Air China limited 2011 Interim Results under IFRS · Air China Limited 2014 Annual Results . Under...

Air China Limited 2014 Annual Results Under IFRS

March 2015

Agenda

Part 1 Results Highlights Part 2 Business Overview Part 3 Financial Overview Part 4 Outlook

Part 1 Results Highlights

0%

6%

12%

18%

24%

Global RPK China's RPK

Gradual Global Economic Recovery, Slower Economic Growth in China

Steady Growth in Passenger Market Air Cargo Traffic showed recovery

4

Sources：IMF, IATA, CEIC, CAAC

3.0%

0.0%

5.4%

4.1%

3.4%

3.3% 3.3%

9.0% 8.7%

10.3% 9.2%

7.8% 7.7% 7.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2008 2009 2010 2011 2012 2013 2014E Global GDP Growth Rate China's GDP Growth Rate

-2%

2%

6%

10%

14%

18%

Global RFTK China's RFTK

Results Highlights

Key Operational Metrics 2014 Annual YoY Change

ATK (million) 27,616.1 12.67%

RTK (million) 19,437.6 10.12%

ATK Load Factor (%) 70.4 -1.63pts

ASK (million) 193,631.5 10.22%

RPK (million) 154,683.9 8.96%

Passenger Load Factor (%) 79.9 -0.93pts

Key Financial Metrics 2014 Annual YoY Change

Turnover (RMB million) 105,844.3 7.85%

Operating Expenses (RMB million) 98,622.7 4.85%

Profit for the period (RMB million) 4,285.0 18.54%

Profits Attributable to Shareholders (RMB million) 3,817.5 16.97%

EPS (RMB/share) 0.31 16.95%

Dividend（RMB/10 shares） 0.5223 15.27%

5

Part 2 Business Overview

Total 2014 YoY Change

Revenue (RMB million) 67,263.3 6.57%

ASK (million) 138,442.6 8.77%

RPK (million) 110,739.2 7.45%

Load Factor (%) 80.0 -0.99pts

Yield (RMB/RPK) 0.61 -0.82%

Domestic 2014 YoY Change


ASK (million) 75,307.4 3.21%

RPK (million) 61,280.4 2.90%



International 2014 YoY Change


ASK (million) 57,894.6 16.44%

RPK (million) 45,311.1 13.50%



Regional (HK, Macau and Taiwan)

2014 YoY Change


ASK (million) 5,240.6 14.12%

RPK (million) 4,147.7 15.65%

Load Factor (%) 79.1 1.05pts


Air China

7

57.33% 39.06%

3.61%

Domestic International Regional

Total (as of December 31, 2013) 316

Introduced in 2014 40

B737-800（13）、B747-8（4）、B777-300ER （4）、A321/320（11）、A330（8）

Retired in 2014 22

B757-200（5）、B737-300（5）、B737-800（6）、B747-400C（4）、B767-300ER（1）、A340（1）

Total (as of December 31, 2014) 334

16.4%

3.2%

14.1% 13.5%

15.7%

-2.0pts 1.1pts

2014 2013

Optimised Capacity Allocation to Align with Market Demands

8

54.40%

41.82%

3.79%

Fleet

-2%

2%

6%

10%

14%

18%

ASK Change RPK Change Passenger Load Factor Change

International Domestic Regional

2014 YoY Change in Capacity & Passenger Traffic 2013-2014 Capacity Distribution

-0.3pts 2.9%

Transfer Passengers and Revenue in Different Hubs RMB 100 million

Strengthened Hub Construction and Improved Network Value

Beijing hub network coverage continued to expand through the launch of new international routes from Beijing to Washington, Vienna (Barcelona) , Yangon and Jeju etc.. Flight banks have been optimized to increase the number of connecting flights. The number of transfer passengers reached 4.88 million The Chengdu regional hub introduced a new international route from Kunming to Yangon and several domestic routes including Chengdu-Ghulja/Yulin. Increased capacity in exclusive routes at the hub. The number of transfer passengers reached 620,000 At the Shanghai international gateway, the new Shanghai-Munich long-haul route was introduced, hence increase Shanghai International routes to 14. Through check-in service expanded to 14 routes for international transfers to Europe via Shanghai. The number of transfer passengers reached 270,000

9

10 thousand persons

Capacity Change in Beijing, Chengdu & Shanghai

7.7% 7.4% 6.8% 11.0%

7.4%

38.2%

0%

10%

20%

30%

40%

50%

Beijing Chengdu Shanghai

ASK YOY Growth AFTK YOY Growth

488

62 27

56

5 3 0

10

20

30

40

50

60

0

100

200

300

400

500

Beijing Chengdu Shanghai

Transfer Passengers Transfer Revenue

Enhanced Restructuring of Marketing Model and Innovation of Services

10

Upgraded Yield Management (O&D) System and Customer Relationship Management (CRM) System Strengthened marketing management to boost the yield of main base Optimised passenger profile to improve revenue from premium classes Enhanced e-commerce capability, upgraded overseas website and expanded mobile APP functions

Proportion of revenue from premium classes in passenger transportation

Continuous Revenue Growth of Premium Classes

11.9%

27.9%

17.6% 11.5%

29.0%

18.3%

0%

10%

20%

30%

40%

2013 2014

RMB 100 million RMB 100 million 1.4% 14.8%

13.6%

11

Fine tuning Marketing initiatives and making Innovation of Services

Introduced a number of new products, such as Upgrade Coupon, Seat Selection Fee, Pre-paid Luggage service, and thus established a product system generating ancillary revenue

Developed and implemented Advance Check-in, “Security check with ID card only”, as well as full self-service offerings such as Check-in, Baggage Check-in, and Boarding.

12

Enhanced Restructuring of Marketing Model and Innovation of Services

Successful trial flight with in-flight internet connection

Initiated and rolled out new cabin interior designs

Air China Cargo

13

Change in air cargo fleet (aircraft) Change in freighter utilisation rate Hour/ aircraft, day

8.05

8.85 9.4

5

6

7

8

9

10

2012 2013 2014

5

4

3

1

1

7

777F

757F

747F

2013 2014

2014 YoY Change

AFTK (million) 9,438.0 17.59%

Freighter AFTK (million) 2,494.8 16.32%

RFTK (million) 5,180.5 14.08%

Freighter RFTK (million) 2,023.8 15.44%

Tonnage Carried (tonne) 1,230,091.5 6.28%

Freighter Tonnage Carried (tonne) 355,703.6 10.23%

Load Factor (%) 54.9% -1.69pts

Freighter Load Factor (%) 81.1% -0.62pts

Yield (RMB/RFTK) 1.56 -1.18%

Shenzhen Airlines

2014 YoY Change

ASK (million) 47,874.9 12.53%

RPK (million) 38,668.4 11.36%

ATK (million) 4,902.4 12.06%

RTK (million) 3,895.1 10.58%

Passengers carried (thousand) 26,251.4 10.15 %

Passenger load factor (%) 80.8% -0.85pts

ATK load factor (%) 79.5% -1.06pts

Passenger Yield (RMB/RPK) 0.55 -4.85%

14

2014 YoY Change

ASK (million) 5,161.9 16.53%

RPK (million) 3,520.7 17.03%

ATK (million) 597.1 16.71%

RTK (million) 376.1 17.04%

Passengers carried (thousand) 2,121.1 16.17%

Passenger load factor (%) 68.2% 0.29pts

ATK load factor (%) 63.0% 0.18pts

Passenger Yield (RMB/RPK) 0.73 -11.39%

Air Macau

15

Part 3 Financial Overview

RMB million 2014 2013 YoY Change

Turnover 105,884 98,181 7.85%

Air traffic revenue 101,385 94,603 7.17%

Operating expenses 98,623 94,063 4.85%

Operating expenses ex-fuel cost 64,080 60,340 6.20%

Profit from operations 7,262 4,118 76.34%

Finance cost 3,071 423 626.33%

Share of profit of associates 754 647 16.52%

Profit before tax 5,065 4,518 12.10%

Profit for the period 4,285 3,615 18.54%

Profit attributable to shareholders 3,817 3,264 16.97%

EPS (RMB /share) 0.31 0.27 16.95%

Operating Performance Recorded Growth, Profit Improved

17

18

Operating Performance Recorded Growth, Profit Improved

4,518 5,065

+ 7,704 - 820 - 1,489 - 556 -981 +653 -2,298

+107 -1,772

0

2000

4000

6000

8000

10000

12000

62.83%

6.10%

31.07%

(RMB million) Passenger Services YoY Change

Cargo Services YoY Change Total YoY Change

Domestic 61,672 4.21% 2,032 13.21% 63,704

4.48% (%) 66.60 -1.63pts 23.13 0.34pts 62.83 -1.62pts

International 25,099 12.26% 6,400 10.65% 31,499

11.93% (%) 27.10 1.33pts 72.85 -0.59pts 31.07 1.32pts

Regional 5,829 12.29% 354 18.88% 6,182

12.64% (%) 6.30 0.31pts 4.02 0.25pts 6.10 0.30pts

RMB Million Changes on Passenger and Cargo Revenue

2013 2014

29.75% 64.45%

5.80%

Steady Revenue Growth in Air Passenger Business and Turnaround in Air Cargo Business

19

Regional International Domestic

0

20,000

40,000

60,000

80,000

100,000

120,000

2013 2014 Passenger Revenue Cargo Revenue

91.17%

8.33%

91.33%

8.67%

(RMB million) 2014 2013 YoY Change

Jet Fuel 34,542 33,722 2.43%

Take-off, landing and depot charges 10,566 9,585 10.24%

Depreciation 11,323 10,937 3.53%

Maintenance 3,588 3,064 17.10%

Staff 15,513 14,024 10.62%

Aircraft and engine operating lease expenses 4,537 4,006 13.24%

Air Catering 2,756 2,572 7.16%

Other flight operation expenses 8,390 8,257 1.61%

Others 7,408 7,897 -6.18%

Total 98,623 94,063 4.85%

Managed Pace of Operation to Control Costs

20

2014

2013

Jet Fuel 35.9%

Take-off, landing and

depot charges 10.2%

Depreciation 11.6%

Maintenance 3.3% Staff

14.9% Lease

expenses 4.3%

Other flight operation expenses

8.8%

Air Catering 2.7% Others

7.9%

Jet Fuel 35.0%

Take-off, landing and

depot charges 10.7%

Depreciation 11.5%

Maintenance 3.6% Staff

15.7% Lease

expenses 4.6%

Other flight operation expenses

8.5%

Air Catering 2.8% Others

7.9%

RMB/Tonne RMB/Tonne Average Domestic International

2014 Average：6,910

2013 Average：7,210

2014 Domestic：7,188

2013 Average：7,441

2014 Average：5,931

2013 Average：6,327

RMB Billion

RMB/Tonne

YoY Drop in Procurement Cost for Jet Fuel

21

22.6

14.5

24.1

34.7 35.6 33.7 34.5

8.7 4

7.7

13.9 15.1 14.5 15.2

0

10

20

30

40

2008 2009 2010 2011 2012 2013 2014

Fuel Cost Jet Fuel Surcharge

Fuel Cost and Jet Fuel Surcharge

Changes in Jet Fuel Purchase Price

0

1,500

3,000

4,500

6,000

7,500

9,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2014 2013

0

1500

3000

4500

6000

7500

9000


2014 2013

0

1500

3000

4500

6000

7500

9000


2014 2013

Ex-fuel Unit Cost

Unit Cost

Cost as Percentage of Revenue

RMB Million RMB

RMB

62,715

45,892

71,560

92,151 94,063 98,623

Strengthened Cost Control

22

91,064

118.54%

89.30% 86.75% 93.64% 91.55%

95.81% 93.18%

75.79%

61.15% 57.54% 58.38% 55.72% 61.46% 60.56%

40%

60%

80%

100%

120%

2008 2009 2010 2011 2012 2013 2014 Operating Cost as % of Revenue

Ex-fuel Operating Cost as % of Revenue

0.44 0.32 0.36 0.38 0.34 0.34 0.33

2.74

2.04 2.3 2.52 2.41 2.46 2.32

0

1

2

3

4

5

2008 2009 2010 2011 2012 2013 2014

Cost per ASK Cost per ATK

0.68 0.47 0.54 0.61 0.56 0.54 0.51

4.28

2.98 3.46

4.04 3.96 3.84 3.57

0

1

2

3

4

5

2008 2009 2010 2011 2012 2013 2014

Cost per ASK Cost per ATK

Fuel Cost and Non-fuel Operating Cost

40,101 31,426 47,464 57,447 55,424 60,340 64,120

22,614 14,466

24,096

34,703 35,640 33,722 34,542

0

20,000

40,000

60,000

80,000

100,000

2008 2009 2010 2011 2012 2013 2014 Operating Cost excluded Fuel Cost Fuel Cost

RMB Million

(X) Asset to Liability Ratio

(X)

%

Healthy Financial Position

23

19,943 23,916

41,438 46,203

49,944 53,757 53,978

0

10,000

20,000

30,000

40,000

50,000

60,000

2008 2009 2010 2011 2012 2013 2014

79.63 77.8

73.94 72.52

71.23 71.94 71.76

64

68

72

76

80

84

2008 2009 2010 2011 2012 2013 2014

EBITDA Interest Protection Multiples Net Assets (Excludes minority interest)

2.5 2.54

1.72 1.53 1.63 1.67 1.77

0

0.5

1

1.5

2

2.5

3

2008 2009 2010 2011 2012 2013 2014

Net Debt-to-Equity Ratio

-1.63

8.89

12.12

7.2 6.47 4.75 5.48

-4 -2 0 2 4 6 8

10 12 14

2008 2009 2010 2011 2012 2013 2014

Interest Bearing Debt

24

(RMB Million) 2014 % 2013 %

USD 83,334 72.81 78,197 70.07

RMB 30,164 26.35 33,239 29.78

EUR 146 0.13 165 0.15

JPY 814 0.71 - -

Total 114,458 100.00 111,601 100.00

38.85%

61.15%

29.87%

70.13%

短期带息负债长期带息负债

31 Dec, 2014 31 Dec, 2013

Short term Interest Bearing Debt

Long term Interest Bearing Debt

Part 4 Outlook

2015: New Normal

26

Shift from high-speed growth to

mid-speed growth

Structural changes in the economy

Development mode focuses more

on quality and efficiency

New Normal in China’s Economy

Slower industry growth

Structural changes in the market

-Higher growth rate in international markets than in domestic

market

-Number of travelers from government organizations decreased

while business travellers and general leisure travellers have

huge growth potential

Diverse growth drivers

-Mobile internet drives innovation and transformation of

business models adopted by the airlines

-Upgraded consumption, outbound travel became a key driver

New Normal in China’s Aviation Industry

27

2015: New Business Focus

Enhance competitiveness of the hubs in order to maximise value of the network; Focus on customers’ needs to implement innovative marketing strategy and activities; Strengthen service management and boost product competitiveness to improve customer experience; Maintain industry-leading cost structure; Improve capability of informatisation; Enhance business synergies with associated corporations in the Group

Appendix 2014 Other Financial and Operational Data

1. Fleet – the Group

29

31 December 2014 Delivery

Sub-total Owned Finance

Lease Operating

Lease Average

Age 2015 2016 2017

A319 40 24 9 7 9.68 3 - - A320/A321 163 59 66 38 4.52 16 17 17 A330 49 10 18 21 4.27 4 - - A340 4 4 - - 16.26 - - - B737 223 105 47 71 6.41 37 14 16 B747 8 8 - - 9.71 3 - - B757 2 2 - - 22.37 - - - B777 30 14 13 3 6.32 - - - B787 - - - - - - 5 5 B747F 3 3 - - 12.53 - - - B757F 4 4 - - 18.35 - - - B777F 5 3 - - 0.69 3 - - Business Jets 9 1 - 8 3.63 - 2 - TOTAL 540 237 155 148 6.08 66 38 38

*Wet lease aircraft excluded in calculation of average ages

2. Fleet – Air China

30

31 December 2014 Delivery

Sub-total Owned Finance

Lease Operating

Lease Average

Age 2015 2016 2017

A319 30 21 9 - 9.44 3 - - A320/A321 87 16 60 11 3.87 5 10 11 A330 49 10 18 21 4.27 4 - - A340 4 4 - - 16.26 - - - B737 124 51 27 46 6.58 22 14 14 B747 8 8 - - 9.71 3 - - B757 2 2 - - 22.37 - - - B777 30 14 13 3 6.32 - - - B787 - - - - - - 5 5 Total 334 126 127 81 6.04 37 29 30

*Wet lease aircraft excluded in calculation of average ages

3. Profitability Ratio

31

2014 2013 同比

EBITDA (RMB million) 18,651 15,141 23.18%

EBITDA margin 17.61% 15.42% 2.19pts

EBITDAR (RMB million) 24,128 20,062 20.27%

EBITDAR margin 22.79% 20.43% 2.36pts

Operating profit margin 6.86% 4.19% 2.66pts

Pre-tax profit margin 4.78% 4.60% 0.18pts

Net profit margin 3.61% 3.32% 0.29pts

ROE 7.09% 6.29% 0.80pts

(RMB million) 31 Dec 2014 31 Dec 2013 Change

Non-current assets 148,180 132,806 11.58%

- Aircraft and flight equipment 130,844 115,918 12.88%

- Property and plant 5,549 5,082 9.19%

Current assets 21,053 25,817 -18.45%

- Cash and cash equivalents 9,660 14,762 -34.56%

Total assets 209,311 205,083 2.06%

Current liabilities 60,843 70,074 -13.17%

Non- Current liabilities 89,358 77,463 15.36%

Total liabilities 150,201 147,537 1.81%

Total equity attributable to equity Shareholders of the Company 53,978 53,757 0.41%

4. Consolidated Balance Sheet (Condensed)

32

(RMB million) 2014 2013 YoY Change

Net cash flow from operating activities 14,064 14,608 -3.73%

Net cash flow from investing activities 10,313 20,638 -50.03%

Net cash flow from financing activities -8,859 9,271 -195.56%

Net increase/(decrease) in cash and cash equivalents -5,108 3,241 -257.62%

Cash and cash equivalents at beginning of year 14,762 11,788 25.23%

Effect of exchange rate changes on cash and cash equivalents 7 -267 102.45%

Cash and cash equivalents at 31 December 9,660 14,762 -34.56%

5. Consolidated Cash Flow Statement

33

Fan Heyun Tel: +8610-6146 2799 Fax: +8610-6146 2805 E-mail: [email protected] Cao Yu Tel: +8610-6146 2788 Fax: +8610-6146 2805 E-mail: [email protected] 公司网址：www.airchina.com.cn

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Air China limited 2011 Interim Results under IFRS · Air China Limited 2014 Annual Results . Under...

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