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Avianca Holdings S.A.4Q 2019 Earnings Presentation
Disclaimer
The present document consolidates information from Avianca Holdings S.A. and its
subsidiaries, including unaudited financial figures, operational managerial
indicators, financial indicators and managerial projections of future performance,
in line with Avianca Holdings S.A. and its subsidiaries’ business plans. References
to future behaviors are indicative and do not constitute a guarantee of compliance
by the Company, its Stakeholders or directors. Unaudited accounting and financial
information and projections presented in this document are based on internal data
and calculations made by the Company, which may be subject to changes or
adjustments. Any change in the current economic conditions, the aviation industry,
fuel prices, international markets and external events, among others, may affect
the ongoing business results and future projections.
Avianca Holdings S.A. herein after Avianca Holdings and its subsidiaries warn
investors and potential investors that future projections are not a guarantee of
performance and that actual results may differ materially. Every investor or
potential investor will be responsible for investment decisions taken or not taken
as a result of his or her assessment of the information contained herein. Avianca
Holdings S.A. is not responsible for any fourth parties’ content. Avianca Holdings
may make changes and updates to the information contained herein.
The information, tables and logos contained in this presentation may not be
reproduced without the consent of Avianca Holdings S.A.
ExecutiveSummary
4Q 2019
Preparing the company for the coming 100 years
Finance
Operations
Customer
One Team
❑ Convertible bond offering to preferredshareholders of min. US 125 mil
❑ Sale and leaseback of 15 Airbus A320 ❑ 1Q 2020 EBIT margin guidance of 2.0% -
3.0%
Successful execution of Financial reprofiling✓ US 550 mil. Bond Exchange, 88.1% tendered✓ Agreement with creditors, lessors and ECAs
on payment deferral (US 220 mil.) ✓ Funding of US 250 mil stakeholder loan✓ Funding of additional USD 125 mil financing
✓ Aircraft Sale; 10 A318, 4 A320, 10 E190 → + USD 100 mil. Net cash
✓ Orderbook reduction from 108 to 88 A320 Neo Aircraft to be delivered starting 2025
✓ Canceled 25 unprofitable routes, ✓ Capacity reduction of 6.9% in 4Q 2019
✓ Branded fare launch in domestic Ecuador and Colombia
✓ 4Q On time Perfomance +504 bps YoY✓ APEX 2020 reward award for “Best Airline in
Latin America
✓ Elimination of organizational silos improvingcross functional sharing of best practices
Management Execution
❑ Densification of A320 Aircraft to increasing seats per aircraft from 150 to 174 seats
❑ Sale of 2 A330, 2 A319 and 1 A320 Pax AC❑ Sale of 1 A330 Cargo Aircraft
❑ Branded fare roll out to international routes❑ Tailor made travel options for AV clients❑ Planes on time, Bags on time ❑ On Time Performance target of at least 80%
for 2020
❑ Work in multidisciplinary teams that involve all stakeholders in decision making
❑ Drive empowerment of teams to make effective and quick decisions
2020 Milestones
Avianca 2021
4
Financial and Operational
Results
4Q 2019
Avianca Holdings successfully concludes financial reprofiling
Financial Reprofiling Milestones
Reached Agreements with substantially all financial counterparties remedying all payment defaults
Stakeholder loan boosts liquidity levels and strengthens capital structure to Cash / LTM Revenue at ~ 10%
1Please check the material fact published on November 18, 2019.
The Preferred Shareholder facility allows shareholders to participate in:• Minimum US$125 million convertible bond financing• Under similar conditions as United Airlines and Kingsland Holdings shareholder loan• To be offered in 2Q 2020
Successful bond exchange US$ 550 million, with a total of 88,1% of bonds tendered
New 2023 bond will pay semiannual coupon of 9% in May and November and mature in May 2023
Untendered Bonds will be paid at par on May 10, 2020
Bond Exchange
Stakeholder Loan
Preferred Shareholder Facility
Upon complying with conditions precedent Avianca drew on the $250 Million stakeholder Loan with following conditions:
• No Upfront fees• 3% PIK Interest
• Maturity in December 2023
• Mandatory conversion to equity at US $ 4.6217 per ADS, subject to certain conditions1
Avianca secured USD 125 million in additional financing:• Private third party contributes USD 50 million under same economic conditions as United and Kingsland• Investment vehicle of Citadel Advisors LLC provides USD 50 million senior secured convertible bond• Group of private investors commit senior secured convertible loan for USD 25 million
6
One-time events on 4Q19 results (USD Million)
Passenger Revenues $ 17.127
Maintenance and Repair expense(E190 repairs)
($3.575)
Selling expenses ($3.000)
Fees and other expenses(prof. charges)
($85.685)
Salaries, wages and benefits ($18.159)
Depreciation, amortization and impairment
($249.931)
One – Time – Event
7
Quarterly Full Year Non-passanger Revenues EBIT/EBITDAR Margin TRASK
8
2016
4Q Revenues – US millions 4Q EBITDAR – US millions
4Q CASK and CASK ex Fuel - US¢ 4Q EBIT – US millions
Cask
CASK ex fuel below 6 US¢ for first time since IPO
(1) When indicated the figures are adjusted by the following one-time items related to the company's transformation plan and accounting adjustments: Passenger Revenue USD 17,1 million, Maintenance and repairs USD (3,6 million), Selling expenses USD (3 million), Fees and other expenses USD (85,7 million), Salaries, wages and benefits USD (18,2 million) and Depreciation, amortization and impairment USD (249,9 million)
11,4
9,18,8
1.033 1.066 977
240 226192
4Q17 4Q18 4Q19
12,5
11,3
4.080 3.922
811 721
FY2018 FY2019
169,1
106,098,6
13,3%
8,2%8,4%
4Q17 4Q18 4Q19
343
181
7,0%
4.0%
FY2018 FY2019
298285
229
23,4%
22,1%
19,6%
4Q17 4Q18 4Q19
950
787
19,4%
16,9%
FY2018 FY2019
9,8
8,3 8,18,5 8,2
7,6
6,1 5,9 6,2 6,0
4Q17 4Q18 4Q19 FY2018 FY2019
9
OPEX Focus: drivers for the fourth quarter
Maintenance and repairs
+12.8%
Fees and other expenses
+43.3%
D&A
19.6%
Passenger services
-21.8%
Flights operations
-79.3%
47.4
53.5
4Q18 4Q19
46.7
66.9
4Q18 4Q19
Jet fuel
-10.3%
323.4
290.1
4Q18 4Q19
50.0
39.1
4Q18 4Q19
49.5
10.2
4Q18 4Q19
104.8
125.3
4Q18 4Q19
10
Executing on our
fleet plan4Q 2019
Detail
AVH continues adjusting its jet capacity to the new strategy
• Sold two Airbus A320 Aircraft and nine Airbus A318 during 4Q • Aircraft held for sale:
Passenger: • Two A330, • Two A319, • One A320
• One A330Cargo:
130108 105
23
23 21
13
13 12
2018 2019 2020
Narrow Body Wide Body Freighter
-12.7%
-16.3%
166145 139
11
4Q RPKs – Millions 4Q Load Factor
4Q ASKs – Millions 4Q Yield1 - US¢
-6.9% +1.8%
Quarterly Full Year
-8.7%
+0.6%
Avianca Holdings Airlines carried more than 30.5 million passangers in 2019
9.443
11.61310.600
4Q17 4Q18 4Q19
44.109 44.367
FY2018 FY2019
84,2%
81,7%80,1%
82,5% 81,7%
4Q17 4Q18 4Q19 FY2018 FY2019
10,9
9,2 9,2 9,2 8,8
4Q17 4Q18 4Q19 FY2018 FY2019
11.211
14.21513.241
4Q17 4Q18 4Q19
53.445 54.410
FY2018 FY2019
(1) When indicated the figures are adjusted by the following one-time items related to the company's transformation plan and accounting adjustments: Passenger Revenue USD 17,1 million, Maintenance and repairs USD (3,6 million), Selling expenses USD (3 million), Fees and other expenses USD (85,7 million), Salaries, wages and benefits USD (18,2 million) and Depreciation, amortization and impairment USD (249,9 million)
Business Units
4Q 2019
617,9
567,6
2018 2019
154
146,2
4Q18 4Q19
Source: Company.
(1) On a per trip basis. (2) Includes consolidated revenues from the cargo operation in Mexico and Deprisa (Other Business Unit) (3) Includes bellies and excludes Colombia domestic operations. (4) International Cargo – Aeronáutica Civil de Colombia (as of Dec 2019) (5) Miami-Dade Aviation Statistics, by airline group (as of Dec 2019)
Segment Overview Key Metrics (Cargo and Courier)
Market Share Colombia (4Q19)4 Market Share Miami (4Q19)5
▪ Cargo performance:
• Cargo revenues decrease for 4Q19, as global air cargo industry
faces challenging macro environment
• Overcapacity deployed throughout the region pressures
pricing and topline. AVH managed to partially offset decreases
in pricing by an increase in transported tons of 6.7%
• We launched our Dallas cargo flight as well as consolidated
our Dominican Republic cargo operationRTK (MM)(3)
Revenue (US$MM)(2)ATK (MM) (3)
Load Factor
-8.1%
Avianca Cargo: financial and operational results
16,6%13,7% 12,7%
10,8%7,4%
4,5%
34,3%
Latam AVH Atlas UPS Amerijet AmericanAirlines
Others
43,7%
8,0% 6,2% 5,3% 4,1%
32,7%
AVH Latam Cargolux Atlas Skylease Others
650,5 697,5
4Q18 4Q19
2.487 2.734
2018 2019
385
4Q18 4Q19
1.424 1.580
2018 2019
59,1% 60,4%
4Q18 4Q19
57,3% 57,8%
2018 2019
+7.2%
+9.5%
13
14
New Commercial Partners
LifeMiles: Loyalty Company
COLCAMNAM
• 4Q’19 gross billings increased 4.0% vs. 4Q´18
• Approximately 9.7 million members, +9.4% vs. 4Q’18
• 586 active commercial partners, +13.8% vs. 4Q’18
• Co-branded credit cards grew 8.1% YoY reaching 734,000 cards
Flight Plan 2020
4Q 2019 2020 OUTLOOK
PAX
ASK
LF
-7.0%
-6.9% (2.0%) - 0.0%
80.1% 80.0% – 82.0%
-24.2% 2.0% – 3.0%2EBIT
EBIT 1
(1.0% - 3.0%)
8.4%
2019
-0.3%
1.8%
81.5%
-12.0%
4.0%
(1) When indicated the figures are adjusted by the following one-time items related to the company's transformation plan and accounting adjustments: Passenger Revenue USD 17,1 million, Maintenance and repairs USD (3,6 million), Selling expenses USD (3 million), Fees and other expenses USD(85,7 million), Salaries, wages and benefits USD (18,2 million) and Depreciation, amortization and impairment USD (249,9 million)
(2) EBIT margin guidance applies to 1Q 2020. We expect to provide incremental guidance once we have more visibility regarding COVID 19
Guidance is provided for 1Q 2020
Q&A
Thank YouContact Information:
Investor Relations Office
T: (57) 1 – 5877700
www.aviancaholdings.com