, Monterrey and Guadalajara
routes, with dedicated boarding gates
• Three largest domestic business markets,
which account for 20% of the domestic
business market
• Hourly flights with consistent two-class
product and improved onboard amenities
6
Arrivals Departures
% of Connecting Passengers of Total
Source: Aeromexico. Connectivity of Aeromexico and partner airlines.
21%
26%
30%
2010 2012 YTD July 2014
c
Strategy Focus on Increasing Connectivity
Connecting Banks in Mexico City Airport
c Banks
COMMERCIAL VALUE CREATION: STRONG GROWTH POTENTIAL IN MEXICO CITY DESPITE SLOT CONSTRAINTS
Today Average Seat Configuration
767’s
777’s
787’s
E-145*
E-170 / 175
737-700
737-800
E-190
50
81
99
124
160
188
243
273
737-800 +56% Seat
Count
Up-gauging
Further opportunities for
widebody upgauging
787’s
7
*By year end 2014, we expect to cease operations of E-145 in Mexico City; These aircrafts will be relocated mainly to MTY/HMO.
84% of 2013
operations in Mexico
City were performed
with regional jets
(E145/170/190) and
737-700
Color
Scheme
241 95 35
143 145 146
0 91 147
0 174 239
196 22 28
0 54 94
COMMERCIAL VALUE CREATION: STRENGTHENING MONTERREY HUB
8
During June 2014 (first month of operation of Monterrey Hub) connecting passengers have increased almost 3 times.
Driving Worldwide Connectivity and New Destinations in Monterrey
Monterrey has a geographical advantage for traffic flows between
North, Central and Eastern Mexico
• Strengthening presence in existing destinations and
connecting Mexico regions of Bajio, Northwestern and
Southeast as well as United States.
• 4 connecting banks structure implemented in 4 June
2014
• 23 direct flight destinations, 8 new destinations during
2014:
Los Cabos Puerto Vallarta Aguascalientes San Luis Potosi Cancun
Tokyo Houston Torreon
May September November
Ancillary revenues add low cost incremental margin.
USD
Strategy for the future Ancillary Revenues per Passenger
Increase distribution of existing products through IT developments:
• Upgrades
• Choice seats: front and exit rows in economy
• Aeromexico Plus
• Concierge
• Ground transportation
9
COMMERCIAL VALUE CREATION: BALANCED REVENUE MANAGEMENT STRATEGY
New Revenue Management Strategy that aims to maximize RASK, increasing load factor with more competitive Yields.
• Competitive pricing with better segmentation to drive volume while protecting yields
• Capturing marginal VFR and leisure passengers with competitive pricing in advance purchase
• Building state of the art data sources and tools
5.9
7.3
7.8
2012 2013 YTD Jun 14
Source: Aeromexico Financial Statements.
Passenger Traffic Monthly Var % YoY
Load Factor (%)
10
COMMERCIAL VALUE CREATION: POSITIVE MOMENTUM
Strong 2014 performance, with passenger traffic growth of 15.3% as of July and load factor increase of over 300 bps YoY.
3.2%
0.6% 0.6% 1.0% 0.8% -1.3%
1.0%
-4.3%
-7.1%
0.4% 0.0% 1.3%
3.2%
7.5%
10.6% 10.5%
13.5%
16.9% 18.8% 18.3%
21.8%
16.7% 18.7%
8.9% 6.8%
78.3 75.6
77.9
77.0 75.9
76.8
83.4
75.4
72.1
75.6 76.1 75.9
74.8 71.3
74.1 73.2
75.5
79.0
86.2
79.4
75.1 76.3
78.6
80.6
80.1 77.6 79.9 79.8
78.8
79.5
84.6
Jan Feb March April May June July Aug Sep Oct Nov Dec
2012
2013
2014
25.3%
13.9%
12.7%
Viva Aerobus 5.8%
Others 42.3%
15.6%
15.6%
14.9%
7.5%
Alaska 4.9%
4.9%
2.5%
Others 34.2% 36.3%
23.4%
23.5%
Viva Aerobus 11.8%
Magnicharter 3.0%
Aeromar 1.6%
Domestic International Total
24.1%
25.3%
Jan-Jul 13 Jan-Jul 14
1.3 pp
34.8%
36.3%
Jan-Jul 13 Jan-Jul 14
1.6 pp
Domestic
13.7%
14.9%
Jan-Jul 13 Jan-Jul 14
1.2 pp
International
+0.2 pp
-1.0 pp
COMMERCIAL VALUE CREATION: POSITIVE MOMENTUM IN MARKET SHARE
Market Share YTD Jul 14
Aeromexico´s Market Share Growth (Var % YoY)
Total
Source: DGAC Regular Passenger Information (excludes charter) 11
12
COMMERCIAL VALUE CREATION: MERITING REVENUE PREMIUM OVER COMPETITORS
RASK YTD June 14– Stage Length Adjusted
USD cents
Aeromexico’s full-service model and broad international network allow it to realize premiums over competitors.
7.60
5.97
5.09
GAM Interjet Volaris
27% 49%
Domestic Industry International Industry
11.72 11.20
10.49 10.07 9.77 9.67
9.20 8.70
7.60 7.48 6.60
5.97 5.09
(1) Stage length adjustment @ 1,000 miles. Ancillary businesses excluded for U.S. Carriers and Grupo Aeromexico. Source: Second Quarter 2014 Companies Financial Statements Aeromexico, American Airlines, Delta and United include regional affiliates.
Low Cost Carriers Full Service Carriers
7.51
5.88 5.58
GAM Interjet Volaris
Aeromexico has proven its ability to cut costs and operate at a world-class level. Management focus on improving productivity has allowed Aeromexico to reach top industry performance.
Color
Scheme
241 95 35
143 145 146
0 91 147
0 174 239
196 22 28
0 54 94
SOLID FINANCIAL PROFILE
CASK YTD June 14 (Stage Length Adjusted) (1)
Low Cost Carriers Full Service Carriers
(1) Stage length adjustment @ 1,000 miles. Ancillary businesses excluded for U.S. Carriers and Grupo Aeromexico. * Includes other operational expenses Source: Second Quarter 2014 Companies Financial Statements ASK Information for Interjet, source: PAXIS. Aeromexico, American Airlines, Delta and United include regional affiliates.
11.13
9.94 9.59 9.57 9.44
8.03 7.77 7.52 7.51 6.68 6.36
5.88 5.58
International Industry Domestic Industry
USD Cents
28% 35%
*
13
Source: Second Quarter 2014 Companies Financial Statements .
14
202
-95 -88
233
-583
91 GAM Volaris Interjet
-2.8% -2.9%
1.5%
1.2%
-9.6%
2Q14 YTD June 14
Operating Profit: Mexican Airlines
2.0%
Millions of pesos, % of Total revenues
SOLID FINANCIAL PROFILE
• New contracts with pilots, flight attendants and ground staff
• Restructuring and Integration of AM/AM Connect
• Maintenance Process Reengineering
• Increase fleet utilization
• ERP and Shared Services Centre
• Improving Distribution Costs
• Co-location in Airports
• Fleet Renewal
• Balance between Owned and Leased Aircrafts
• Unique Fleet Plan Flexibility
15
Strong pipeline of cost reduction initiatives.
Operational , Administrative & Sales Efficiencies
Fleet Strategy Labor Costs
PRODUCTIVITY AND COST CONTROL INITIATIVES
Owned: (21%)
USD 649mm
Leased: (79%)
USD $2.4bn Source: Aeromexico, Avitas Bluebook 1st Half 2014. Aeromexico estimates as of 2013. (1) B767-2 and B787 data for: Mex-Mad. B737-7 and B737-8 / ERJ145,
ERJ190 and ERJ170 data for Mex-Mty. (2) Fleet proportion of leased vs. owned depends on fleet value. (3) On July 2013, Aeromexico announced the pricing of an offering of USD$117.4 million of 2.537% secured notes guaranteed by the Export-Import Bank of the United States.
EJ170 & E190
ERJ145 B737-8 B737-7 B787 B767
100
84
77
100
86
100
81
E145 E170 E190 B737-7 B737-8 B767 B787
(16%) (19%)
(9%)
(14%)
Estimated CASK Reduction (1)
Today 2018
E-145
E-170/175/190
737 – 700’s/800’s
NG
767’s
787’s
777’s
E-170/190
737 – 800’s
NG/MAX
787’s
Fleet Plan
Leased vs. Owned
Fleet Plan renewal provides CASK efficiencies, maintaining flexibility and reducing ownership cost.
PRODUCTIVITY AND COST CONTROL INITIATIVES: FLEET STRATEGY
Leased Owned
Annual Cost of Financing
4% to 6% (2)
10%-12%
USD $122M– USD $183M cost savings due to ownership
Fleet Value: USD 3.05 billion(3)
Fleet Value
16
• Over 50% of expected fuel consumption for the next 12 months is hedged
• Fuel surcharges complement Grupo Aeromexico’s
hedging strategy
Reduced Exposure
57% Revenues in US dollars 66% Costs in US dollars
Reduced exposure
Fuel Hedging Strategy
Total
17
SOLID FINANCIAL AND RISK PROFILE: COMPREHENSIVE RISK MANAGEMENT
Economic Cycle
Staggered Leases
Fleet 2015 2016 2017 2018 Total
Narrow Body Total 28 16 17 6 67
Wide Body Total 4 1 0 3 8
GAM Total 32 17 17 9 75
Currency
Aircrafts
Year
Fleet plan flexibility
Approximately:
20 19 39 38
249 53
19 25 18
97
2014 2015 2016 2017 2018+
18
SOLID FINANCIAL DEBT PROFILE
Debt Maturity Profile (1)
(1) Information as of June 2014 (2) Last 12 months EBITDAR as of June2014. Source: Second quarter 2014 Financial Statements * Considers Adjusted EBITDAR
USD millions
12.5% 6.6% 11.1% 9.7% 60.1%
Benchmark Financial Net Debt / Adjusted EBITDAR (2)
Adjusted EBITDAR LTM as of June 2014: USD 574 M
Low Cost Carriers Full Service Carriers
8.1x 7.1x
5.3x 4.8x 4.6x 4.4x
3.4x 2.9x
1.9x 1.1x
Interjet Volaris LATAM GOL Avianca AeroMexico United American Delta Copa
*
*
• Aeromexico has a 51% investment in PLM.
• Value of PLM in Dec 2012 US$518 Million.
• +3.6 million frequent flyer members.
• Gross billings of USD $144M in 2013.
• Dominant Frequent Flyer Program (“FFP”) in Mexican market.
• Solid commercial alliances with financial institutions (i.e. Banamex, AMEX) and retailers (i.e. Soriana)
• Low capital requirements and stable cash flow generation.
• Earn kilometers with 90+ commercial partners.
Source: Aeromexico, INEGI. (1) In June 2012, Delta purchased a 4.17% stake in Aeromexico for USD$65mm. The transaction's implied price was $31.00pesos (equal to the IPO price), which is a 59.0% premium to the current trading price of $19.50 as of February
21, 2014. (2) Delta Master Trust is an entity which holds pension assets under various employee pension plans sponsored by Delta Airlines. (3) These derivative agreements were conducted on April 29 , 2014 and May 7, 2014.
• In 2012, Delta invested USD $65mm in Aeromexico (1)
• Delta, through Delta Master Trust(2), increased its exposure to Aeromexico to 9.5% through derivative agreements (3)
• Network-wide code sharing • 204 share codes 725 flights
• Join efforts in sales, marketing and customer experience.
• JV-MRO facility in Querétaro.
• Transborder upgrades.
• Co-location Efforts in airports
Delta Alliance Club Premier Loyalty Program
STRONG BRAND WITH STRATEGIC PARTNERSHIPS
Strategic alliances have contributed to Aeromexico’s increased connectivity and premium product. Only Mexican carrier in an international alliance.
19
DISCLAIMER
This presentation is neither an offer for sale nor a request to buy any securities. Such offer or request may only be made through an offering memorandum containing the description of
the terms and conditions of such offer and shall include detailed information of the company and its management, as well as the financial statements of Grupo Aeromexico, S.A. de C.V.
(“Grupo Aeromexico”), in terms of the Securities Market Law (Ley del Mercado de Valores) (“LMV”) and the General provisions applicable to securities issuers and other securities market
participants (Disposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores) (the “Provisions”).
The information contained herein is confidential and shall not be reproduced in whole or in part or shared with third parties without the previous consent of Grupo Aeromexico.
This presentation contains information obtained from diverse sources and, despite it contains truthful information, no representation is hereby made by Grupo Aeromexico as to the
accuracy, integrity and sufficiency of such information. Additionally, Grupo Aeromexico makes no representation in respect of the sufficiency or truthfulness of the assumptions,
estimations, projections, hypothetical behavior analysis or in respect of other financial information included in the results of the financial models contained or used herein.
The results contained herein may substantially vary. Nothing herein shall be understood or construed as a representation or warranty as to future performance of the securities referred to
herein.
The information included in this presentation has not been audited and it does not provide information on the company’s future performance. Aeromexico’s future performance depends
on many factors and it cannot be inferred that any period’s performance or its comparison year-over-year will be an indicator of a similar performance in the future.
Thank You Investor Relations Contact Information [email protected] Tel (+52) 55 9132 4257 Luz Montemayor [email protected] Daniel Frias [email protected]