Transcript Document

Air Arabia PJSC
Investor Presentation
May 2008
May 2008
-1-
Disclaimer
Information contained in this presentation is subject to change without notice, its accuracy is not
guaranteed and it may not contain all material information concerning the company. Neither we nor
our advisors make any representation regarding, and assumes no responsibility or liability for, the
accuracy or completeness of, or any errors or omissions in, any information contained herein.
In addition, the information contains projections and forward-looking statements that reflect the
company’s current views with respect to future events and financial performance. These views are
based on current assumptions which are subject to various risks and which may change over time.
No assurance can be given that future events will occur, that projections will be achieved, or that the
company’s assumptions are correct. Actual results may differ materially from those projected.
This presentation is strictly not to be distributed without the explicit consent of
Company management under any circumstance.
May 2008
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Agenda
 Air Arabia at a Glance
 Investment Highlights
 Financial Highlights
 Strategy and Outlook
May 2008
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Highlights
Route Network – as of December 2007
 A national carrier of the UAE… Established in 2003 by
the Government of Sharjah
 First and largest low-cost airline in the MENA region
 5.03 billion RPK(1)
 2.5x the number of passengers as its closest LCC
rival(1)
 Current fleet of 11 leased Airbus 320s
 Network covering a total population of 1.7 billion, 37
destinations in 21 countries within the Subcontinent,
MENA region and Central Asia
 Broke even within the first full year of operations
 Awarded “best low cost carrier in the Middle East” by
Skytrax
 Adel Ali, CEO was awarded the CEO of the year 2007
by Aviation Business Magazine
(1)For
Year Ending 31 December, 2007
May 2008
 Started operations from second Hub in Nepal in Jan 08
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Passenger and Aircraft Growth
Fleet Size
Number of Destinations
16
38
37
40
32
35
5
5
6
4
5
3
2
0
0
2003
2004
2005
2006
2007
2004
08 Q1
Total Passengers and Load Factor
2,500
79%
68%
1,763
2,000
1,500
1,000
100%
2,700
80%
86% 85% 80%
60%
1,133
757
547
40%
500
20%
-
0%
2004
May 2008
2005
Passengers
2006
2007
Load Factor
2005
2006
2007
Geographic Distribution
N. Africa, 10%
Load Factor (%)
3,000
Passengers ('000s)
8
8
15
15
10
10
23
20
11
12
30
25
14
14
Middle East
(Ex-GCC),
15%
GCC, 33%
Q1 2008
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Central Asia,
5%
Subcontinent,
37%
08 Q1
Investment Highlights
 Highly favorable home and regional market dynamics
 Strong air traffic growth projected in our target regions
 Low Cost Carrier (LCC) model highly untapped in the Middle East
 First mover advantage
 Highly profitable Low Cost Carrier business model
 Continue to drive costs lower through operational efficiencies
 Consistently achieved the highest level of aircraft utilization in the A320 family
 Cost-effective distribution network and booking system
 Drive growth through an aggressive expansion plan
 Significant route and fleet expansion planned, supported by Sharjah Airport expansion
 Track record of profitable expansion
 Started operations from second hub in Nepal in Jan 08 and plans for third hub through 2008
 Support from the Sharjah and UAE Government
 Experienced management team
May 2008
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Highly Favorable Home and Regional Market Dynamics
Strong Air Traffic Growth Projected in Our Target Regions
Middle East Passenger Traffic(1)
International Air Traffic Growth by Key Route Area
Middle East Routes
Passenger
Passengers in MM
6.0%
5.3%
5.3%
AAGR % 2005A-2010E
7.1%
270
81
2005A
All International Routes
Freight
Source: Airbus
(1) Airbus
May 2008
Estimate; based on number of passengers of the top 20 airlines in the Middle East
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2025E
Highly Favorable Home and Regional Market Dynamics
Low Cost Carrier (LCC) Model Highly Untapped in the Middle East
LCC Penetration – Proven Markets –
2005A(1)
LCC Penetration - Middle East(2)
Europe
LCC
11%
2005A
2008E – Air Arabia Estimate
LCC
LCC
0.8%
1.4%
Traditional
Carriers
89%
North America
LCC
25%
Traditional
Carriers
98.6%
Traditional
Carriers
99.2%
 GCC countries, particularly UAE, have a significant expatriate
population from the Indian Subcontinent, Egypt and the Levant (80%
of UAE population is expatriate)
Traditional
Carriers
75%
(1) Source:
IBM Business Consulting Services
(2) Source:
Air Arabia – 2005A: based on number of passengers of Air Arabia and Jazeera Airways (1.2m; Source: respective company websites) as a percentage of total passenger traffic in the
Middle East (148m; Source: Zawya.com).
May 2008
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Highly Profitable Low Cost Carrier Business Model (Q3/07)
Company
Air Asia
Air Arabia
Ryan Air
Jet Blue
South West
Vigin Blue
WestJet
GOL
EasyJet
Vueling Airlines SA
UAL Corp (US)
North West Airlines (Corp)
LCC Median
Cathy
Emirates
SIA
Qantas
Air France - KLM
British Airways
May 2008
Revenue / ASK
(AED - Fils)
Cost / ASK
(AED - Fils)
13.7
21.1
21.5
20.3
22.6
36.8
34.0
29.7
31.1
24.4
29.1
30.6
26.7
32.6
28.0
35.7
53.4
51.1
42.8
-9-
EBITDAR
11.2
13.6
16.8
19.1
20.8
31.3
29.2
29.8
25.9
27.9
27.6
27.3
26.6
29.6
25.2
30.8
49.5
47.0
38.0
32.2%
34.3%
30.0%
16.6%
15.2%
19.6%
23.7%
13.0%
16.6%
3.4%
11.8%
17.7%
17.2%
19.8%
24.7%
25.9%
19.0%
17.1%
21.6%
Highly Profitable Low Cost Carrier Business Model
Continue to Drive Costs Lower Through Operational Efficiencies
Cost/Passenger – Q1 2007 Vs. Q1 2008
Revenue/Passenger – Q1 2007 Vs. Q1 2008
470
421
346
418
Cost/ Passenger (AED)
Revenue/Passenger (AED)
Q1 2007
Q1 2007
Q1 2008
12% Y-o-Y Growth
22% Y-o-Y Increase
Cost/Passenger – Excluding fuel
229
218
Cost/ Passenger (AED)
Q1 2007
Q1 2008
5% Y-o-Y Increase
May 2008
Q1 2008
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Highly Profitable Low Cost Carrier Business Model
Consistently Achieved the Highest Level of Aircraft Utilization in the A320 Family
*
100.0
Operational Reliability %
99.8
99.6
99.4
Avg. A320
99.2
99.0
98.8
98.6
98.4
98.2
98.0
7
8
9
10
11
12
13
14
15
Daily Utilization (Hours)
*Data indicated for Q1 2007
Source: Airbus
YTD we have achieved a flying time per aircraft of over 14 hours per day
with more than 99% reliability
May 2008
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Drive Growth Through an Aggressive Expansion Plan
Significant Route and Fleet Expansion Planned, Supported by Sharjah Airport Expansion
5 Hour Flying Radius (Sharjah Hub)
We currently serve only 38 out of the potential 200 airports within 5-hours flying radius
May 2008
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Drive Growth Through an Aggressive Expansion Plan
Track Record of Profitable Expansion
# of Destinations vs. Net Profit Margin
Destinations
32
30
20
24
18.0%
0.0%
10.0%
0.0%
0
04 Q1
05 Q1
5.0%
4.0%
06 Q1
Destinations
0.0%
07 Q1
100%
80%
60%
77% 79%
73%
80%
40%
2005
2006
Breakeven load factor
Jun - 07
95%
1
Peshwar - Pakistan
Mar - 07
85%
2
Chennai - India
Nov - 06
74%
2
Thiruvananthapuram - India
Nov - 06
89%
2
May 06
95%
1
destinations added in October; Net income excluding interest on IPO funds
May 2008
2007
Actual load factor
Months to Months to
Load Factors
Profitability
Chittagong - Bangladesh
Kochi - India
67%
85%
68%
0%
08 Q1
Start of
Operations
86%
20%
Net profit margin
Recent Route
(1)Two
15.0%
16
12
10
25.0%
23.0%
20.0%
Net profit margin (%)
38
40
Breakeven Load Factor vs.*Actual Load Factor
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Q1 08
Experienced Management Team
May 2008
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Historical Financial Performance
1,225
1,200
1,000
749
800
600
411
400
356
192
200
350
300
250
200
150
100
50
0
318
25.9%
12.5%
24
2004
30.0%
25.0%
20.0%
13.8%15.0%
10.0%
53
5.0%
0.0%
08 Q1
17.4%
15.8%
130
65
2005
2006
2007
2005
2006
2007
Gross profit
08 Q1
421
400
300
200
100
20.4% 24.3%
15.1%
29
182
130
84
20.0%
10.0%
0
0.0%
2004
2005
EBITDAR
May 2008
34.4%
40.0%
34.0%
30.0%
2006
2007
08 Q1
Net Profit (AED in MM)
500
Net Profit
% Margin
EBITDAR (AED in
MM)
EBITDAR
Margin
EBITDAR Margin
100
25.0%
78
80
60
15.0%
40
20
0
10.0%
0.0%
0
0
0.0%
Q1 04
Q1 05
4.0%
5
5.0%
0.0%
Q1 06
Net Profit
- 15 -
20.4%20.0%
18.0%
43
Q1 07
Net Margin
Q1 08
% Margin
2004
% Margin
1,400
Gross Profit
Gross Profit (AED in MM)
Revenues (AED in MM)
Revenues
Operating Statistics
# of Aircrafts
Average Aircrafts
Destinations
# of Passengers (Millions)
RPK (Billions)
ASK (Billions)
Average Load Factor
Revenue / Passenger
Cost / Passenger
Cost / Passenger (Ex-Fuel)
EBITDAR Margin
May 2008
2004
3
3.0
15
0.6
1.2
1.8
68.0%
318.2
348.9
240.2
13.9%
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2005
5
4.9
23
1.1
2.5
3.2
79.0%
354.7
345.3
220.7
20.4%
2006
8
6.0
32
1.7
3.7
4.7
80.0%
425.0
382.1
248.0
24.9%
2007
11
9.5
37
2.7
5.0
5.8
86.0%
453.6
351.6
207.9
34.4%
Q1 08
11
11
38
0.76
1.5
1.7
85%
470
421
229
34%