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LifeMiles Deal Announcement B787 Dreamliner
July 14 2015
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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. The Company has filed a registration statement (including a prospectus)
with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the Company has filed
with the SEC for more complete information about the company and this offering.
This presentation is not a prospectus and is not an offer to sell securities. Registration statements relating to the Company’s ADSs and preferred shares have been filed with the Securities and
Exchange Commission, but have not yet become effective. The ADSs may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. The
offering is being made by means of the prospectus only, copies of which may be obtained from the underwriters.
No representations or warranties, express or implied, are made as to, and no reliance should be placed on, the accuracy, fairness, or completeness of this information. Neither the Company
nor any of its affiliates, advisers or representatives accepts any responsibility whatsoever for any loss or damage arising from any information presented or contained in this presentation. The
information presented or contained in this presentation is current as of the date hereof and is subject to change without notice, and its accuracy is not guaranteed. Neither the Company nor
any of its affiliates, advisers or representatives makes any undertaking to update any such information subsequent to the date hereof.
This presentation contains forward-looking statements, which are based upon the Company and/or its management’s current expectations and projections about future events. When used in
this presentation, the words “believe,” “anticipate,” “intend,” “estimate,” “expect,” “should,” “may” and similar expressions, or the negative of such words and expressions, are intended to
identify forward-looking statements, although not all forward-looking statements contain such words or expressions. Additionally, all information, other than historical facts included in this
presentation is forward-looking information. Such statements and information are subject to a number of risks, uncertainties and assumptions. Forward-looking statements are not guarantees
of future performance and actual results may differ materially from those anticipated due to many factors. As for forward-looking statements that relate to future financial results and other
projections, actual results may be different due to the inherent uncertainty of estimates, forecasts and projections. Because of these uncertainties, potential investors should not rely on these
forward-looking statements. Neither the Company nor any of its affiliates, directors, officers, agents or employees, nor any of the shareholders or initial purchasers shall be liable, in any
event, before any third party (including investors) for any investment or business decision made or action taken in reliance on the information and statements contained in this presentation or
for any consequential, special or similar damages.
Certain data in this presentation was obtained from various external sources, and neither the Company nor its affiliates, advisers or representatives has verified such data with independent
sources. Accordingly, neither the Company nor any of its affiliates, advisers or representatives makes any representations as to the accuracy or completeness of that data, and such data
involves risks and uncertainties and is subject to change based on various factors.
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.
The trademarks included herein are the property of the owners thereof and are used for reference purposes only. Such use should not be construed as an endorsement of the products or
services of the Company or this proposed offering.
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For Avianca Holdings (AVH):
- It unlocks value for AVH Shareholders
- Positive impact on Liquidity and Leverage ratios(2):
- Net Adjusted Debt to EBITDAR(3)(4):
- It would have an estimate reduction of ~0.6x
- Cash as percentage of LTM Revenue(3)(5)
- 15.1% 22.4%
For LifeMiles
- Reinforce management and corporate structure
- Independent governance
- Further develop retail coalition program
- Strengthen home markets and grow in new ones
+USD~$343.7M
Transaction Overview
Deal structure(1)
Overview
On July 13, 2015, Avianca Holdings S.A (AVH) and Advent International, the largest private equity investor in Latin America, announced Advent’s acquisition of a 30% minority stake in LifeMiles B.V., for which AVH will receive total proceeds of ~ $343.7 million(1)
70% 30%
LifeMiles has been a Thoughtful and Thorough Process
1. Completion of the transaction is subject to customary closing conditions and is expected to take place in Q3 2015 2. First quarter 2015 ratios, +USD350M in cash, ceteris paribus. 3. As of March 31, 2015. 4.Net Adjusted Debt to EBITDAR= Calculated as net adjusted debt (including capitalized leases at 7.0x) divided by adjusted EBITDAR. 5. Includes ~USD280M of cash in Venezuela.
New Board of Directors: 4 Seats for Avianca Holdings 2 Seats for Advent 1 Independent Member
2011
•LM is established as a separate legal entity
2012
•Miles and Seats Pricing developed with Oliver Wyman
2014
•Key model elements refined with McKinsey
2014
•AVH Board decision to hire Morgan Stanley to find strategic partner
2015
• Advent’s minority investment in LifeMiles
Advent - with its strong footprint in Latin America,
investment professionals and independent operating partners including Jeremy Rabe, Jorge Londoño and Livia Masnaghetti - will partner with Avianca to enhance LifeMiles’ strong competitive position in key markets and continue to pursue growth
Value Creation
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1. Operating Partners and Industry Advisors are senior industry executives who act as independent advisors to Advent and the management teams of its portfolio companies. They support the development of businesses through their subsector expertise, operational know-how, leadership experience and contact networks.
LifeMiles Experienced Management Team will be supported by Advent’s Industry Experts
• Former Chief Executive Officer and a board member of
Premier Loyalty & Marketing the joint venture of
AeroMexico and AIMIA
• Doubled its annual sales and maintained highly
competitive industry margins
• Led strategic restructuring of AeroMexico’s frequent flyer
program, Club Premier
• Formerly led TACA Airlines’ Distancia Loyalty Program
• Finance executive with significant expertise in the loyalty
and aviation industries
• Played a key role in the IPO of Aeroplan and the
execution of the Premier Loyalty & Marketing joint
venture between AeroMexico and AIMIA
• She played an important role in the implementation of a
standalone operation and governance plans for Club
Premier
• Former CEO of Bancolombia for 15 years
• Transformed Bancolombia from being a niche player to a
leading full service financial institution in Colombia
• Led several acquisitions and integrations both
domestically and internationally
• Served or currently serves on several board of directors
including Bancolombia, Conavi, Banco Falabella,
Financiera de Desarrollo Nacional, Organizacion Corona
and Ospinas y Cia
Jeremy Rabe Former CEO of
Aeromexico-AIMIA JV PLM
Livia Masnaghetti
Industry expert in Frequent Flyer
Programs
Jorge Londoño Former CEO of Bancolombia
Advent Operating Partners and Industry Advisors (1)
Matt Vincett
• Vice President AVH Loyalty Business Unit - LifeMiles
• Oversaw transformation of Avianca Plus & Taca’s Distancia Frequent Flyer Program into LifeMiles a leading Loyalty Company in Latin America
• 5 years as management consultant • 11 years in Aviation industry • 5 years with AVH Loyalty/LifeMiles • Former Vice President Commercial –
TACA • Former Vice President Regional
Airlines - TACA
LifeMiles Management Team
Strategy & Innovation
Commercial & Non-Air Partners
Program & Air Partners
Operations & IT Brand &
Communication Legal
On average LifeMiles’ Management Team is comprised by professionals with more than:
• 15 years of experience
• 6 years within the Loyalty Industry (LifeMiles/
Distancia/ Avianca Plus)
LifeMiles VP has been leading the following functional areas:
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LifeMiles is a well recognized brand with a Growing Regional Presence
• Exposure to growing underlying markets
• 20-year agreement, including guaranteed exclusivity and seat availability, with Avianca – strong sponsor airline with growing passenger air travel in Andean region and Central America
• Platform to explore additional upsides in different industries
• Expansion from an FFP of an airline to a Loyalty Coalition
• Larger network creates value for both partners and members
e.g. Increase Co-branded card penetration, entrance into new markets, non-air redemption growth
Favora
ble
m
acro
dynam
ics
Pla
tform
with
upsid
e
1. As of March 31, 2015.
Strong Brand Recognition
– LifeMiles won Best Promotion of the Year in 2015 Freddie Awards and finished in the top 3 in 5 out of 6 categories
– Only Latin American winner of Freddie Awards in 2013, 2014 and 2015
LifeMiles at a glance(1)
6+ million members
(CAGR 2010-2014: 10%)
200+ commercial partners
71 mileage agreements with financial institutions
28 co-branded credit and debit cards
Airline Promotion
Redemption Ability
Customer Service
Program of the Year(*)
Elite Program
Loyalty Credit Card
2
3
4
1
2
3
(*) Winner of the “Up and Coming Program of the Year” for the Americas
One of the Largest Coalition Loyalty Programs in Latin America
1
2
1
Colombia
Peru
Central America
Leading Market Positions
Home markets
Reference markets
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Favorable Demographics and Underpenetrated Credit Card Markets in the Region Provide Strong Upside Potential
318
34.8
120.3
46.2 30.1
15.7
40
202.7
USA Canada Mexico Colombia Peru Ecuador CAM Brazil
Large Population Base in Home Markets…
LM Home Markets
Reference Markets
33% 28.%
46% 43% 46% 47%
53%
40%
USA Canada Mexico Colombia Peru Ecuador CAM Brasil
132M
37.6 41.7 27.3 28.9 27.0 26.7 23.4 30.7 Median Age
…With Young and Positive Demographics (% of Population Below 25 Years)(2)(5)
LM Home Markets
Reference Markets
(% Consumer Payments Growth (CPG) and CPG as multiple of real GDP Growth)(3)(5)
Rapidly Growing Consumer Payments…
(Credit Cards per Capita, 2014E)(4)(5)
…With Low Levels of Credit Card Penetration
9% 11% 10%
29%
23%
29%
20%
US CAN BRA CHL COL PER ECU
Reference Markets
Home Markets
4.3x 4.4x 2.7x 5.1x 4.7x 4.0x 3.3x
1.8
2.6
1.0 1.2
0.2 0.2 0.1
US CAN BRA CHL COL PER ECU
Reference Markets
Home Markets
(Population MM)(1)(5)
CPG/GDP Growth
1. 2. Source: CIA World Factbook. 3. Source: Economist Intelligence Unit, the World Bank, and The Brookings Institution. 4. Source: Euromonitor
Avg: 26.5
5. CAM: Central America, excludes Panama and Belize
Well-established program poised to capture regional and industry growth potential
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44%
18%
38%
81%
15%
4%
Burn Mix
1. LifeMiles revenues are primarily from the sale of miles, which are referred to “Gross Billings” 2. Breakdown per geography for LifeMiles based on gross billings as of 2014 excluding miles sold to Avianca; for Smiles and Multiplus based on 2015 company filings. 3. Gross billings breakdown by product for LifeMiles, Smiles and Multiplus as of 2014
LifeMiles is a leading loyalty program in Latin America, well diversified across Products and Geographies
… and a Large Variety of Earn/Burn Options
Earn Mix Burn Mix
Financial & Others
Air
Sold Directly to Members
Avianca
Other Avianca Air Partners
100% 100%
48%
25%
5%
22%
…well diversified among its home markets2 …
Brazil Brazil Colombia
CAM
Other
Peru 1% Ecuador
47%
69%
90%
28%
8%
10% 25% 23%
Member Direct
Sponsor Airline
Banks, Retail,Services & Others
… Sources of Revenue by Products3
With a quickly growing Gross Billings Base1…
170 220
250 282
2011 2012 2013 2014
(Gross Biillings by Country) (Proforma Gross Biillings USD millions)
Breakage Rate 18%
CAGR: 13%
~
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46%
69% 69% 71% 75%
2010 2011 2012 2013 2014
Solid Positioning Combined with a Strong Partner Network
Strong network of partners
Selected Airlines
Selected Financial Institutions
Selected Regional Hotels
Other Selected Commercial Partners
As Partner Network Grows Burn/Earn Ratio has Increased2
Coalition program allowing members to accrue and redeem miles across a diverse variety of products and services, including: Air, Hotels, Cars, Shopping, Media, Music, Duty Free
As we diversify the program’s network it should become more relevant to a broader range of consumer
segments
1. Partner Count as of December 2014. New Contracts from June 2014 to June 2015 2. Burn/Earn Ratio calculated as miles redeemed divided by miles issued in a given period of time
Advent’s experience & focus will help to further enhance LifeMiles ability to:
• Enter new markets • Diversify and accelerate Gross Billings base • Strengthen its commercial partner network • Acquire non-airline related expertise (e.g. Retail)
Business model with diversified sources of revenue and track record of innovation
- Significant diversification of revenue by both, product and geography
45+ New Brands added in the last 12 months
Other
Financial
Travel-
Related
Airline
Dec-14
Growing and Diverse Commercial Partners…
200+ Partners
Selected LTM New Contracts
(Partner Count Based on Number of Contracts )1
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Investments(2) (5)
Exits(4)
Investment Professionals(5)
Advent International: Overview
Americas Europe and Asia
Brazil
Colombia
Mexico
United States
France
Germany
Spain
United Kingdom
Czech Republic
Poland
India
China
One of the largest and most experienced global private equity firms focused on investing in well-positioned companies and partnering with management teams to create value through sustained revenue and earnings growth
• Founded in 1984
• US$33.0 billion in assets under management (as of Dec. ‘14)
• Invested US$28.0 billion in over 300 transactions across 40 countries(4)
• Over US$6.0 billion(1) raised for Latin America
• Currently on 6th fund for region, LAPEF VI (2014)
• Global investment platform(4):
• 190+ investment professionals
• 60+ Operating Partners
• 13 offices in 12 countries
• Global investment regions: Current fund:
• Europe / North America/Asia US$10.8 billion
• Latin America US$2.1 billion
Mexico City
São Paulo
Bogotá
Present in Latin America since 1996, with offices in Colombia, Brazil and Mexico
Mexico City
Office opened in 1996
12 investment professionals
23 investments
Bogotá
Office opened in 2011 to cover the Andean Region
11 investment professionals
6 investments
São Paulo
Office opened in 1997
17 investment professionals
19 investments
1 Includes limited partner co-investments; 2 Includes investments from the former Buenos Aires office; 3 Chosen as private equity firm of the year in Latin America Private Equity International/PrivateEquityOnline.com, 2005-2009 , 2011 & 2014. 4. As of March 31, 2015; 5. Investment professionals and Investments as of June 30, 2015. Investments include add-on acquisitions.
Latin American Private Equity Firm of the Year(3) 2005, 2006, 2007, 2008, 2009, 2011, 2014
40
50
33
13 Advent Offices Around the Globe
Extensive footprint in Latin America
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SECTOR GLOBAL EXPERIENCE1 LATIN AMERICA EXPERIENCE2 CARVE-OUT EXPERIENCE2
BUSINESS & FINANCIAL SERVICES
RETAIL, CONSUMER & LEISURE
INDUSTRIAL, AIRPORTS & INFRA-STRUCTURE
Advent International: Global + LatAm Expertise
Strong experience in travel & leisure, retail, financial services and corporate carve-outs
1. Global experience from 2010 to 2015. 2. Latin American and carve-out experience from 2005 to 2015.
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Thank You Contact Information:
Investor Relations Office [email protected] Tel : (57) 1 – 5877700 www.aviancaholdings.com