icelandair group presentation of q3 2017 results€¦ · presentation if errors are found or...

Icelandair Group

Presentation of Q3 2017 Results

2

Q3 HIGHLIGHTS

EBITDA

USD 161.1 million

and net profit

USD 101.3 million

Most

businesses

performed well

Better results

than anticipated

mainly due to

stronger passenger

revenues

Financials

Bogi Nils Bogason, CFO

USD million Q3 2017 Q3 2016 % Chg.

Operating Income 536.0 485.9 10%

Salaries and related expenses 118.1 94.7 25%

Aircraft fuel 82.4 73.1 13%

Aircraft lease 5.2 4.4 19%

Aircraft handling, landing and communication 41.4 38.9 7%

Aircraft maintenance expenses 19.6 19.2 2%

Other expenses 108.2 94.0 15%

Operating expenses 374.9 324.2 16%

EBITDA 161.1 161.8 0%

EBIT 126.8 132.1 -4%

EBT 127.1 130.8 -3%

Profit for the period 101.3 102.8 -1%

EBITDA ratio 30.1% 33.3% -3.2 ppt

EBITDAR 171.5 170.4 1%

EBITDAR ratio 32.0% 35.1% -3.1 ppt

Strong results – net profit at USD 101.3 million

EBITDA and net profit | USD million

161162156

124

102 101103103

86

65

Q317Q316Q315Q314Q313

EBITDA

Net profit

4

5

Lower yields affect the EBITDA negatively by USD 23.3 millions

6.1

28.0

2.12.3

EBITDA Q3 2016 Capacity

-23.3

161.1

Shared ServiceTourism ServiceOther companys

Route Network

0.1

Currency

-7.0

EBITDA Q3 2017Other changes

Icelandair

Other revenues

-3.6

Yield

-5.4

Fuel price

161.8

All figures in USD million.

EBITDA ratio 30.1%

6

Q316

30.1%

20.5%

36.2%

Q317

29.6%

Q313

18.9%

21.1%

33.3%

Q315Q314

24.0%

16.2%

Q312

24.6%

17.6%

27.5%

Net earnings %

EBITDA %

Growth in all our businesses - Hotel occupancy declined between years

7

-2-3

-1

25

15

01

43

1

12

10

ASK

Route Network

Passengers

Route Network

Occupancy (ppt)

HRN Hotels

Fleet utilisation

Charter flights

SLF (ppt)

Route Network

Sold BH

Charter flights

Available

HRN Hotels

SLF (ppt)

Domestic and

Regional flights

ASK Domestic

and Regional

flights

Sold

HRN Hotels

FTK

Cargo

Passengers

Domestic and

Regional flights

Q3 year-on-year change in %

ASK = Available Seat Kilometres, BH = Block Hours, HRN = Hotel Room Nights.

Occupancy

REK 94.8%

↑ 2.3 ppt from LY

Occupancy

Countryside 79.4%

↓ 8.1 ppt from LY

Good load factor with 10% passenger increase

Q317

58%

8%

34%

1,496

1,360

8%

36%

Q315

+10%

Q316

56%

969

36%

821

Q314

34%

55%

10%

Q313

56%

52%

1,144

11%

34%

12%

FromTo Via

8

4.9

Q315 Q316

3.4

5.5

Q313

4.0

Q314

2.9

+12%

Q317

86.2%

+0.7

Q317Q316

85.5%

Q315Q314

84.2%87.3%

Q313

83.5%

Passenger mix | number of passengers in thousands Available seat km (ASK) per quarter | billions

Load factor per quarter | 2013-2017

Continued pressure on yields but PRASK decrease slowing down

Absolute figures show yield as passenger revenues (PR) / total available seat kilometres (ASK) per US Cent

7.1

6.2

5.2

5.7

7.2

6.36.0

6.4

8.0

7.0

6.56.7

8.9

Q216

-2%

-10%

Q416Q415Q315 Q117 Q217Q316Q116 Q317Q115 Q215Q314 Q414

-9%

Fuel hedge strategy mitigates higher fuel prices

200

250

300

350

400

450

500

550

600

650

Aug16

Apr1

6

Fe

b17J

un16

May16

Oct1

6

Sep16

Nov16

Mar1

6

Fe

b16

Jul1

6

Jan17

Mar1

7

Apr1

7

Jun17

Dec16

Jan16

May17

Aug17

Jul1

7

Sep17

Average and effective fuel price per month | USD/ton 2016-2017

9

437443435433

520557

517486

Q3Jul Aug Sep

+19%

2016

2017

504486491534 516

546509493

+2%

SepAug Q3Jul

2017

2016

Effective fuel price paid by Icelandair Group | Q317 vs Q316

Average world fuel price | Q317 vs Q316

Average fuel price

Effective fuel price

Period Estimated usage (tons) Swap volume % hedged Av. swap price USD

Okt 17 31,418 17,550 56% 516

Nóv 17 26,707 14,550 54% 547

Des 17 25,498 15,550 61% 552

Jan 18 24,969 14,250 57% 558

Feb 18 22,456 12,250 55% 556

Mar 18 27,644 15,250 55% 544

Apr 18 29,268 14,250 49% 542

Maí 18 36,427 18,250 50% 527

Jún 18 49,579 25,250 51% 513

Júl 18 52,163 26,250 50% 507

Ágú 18 51,607 23,250 45% 532

Sep 18 46,011 8,250 18% 534

12 months 423,747 204,900 48% 532*

Okt 18 34,102 7,000 21% 519

Nóv 18 27,960 4,000 14% 515

Des 18 26,620 4,000 15% 559

Jan 17 26,168 0 0% 0

Feb 17 23,725 0 0% 0

Mar 17 23,852 0 0% -

13-18 months 162,427 15,000 9% 528*

* weighted average price

48% of estimated usage for the next 12 months has been hedged at weighted

average swap price of 532 USD/tonne

10

528532

12 months 13-18 months

48%

hedged at

USD 532

average

swap price

9%

hedged at

USD 528

average

swap price

12

Cash and cash equivalents at USD 260 million

Changes in cash Q3 2017 | USD million

Net cash from

operating

activities

Currency effect

-53.2

336.0

Net cash used

in investing

activities

Cash 01.07.17

260,1-2.4 -0.6

Cash 30.09.17

-19.7

Net cash from

financing

activities

14.0

0.915.9

8.8

39.7

Total CAPEX

Q3 2017

Other

investments

Intangible

assets

Aircraft and

aircraft

components

Overaul

own aircraft

Capex in cash Q3 2017 | USD million

Other

investments

mainly in

new hangar, new flight

simulator and

refurbishment of

Saga Lounge at

KEF int. airport

Equity ratio at 43% and net interest bearing debt USD 19.9 million

13

Interest

bearing debt

USD 284.0m

Net debt

USD

19.9m

USD million 30.09 2017 31.12 2016 30.09 2016

Assets

Operating Assets 642.8 602.6 545.2

Intangible assets and goodwill 179.2 174.7 174.5

Other non-current assets 126.8 97.7 91.0

Total non-current assets 948.9 875.0 810.7

Other current-assets 232.1 167.4 178.7

Short term investments 3.9 23.2 3.2

Cash and cash equivalents 260.1 226.9 191.4

Total current assets 496.2 417.5 373.3

Total assets 1,445.0 1,292.5 1,184.0

USD million 30.09 2017 31.12 2016 30.09 2016

Equity and liabilities

Stockholders equity 618.6 568.2 582.9

Loans and borrowings non-current 235.8 196.7 49.6

Other non-current liabilities 91.0 71.5 90.6

Total non-current liabilites 326.8 268.2 140.2

Loans and borrowings current 48.1 45.7 10.8

Trade and other payables 244.6 210.5 257.0

Deferred income 206.9 199.9 193.1

Total current liabilites 499.7 456.1 460.9

Total equity and liabilities 826.5 1,292.5 1,184.0

Equity ratio 43% 44% 49%

Current ratio 0.99 0.92 0.81

Net interest bearing debt 19.9 -7.7 -134.2

Interest bearing debt 284.0 242.4 60.4

14

3

2

1

3

3

1

3

2

5

6

2021202020192018

B737 MAX 8

B737 MAX 9

Sale leaseback for 4 aircraft, 1 in

2018 and 3 in 2019

Jolco financing process for the

remaining 2 aircraft in 2018 is on

good track

The financing of the new fleet is on schedule

Outlook

Björgólfur Jóhannsson, President and CEO

16

Route Network 2018

+ 3 new destinations

+ 10% trips

+ 400,000 passengers

17

Further growth is planned in 2018 with 11% increase in available

seat kilometres and 10% increase in number of trips

N-America

7.5%

New

dest-

ination

5.6%

Total

increase

Current

dest-

ination

13.1%

Europe

Total

increase

7.9%

Current

dest-

ination

3.3%

New

dest-

ination

4.6%

Total

5.7% 10.9%

Total

increase

New

dest-

ination

5.2%

Current

dest-

ination

B737 MAX

will be added

to the fleet in

2018 to increase

flexibility and

support our

growth plans

The first Boeing 737 MAX delivery in Q1 2018

-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

-40 -35 -30 -25 -20 -15 -10 -5 0 5 10

Fuel savin

g p

er

seat %

B737 MAX 9

B757 200

Fuel savings per BLH in %

B737 MAX 8

32

3

1

1

3

2021202020192018

B737 MAX 9

B737 MAX 8

Fuel savings per seat and per BLHB737 MAX8 & 737 MAX9 in comparison to 757 200 in %

16 firm orders

160seats

MAX 8

178seats

MAX 9

3

19

The market has

responded

favourably

to our new

fare offering

ECONOMY LIGHT

20

EBITDA forecast increased to USD 165-175 million

11.5

2.1

2.0 3.8

0.6

165-175

Route Network

- other changes

Passenger revenues CurrencyOther revenues New EBITDA forecastTourism Service &

Shared Services

Service cost

-2.4

-2.9

Aviation expensesLast EBITDA forecast

150-160

All figures in USD million.

Disclaimer

21

| This material has been prepared by Icelandair Group hf. It may include confidential information about Icelandair Group hf. unless stated otherwise all

information is sourced by Icelandair Group hf.

| The circulation of the information contained within this document may be restricted in some jurisdictions. It is the responsibility of the individual to comply with

any such jurisdictional restrictions.

| Forecasts, by their very nature, are subject to uncertainty and contingencies, many of which are outside the control of Icelandair Group. Past performance

should not be viewed as a guide to future performance. Where amounts involve a foreign currency, they may be subject to fluctuations in value due to

movements in exchange rates.

| Icelandair Group cannot guarantee that the information contained herein is without fault or entirely accurate. The information in this material is based on

sources that Icelandair Group believes to be reliable. Neither Icelandair Group nor any of its directors or employees can however warrant that all information

is correct. Furthermore, information and opinions may change without notice. Icelandair Group is under no obligation to make amendments or changes to this

presentation if errors are found or opinions or information change. Icelandair Group accepts no responsibility for the accuracy of its sources or information

provided herein and therefore can neither Icelandair Group nor any of its directors or employees be held responsible in any way for the contents of this

document.

| This document must not be construed as investment advice or an offer to invest.

| Icelandair Group is the owner of all works of authorship including, but not limited to, all design, test, sound recordings, images and trademarks in this material

unless otherwise explicitly stated. The use of Icelandair Group´s material, works or trademarks is forbidden without written consent except where otherwise

expressly stated.

| Furthermore, it is prohibited to publish, copy, reproduce or distribute further the material made or gathered by Icelandair Group without the company‘s explicit

written consent.

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