ABC Company Limited - SpiceJetcorporate.spicejet.com/Content/pdf/CorporatePresentationJUL2017.pdf · The information in this presentation has been prepared by Spicejet Limited (the

December 2016

Corporate PresentationCorporate Presentation

July 2017

2

Disclaimer

The information in this presentation has been prepared by Spicejet Limited (the “Company”) and has not been independently verified. No representation or warrantyexpressed or implied is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of such information or opinions containedherein. The information presented or contained in these slides is current as of the date hereof and is subject to change without notice, and its accuracy is notguaranteed. Neither the Company, nor any of its advisers or representatives, nor any of their respective affiliates makes any undertaking to update any suchinformation subsequent to the date hereof. This presentation should not be construed as legal, tax, investment or other advice. No consideration has been given to theparticular objectives, financial situation or particular needs of any recipient. Neither the Company nor any of its advisors or representatives, nor any of their respectiveaffiliates shall have any liability whatsoever (in negligence or otherwise) for any loss arising from the use of this presentation or its contents or otherwise arising inconnection with this presentation. By assessing this presentation, you are agreeing to be bound by the trailing restrictions.

This presentation is intended for financial institutions and professional investors only and is not intended for distribution or reproduction to, or use by, retail investors.This presentation is also not intended for distribution or reproduction to, or use by, any person or entity in any jurisdiction or country where such distribution or usewould be contrary to law or regulation.

The information in this presentation is given in confidence, and reproduction of this presentation, in whole or in part, or disclosure of any of its contents, without priorconsent of the Company, is prohibited. This presentation should be distributed and read in its entirety. This presentation remains the property of the Company and onrequest must be returned and any copies destroyed.

This presentation is for information and convenient reference and does not constitute or form part of, and should not be construed as, any offer for sale or subscriptionof, or solicitation of any offer to buy or subscribe for, any securities of the Company nor should it, or any part of it, form the basis of, or be relied on in connection with,any contract or commitment whatsoever. This presentation does not constitute an offer of securities for sale in any jurisdiction, including the United States, and anysecurities described in this announcement may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended or anexemption from such registration.

Please refer to the financial statements of the Company that have been filed with the stock exchanges and is available on the Company’s website. This presentation isnot intended to be fully inclusive and may not contain all of the information that you may consider material. This presentation contains historical information of theCompany that should not be regarded as an indication of future performance or results.

Certain statements in these slides may be considered forward-looking. These statements are based on management’s current expectations and are subject touncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors.

By accepting any copy of this presentation, you agree to be bound by the foregoing limitations.

3

Table of Contents

1 Industry Snapshot

2 Spicejet: Fact Sheet

3 Corporate Strategy

4 Key Financials and Stock Price Performance

4

Table of Contents

1 Industry Snapshot




Real GDP Growth ProjectionCY2016 – CY2022E

7.8%

6.0%

5.2%

3.5%

3.1%2.3%

1.8% 1.8%

India China ASEAN-5 Sub-Saharan Africa Middle East & NorthAfrica

Latin America &Caribbean

European Union Advanced economies

5

Favourable Demographics

From 2016 through 2025, the share of elite, affluent and aspirers households will increase from 23% to 36% of the total while the share of strugglers will drop from 31% to 18%

The number of middle class households in India will exceed 90 million, retaining its current rank as the world’s 2nd largest middle class

Continued Population Growth

2nd most populous country with1.31 billion people growing at aCAGR of 1.3%

Strong Economic Growth

India retains its position as thefastest growing major economy ofthe world ahead of China in FY16

The Asian Development Bank expects Indian economy to grow at 7.4% in 2017-18 and 7.6% in 2018-19.

World average of 3.7%

Source: IMF, World Economic Outlook, April 2017

Note: 1. CY2016 population data is updated for all countries except Germany, for which data has been estimated by the IMF. CY2017 to CY2022 population data for all countries are estimates by the IMF.2. Income distribution is calculated in constant 2015 dollars, $1 = 65 Rupees

1,383 1,309

259 206 143 127 122 104 83 80 69 65 61 49 46 36 32 24 5

Ch

ina

Ind

ia

Ind

on

esi

a

Bra

zil

Ru

ssia

Jap

an

Mex

ico

Ph

ilip

pin

es

Ger

man

y

Turk

ey

Thai

lan

d

Fran

ce

Ital

y

Co

lom

bia

Spai

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Can

ada

Mal

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Au

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lia

No

rway

Population Growth 1

(CY2016 – CY2022)

0.4% 1.3% 1.3% 0.7% (0.1% (0.4%) 1.0% 2.0% 0.2% 1.0% 0.1% 0.5% 0.4% 1.1% (0.1)% 1.2% 1.7% 1.7% 1.2%

Source: BCG Report “The New Indian: The Many Facets of a Changing Consumer”, March 2017

Indian Economy: Steady Growth Supported by Strong Fundamentals

Source: IMF, World Economic Outlook, April 2017

6.5

17

40

121

82

15.8

33

61

140

55

3.1

7

17

89

93

Elite (>30.8)

Affluent (15.4-30.8)

Aspirers (7.7-15.4)

Next billion (2.3-7.7)

Strugglers (<2.3)

Indian Households by Income (Millions) 2

2005 2016 2025

Annual Gross Household Income ($ ‘000)

10.7%

7.6% 7.4%8.0%

5.8%5.0%

4.3%5.0%

4.5%

5.8%

6.8%

5.7%

4.3%

5.4%

6.5%

4.6%3.9%

4.6%

2.8%

4.5%

0%

2%

4%

6%

8%

10%

12%

Domestic India Domestic PRC Domestic Turkey DomesticEmerging Asia

Domestic SubSahara Africa

Domestic SouthAmerica

Domestic SouthAfrica

Domestic Brazil Domestic NorthAfrica

DomesticCaribbean

Domestic Air Passenger Traffic Forecast(Top 10 Markets)

2016-2026 CAGR 2026-2036 CAGR

0.09 0.36 0.32 0.41 0.39 0.43 0.53 0.520.83 0.96

1.34

4.65

3.072.59

1.84 1.721.42 1.21 1.20 1.28

Ind

ia

Ch

ina

Ph

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pin

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Ind

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Mex

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Bra

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Ru

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Co

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Thai

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Turk

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No

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Au

stra

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Spai

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USA

Can

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Ital

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Jap

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Fran

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Ger

man

y

Annual Trips per Capita – CY 2016

6

Indian Aviation: Market Forecast

Strong Growth in Tourism

Total contribution of Travel &Tourism to GDP was INR14,019 bn(9.5% of GDP) in 2016 and isforecasted to rise by 6.7% p.a. toINR28,492bn (10% of GDP) by 2027

According to IATA, India’s air travelsector supports 8 million jobs andcontributes USD 72 billion in theGDP

Untapped Market Potential

India has the lowest penetration

rate – 0.09 annual trips per capita

for CY 2016

Lowest amongst developing

nations like Brazil, Turkey,

Indonesia and China

Expansion in Infrastructure & Capacity to Support Growing

Demand

Public-private partnerships

State-of-the-art greenfield airports

– work on for brownfield airports

Domestic India is projected to be

fastest growing aviation market at

10.7% CAGR (2016-26) and 8.8%

CAGR (2016-2036)

Source: Airbus Global Market Forecast 2017

Source: WTTC

Source: Airbus Global Market Forecast 2017

10,398 10,97211,846

12,94014,019

2012 2013 2014 2015 2016

Total Contribution of Travel & Tourism to GDP(INR Billions)

Source: IATA, October 2016

483

616

110

107

38

1300

1100

442

242

150

China

US

India

Indonesia

Vietnam

Passengers Forecast: Five Fastest Growing Markets (Millions)

2015

2035

69 72

62

70 76

82

91

22 24

FY11 FY12 FY13 FY14 FY15 FY16 FY17 03MFY17

03MFY18

50 54

48

55 60

65

71

17 19


03MFY18

53 59 57 59

67

81

99

23 28


03MFY18

68

79 76 81

85

98

117

28 32


03MFY18

Indian Aviation: Demand & Supply Trends

Strong underlying demand to match supply

India is a growth market.

Demand growth has outpaced

growth in supply.

Domestic growth has seen a spurt

in the last 2 years on account of

economic buoyancy and

reasonable fares due to low ATF

prices.

The UDAAN scheme, introduced

as part of National Civil Policy,

will provide a boost to regional

connectivity and drive demand

from the Tier-II and Tier-III cities.

The Union Civil Aviation Ministry

has already awarded 128 routes

connecting 70 airports to 5

airlines.

International sectors keep

opening up and the travel

patterns are becoming more

Point to point.

RPK of Domestic Scheduled Services (billions)

ASK of International Scheduled Services (billions)

Source: DGCA data as of 30 June 2017

RPK of International Scheduled Services (billions)

ASK of Domestic Scheduled Services (billions)

7




Indian Domestic Full-Service Carriers vs. Low-Cost Carriers Market ShareLCCs consistently gaining market share and expect to reach 75% -80% within two years as per CAPA

8

Indian Aviation Landscape

Airline PromoterMarket Share(1) #

(Domestic)Capacity Share(1) *

(Domestic)Service Type(2) Fleet Size(2) Aircraft Type(2) Airports(2)

Air India Govt of India 12.9% 14.4% FSC 152A319, A320, A320N, A321, B747, B777, B787, ATR42/72

69-Dom37-Int

Jet Airways Naresh Goyal 17.5% 17.6% Dual 105(4) A330, B737, B777, ATR7248-Dom20-Int

IndiGo InterGlobe Enterprises 40.1% 40.5% LCC 135 A320, A320N39-Dom7-Int

SpiceJet Ajay Singh 13.4% 11.4% LCC 55(3) B737, Q40040-Dom7-Int

GoAir Wadia Group 8.4% 8.1% LCC 23 A320, A320N 23-Dom

Source: (1) DGCA (June2017)(2) Company website and Internet search (30 June 2017)

49.8%60.8% 63.4% 64.9% 64.2% 67.6%

50.2%39.2% 36.6% 35.1% 35.8% 32.4%

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017

LCC Market Share FSC Market Share

Source: DGCA

Note:(3) Company operates 1 aircrafts on wet lease ; (4) Doesn't include data for subsidiaries #Percentage of total passengers carried; *Percentage of total ASKM deployed

9

Table of Contents

1 Industry Snapshot




10

Key Highlights: Strong Performance, Consistent Execution

Best positioned to capitalize on aviation growth backed by strong demand from India’s secondary centres

One of the few airlines globally to turn in nine successive quarters of profitability after near shutdown (1)

#1 Best performing Indian airline stock in terms of investor returns over the last 2 years

#2

#3 Average OTP of 81.3% since March ’16 at metro stations: Highest amongst Indian operators (2),(3)

#4 Industry Leading Load Factor of 90%+ for 27 months in a row (2)

#5Unique two pronged fleet strategy helps in optimizing network and adapting to existing infrastructure conditions & different demand profiles

#6Strong foothold in domestic market and substantial presence in regional and international operations. Spicejet is in a better position to take advantage of the growth witnessed in tier 2 / tier 3 cities

Note: 1. Data as of March 2017, 2. Source: DGCA (June 2017)3. Average of OTP from March 2016 to June 2017, Source: DGCA Statistics

#7 Strong management team with Mr. Ajay Singh at the helm – pioneer of low cost aviation in India

11

Route Network

~ Pax carried per day48,500

~ Flights per day365

Domestic destinations 40

International destinations7

Note: Data for June 2017

12

Operations Overview

History and Corporate Matters

Started in May 2005, 2nd largest airline by Jul’14

Change of control in 2010,Acquired by Marans

Change of control again,Ajay Singh takes over following scheme of reconstruction and

revival in Feb’15

Fleet Details(1)

Scale of OperationsPassengers Ferried:

48,500 per day1.42 million per month(2)

Market Share(2):13.4% on domestic operations

Passenger Load Factor(2):94.5% - Highest in industry

(domestic) consistently

Total Fleet Size55 aircraft

Share Market Data(1)

CMP: Rs.132.1552week H/L: Rs. 132.70 / 99.95

Market Cap: ~Rs. 79,168 Mn(30th June’17)

Promoter Shareholding: 60.3%Stock Performance since Jan’15

(announcement of change in control): 609%

B737-700Fleet: 2 aircraft



Q400Fleet: 20 aircraft

Note: (1) Data as of 30 June 2017(2) Source: DGCA Statistics as of 30 June 2017

13

Key Management Personnel

The Company has a strong management team supported by robust middle management

Management Team

Manjiv Singh

Chief Projects Officer

SPS Suri

Head of Flight Operations

Chandan Sand

Head of Legal & Company Secretary

GP Gupta

Chief Administrative Officer

Kiran Koteshwar

Chief Financial Officer

Debojo Maharshi

Chief Marketing Officer

Ajay Singh

Chairman & MD

Arun Kashyap

Head of Engineering

Shilpa Bhatia

SVP - Sales and Revenue

Bhavesh Mishra

Chief of Flight Safety

Kamal Hingorani

SVP IFSD & Customer relations

14

Awards and Recognition

Awarded as ‘Best Historic Turnaround’ at the 9th ASSOCHAM International Conference & Awards

Voted as ‘Best Transportation’ brand and ‘Best Airline’ brand in India by Brand Trust Report

Public relations (PR) campaign ‘Rising like a Phoenix’ awarded at the Global SABRE Awards as among the 40 best PR campaigns in the world

Spicejet PR was awarded the best ‘Individual: Consultancy Professional’ award at Fulcrum 2016

SpiceJet CMD Mr. Ajay Singh received the ‘DDP Game Changer’ award at the North India Travel Award

Awarded for ‘Best Employee Engagement’ at the 4th DMA-Thomas Associates National Award

Awarded the ‘Best Check-in Initiative’ by Future Travel Experience global awards for its introduction of Bluetooth Low Energy (BLE) beacons and Near Field Communication (NFC) technology.

Won the ‘Best Domestic Airline for South India’ award by DDP TravTalk

SpiceJet CMD Mr. Ajay Singh received the ‘World Travel Leaders’ award at the World Travel Market Awards in London

SpiceJet received 'Asia's Greatest Brands - 2016' award at the Asia One Awards and SpiceJet CMD Ajay Singh and CFO Kiran Koteshwar were honored with 'Global Asian of the year' and 'Asia's Greatest CFO 2016' awards respectively

2016

2016

2016

2016

2016

2016

2016

2016

2016

2017

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Table of Contents

1 Industry Snapshot




16

Corporate Strategy

Maximize passenger related ancillaries through a range of value-based products

Integrate travel related services like hotels, vacations, car hire etc.

Develop cargo and merchandise business units

Maintain fleet reliability

Develop a continuous line of trained professionals through its academy

Implement and maintain high level of automation

Highly skilled and motivated work force

Build its financials to avoid shocks

Monitoring and improving fuel consumption

Readiness for import of fuel or hedging

Lower aircraft acquisition & associate maintenance costs

Bring down other costs by insourcing or securing long terms contracts

Maximize asset utilization

Expand international

Focus on key sectors

Develop regional markets with Q400

Dynamic fleeting capability to address seasonality variations

Sizing capacity to demandLow Cost

Operations

Increase Ancillary Revenue

Consolidate Operations &

Strengthen Financials

Revenue Maximization /

Optimization

64.2%59.8%

69.9%

77.1%

73.4%

79.8%

69.9% 70.4%

86.1%

75.9%

SpiceJet Air India Jet Airway and JetLite Indigo GoAir

Dec-14 Jun-17

86.7% 85.9%89.1% 88.8%

84.2%

94.5%

76.8%81.2%

87.8%

89.4%

SpiceJet Air India Jet Airway and JetLite Indigo GoAir

Dec-14 Jun-17

Others

10.5%

18.3%

23.3%

36.2%

9.4%

2.3%

13.4% 12.9%

17.5%

40.1%

8.4% 7.7%

SpiceJet Air India Jet Airway and JetLite Indigo GoAir Others

Dec-14 Jun-17

17

Market leading load factors testament to strong brand connect and improving OTP performance

Will increase market share responsibly by gaining stronger presence in profitable & key markets

Increased regional connectivity together with focus on international expansion to propel market share

Growth in Market Share Market Leader in terms of Load Factor Significant Improvement in OTP *

Consolidating Market Presence and Strengthening Performance

Source: DGCA Source: DGCA Source: DGCA

Note: * Average of 04 metro stations

Maintain operational efficiency with strong focus on high OTP and low cancellations

• Operates 20 Q400s: 13 on finance lease and 7 on dry operating lease

• With 78 seats each, these serve as excellent connecting agents for niche routes with high passenger yields

• Provide the airline with significant flexibility to develop regional routes and test new markets

• Operates 34 B737 family aircraft on operating lease

• Serves 40 domestic and 7 international routes

• Additionally, the company operates 1 aircraft on wet lease making it a total of 35 narrow body operations.

18

Current Fleet and Expansion PlansFocus on Increasing Regional & International Presence; Create Strong Foothold Domestically

Boeing Fleet Bombardier Fleet

Fleet Size (1)

Seat capacity

Aircraft Type • Boeing 737-700

• 2 aircraft

• 149 Y

• Boeing 737-800

• 29 aircraft

• 189 Y

• Boeing 737-900

• 4 aircraft

• 212 Y

• Q400

• 20 aircraft

• 78 Y

Expansion plans

Description

• January 2017: Placed an order with Boeing for 155 firm and 50 options for B737 Max aircraft

• June 2017: Placed an order with Bombardier for purchase of 25 and purchase right for 25 Q400 aircraft at Paris Air Show

Note: (1) Data as of 30 June, 2017

• June 2017: Entered into an MOU with Boeing for 20 firm and 20 options for B737 Max 10 aircraft at Paris Air Show

19

Sustain Profitability: Focus on increasing Margins by Reducing Costs

Continuous Focus on

Reducing Costs

Manage StructuralMatters

Focus on increasing ancillary revenues through travel related

opportunities

Increase contribution of direct sales; Spicejet APP

was launched.

Manpower optimisation to cater to maximise utilisation & increased productivity

Drastic improvement in efficiencies of key functions like cargo handling and call centre after being taken in-house

Renegotiation of unfavourable contracts and SLA management

Fuel saving methods such as fuel hedging, lightweight seats being considered. Invested in fuel dashboard software system for monitoring fuel conservation measures.

Route optimization – reduce unproductive flight time;

Will invest in technology & upgrading aircraft specifications.

Dynamic fleeting to address seasonality variations

Work in progress for direct import of ATF – estimated cost saving of 12-

15% on fuel cost

Cost reduction initiatives by dedicated cross-functional task-force

20

Increasing Focus on Ancillary Revenue

Ancillary Products & Services* Ancillary Products and Services Focussed Communication

Excess Baggage Charges

Spice Max Seats

Meals

Pre Book Seats

Insurance

Hand Baggage

My Flexi Plan

Spice Vacations

Priority Check in

Lounge

Visa

Cab

Note: * The list is not exhaustive

21

Increasing Brand Acceptance

Improving OTP Changing perception

Focused Marketing and Promotion Campaigns riding on Spicejet’s Strong Brand Recall to Deliver Maximum Impact at Optimum Cost

Targeting to be more Customer Friendly

Trendy Taglines – Getting the Point Across with High Impact

22

Table of Contents

1 Industry Snapshot




23

Improved Operational Efficiency Bringing Stability to our Financials

Net worthRs. MN

(2,244)

(9,945)

(14,852)

(10,389)

(6,091)

FY13 FY14 FY15 FY16 FY17

14,610 15,112

12,178

9,2008,271


Profit and Loss Account(1) Balance Sheet(1)

Net Revenue from OperationsRs. MN

56,007

62,387

51,727 50,204

61,013


EBITDAR(2)

Rs. MN

8,163

3,348 4,675

15,643 16,549


Net ProfitRs. MN

(1,911)

(10,032)

(6,871)

4,498 4,307


Annual Financial Performance – SpiceJet recorded second successive profitable year

Net Revenue from OperationsRs. MN

11,032 10,291 14,394 14,487

15,064 13,785

16,027 16,138

Q1 Q2 Q3 Q4

FY16 FY17

EBITDAR(2)

Rs. MN

Net ProfitRs. MN

Quarter Financial Performance – SpiceJet recorded ninth consecutive profitable quarter

3,081 2,693 5,409 4,461

4,743

3,334

4,842

3,630

Q1 Q2 Q3 Q4

FY16 FY17

730 290 2,399 1,079

1,490

589

1,811

416

Q1 Q2 Q3 Q4

FY16 FY17

• Calculated as sum total of long term and short term borrowings net of cash and bank balances

• Debt is substantially on account of finance lease on Q400 aircraft

Calculated as sum total of share capital and other equity

Note 1: Source – BSE filingsNote 2: EBITDAR is calculated as total income net of (i) operating expenses (ii) employee benefit expenses (iii)other expenses and adding rentals

Net DebtRs. MN

50

70

90

110

130

150

170

190

210

230

01-Jul-16 12-Sep-16 24-Nov-16 05-Feb-17 19-Apr-17

SpiceJet 105% Jet Airways 3% Indigo 15% Sensex 14%

20

120

220

320

420

520

620

720

820

15-Jan-15 01-Jun-15 16-Oct-15 01-Mar-16 16-Jul-16 30-Nov-16 16-Apr-17

SpiceJet 609% Jet Airways 26% Indigo 33% Sensex 10%

Operational Turnaround Rubbing off on Stock Price

Best performing Indian airline stock in terms of investor returns over the last 2 years

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Price Performance – Rebased to 100Last 1 year

Price Performance – Rebased to 100Last 1 year

Source Reuters as of 30 June, 2017

Price Performance – Rebased to 100Since 15th January, 2015 (Change of Control) till date

Price Performance – Rebased to 100Since 15th January, 2015 (Change of Control) till date

24

20

70

120

170

220

270

15-Jan-15 01-Jun-15 16-Oct-15 01-Mar-16 16-Jul-16 30-Nov-16 16-Apr-17

Thai Airways 24% Cathay Pacific -31% Qantas Airways 142%

Air Asia -25% Air Arabia -39% Singapore Airlines -19%

50

100

150

200

250

01-Jul-16 12-Sep-16 24-Nov-16 05-Feb-17 19-Apr-17

Thai Airways -20% Cathay Pacific 7% Qantas Airways 107%

Air Asia 8% Air Arabia -22% Singapore Airlines -5%

Thank YouSpiceJet LimitedRegd. Office: Indira Gandhi International Airport, Terminal 1D, New Delhi – 110 037

Website: www.spicejet.com; Email: [email protected];T: +91 124 3913939; F: +91 124 3913844

For detailed quarter/annual financial performance information, visit investor section on our company website

mailto:[email protected]

Documents

ABC Company Limited - SpiceJetcorporate.spicejet.com/Content/pdf/CorporatePresentationJUL2017.pdf · The information in this presentation has been prepared by Spicejet Limited (the