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Key Highlights for Jul-Sep Quarter Core operating loss of RM76 million – unit jet fuel cost increased by 94% to US$162 per barrel year on year
Net Loss of RM466 million – forex translation loss of RM213 million, non cash item. Based on actual contractual rates, AirAsia stands to gain RM366 million over the entire tenure of forex hedging term – exceptional losses relating to fuel hedge unwinding, will recover within three months at current fuel prices
Contrarian approach, keeping the growth intact – introduced 29 routes since the beginning of the year – Group fleet size of 75 (end of September 2008)
Thailand and Indonesia making progress with Airbus A320 aircraft – higher reliability and improved serviceability – operational losses has reduced substantially, Thailand reduced losses by 44% and Indonesia narrowed losses by 88% against second quarter
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Incredible Passenger Growth Passengers Flown by AirAsia and AirAsia Associates (‘000) 2 0 ,0 0 0
15 ,3 3 5
57% R G CA
23%
g
th Y w o r
oY
13 ,5 10
12 ,10 7 11,0 0 3
7 ,3 7 0 4 ,8 6 8 2 ,0 9 4 1,0 4 1 2002
2003
2004
2005
2006
2007
Benefiting from slower economic growth
9-mth 2007
9-mth 2008
2008 Forecast
– people switching for better value proposition airline 3
Comprehensive & Efficient Network Period
# Routes Served
Jan 2002
6
Jun 2003
11
Jun 2004
26
Jun 2005
52
Jun 2006
65
Jun 2007
75
NOW
110
Latest Routes Kuching – Singapore KK – Singapore
Upcoming Routes KL – Tiruchirapalli
Î 37 unique routes 4
Results Commentary
Q3 2008: Revenue Growth Components Year-Over-Year % Change + 34%
43%
24%
12% 7%
YTD
Revenue
Volume
40%
21%
Price
13%
Ancillary
6%
Strong passenger growth demand Price increase from effective yield management Consistent ancillary income growth 6
Consistent Strong Passenger Growth 2008
2008
Passengers Carried (‘000)
Seat Load Factor (%) vs. capacity growth (%)
2007
2007
Capacity growth 4 5 .0%
1 00.0%
24% 20% 21%
3,018
9 5 .0%
2,823
36%
4 0.0%
33%
2,612
33%
9 0.0%
2360
3 5 .0%
2440
80.7%
8 5 .0%
2160 8 0.0%
76.5%
79.3% 76.4%
3 0.0%
75.4% 2 5 .0%
72.1%
7 5 .0%
2 0.0% 7 0.0%
1 5 .0%
6 5 .0%
6 0.0%
Quarter 1
Quarter 2
Quarter 3
1 0.0%
Q ua rt e r 1
Q ua rt e r 2
Q ua rt e r 3
Average 21% passenger for the first 9 months of the year – one of the fastest growing airline in the world
Maintaining high load factors – despite capacity growth in excess of 33% – in line with management’s expectation 7
Higher Average Fare & Yields 2008
Average Fare (RM)
2008
Rev / ASK (US cents)
2007
2007
13% 16% 10%
198
12% 12%
195
8%
189
171
Qu a r t e r 2
174
Qu a r t e r 3
4.08
3.82 3.70
170
Qu a r t e r 1
4.19
3.65
3.52
Quarter 1
Quarter 2
Quarter 3
Consistent average fare and yield enhancement – competitors increased fare substantially – some routes become mature – better yield management techniques 8
Driving Growth from Ancillary Income Jul-Sep 2008
Jul-Sep 2007
∆%
Ancillary Income (RM million)
69.7
37.0
88%
Passenger Spend (RM / pax)
23.1
15.2
52%
10.6%
8.0%
2.6 ppt
% Revenue
Checked baggage fee launched 21 April – revenue contributor and cost savings – this is the first quarter with evident impact of check baggage, the second quarter had impact of forward bookings
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Ancillary Income – the driving force to high profit margins 35 30
Ancillary Income / pax (RM) Ancillary Income % Revenue 8.3%
8.0%
7.6%
7.3%
12.0
23.1
6.6%
6.5%
15.1
9.0% 8.0% 7.0%
17.8 15.2
15
11.0 10.0
25 20
12.0 10.6%
6.0%
15.7
13.3
5.0% 4.0%
10
3.0% 2.0%
5
1.0% 0
0.0% Q1
Q2
Q3
Q4
Q1
2007
Q2
Q3
2008
ÎStrong upside growth trend for ancillary income Î Medium term target of 15% of revenues 10
Cost / ASK – year on year Comparison Cost Breakdown (US cents / ASK)
Jul-Sep 2008
Jul-Sep 2007
∆ (%)
Staff Costs
0.36
0.33
11%
Pilot salary increase
Fuel and Oil
2.73
1.52
79%
Higher jet fuel price
User & Station Charges
0.23
0.21
12%
More international routes bias
Maintenance and Overhaul
0.12
0.14
(13%)
New aircraft requires less work
(0.15)
0.02
n/a
Sub-lease income from Associates
Depreciation & Amortisation
0.54
0.49
11%
More owned aircraft in fleet
Sales, Marketing & Others
0.21
0.29
(27%)
Economies of scale
Total Cost / ASK
4.05
3.00
35%
Higher Fuel Price
Cost / ASK (ex fuel)
1.33
1.48
(10%)
Cost of Aircraft
Reason
Efficient A320 aircraft
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Exceptional Losses Short term pain for long-term gains Unwind fuel hedging contracts – initial view was oil prices to remain at US$70 per barrel, the financial crisis has caused the oil market to collapse and change of view – swift action by management has saved significant amount of money – at current WTI of US$50 per barrel, we would have to incur a total of US$481 million of fuel hedging losses
Lehman Brothers – likely non recovery in the amount of US$26 million – served a notice of termination to exercise our rights under ISDA – has provided full amount to be written off
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Updates on Associates
Updates on Associates Thai updates – 25% passenger growth with 29% average fare growth YoY – posted a loss of THB250 million (RM24.6 million), our portion of losses is THB122 million (RM12.1 million) – competitors are scaling back capacity and cancelling flights – reduced losses by 44% against second quarter
Indonesia Updates – 24% passenger growth with 75% average fare growth YoY – posted a loss of IDR12 billion (RM4.3 million), our portion of losses is IDR6 billion (RM2.1 million) – competitors are scaling back capacity and cancelling flights – reduced losses by 88% against second quarter
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AirAsia X – the World Hub is Developing
Received first purchased Airbus A330 aircraft on 2 November New Australian routes (Perth and Melbourne) performing well Kuala Lumpur to London has opened for sale – maiden flight on 11 March 2009 – exceptionally popular, tickets selling fast
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Summary Improved outlook – fuel price has receded to attractive levels – more people switching to LCC as first choice of travel
Competitive environment has improved – competitors has slowed / reduced capacity rollout – competitors increased fares substantially
Ancillary Income Most comprehensive route network in Asia – competitors are slowing, we are continuing to expand the network
Stimulate market with attractive value proposition – ceased charging fuel surcharge
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Appendix
Financial Data – Third Quarter Quarter Ended: 30 September
Jul-Sep 2008
Jul-Sep 2007
∆ (%)
Ticket Sales
588,755
424,563
39%
Ancillary Income
69,720
37,022
88%
Revenue
658,475
461,585
43%
(215,280)
0
n/a
69,248
148,655
-53%
Core Operating Profit/(Loss)
(75,933)
47,763
-259%
Profit/(Loss) After Tax
(465,526)
179,977
-359%
EBITDAR Margin
10.5%
32.2%
-21.7 ppt
Core Operating Profit/(Loss) Margin
-11.5%
10.3%
n/a
Profit/(Loss) After Tax Margin
-70.7%
39.0%
n/a
RM'000
Once off/Exceptional Items EBITDAR
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Operating Data – Third Quarter Jul-Sep 2008
Jul-Sep 2007
∆ (%)
3,018,395
2,439,600
24%
ASK (million)
4,833
3,645
33%
RPK (million)
3,429
2,707
27%
Seat Load Factor
75.4%
79.3%
-3.9 ppt
195
174
12%
Rev / ASK (sen)
13.63
12.66
8%
Rev / ASK (US cents)
4.08
3.65
12%
Cost / ASK (sen)
13.54
10.39
30%
Cost / ASK (US cents)
4.05
3.00
35%
Cost / ASK-ex fuel (sen)
4.43
5.13
-14%
Cost / ASK-ex fuel (US cents)
1.33
1.48
-10%
46
37
24%
Quarter Ended: 30 September
Passengers Carried
Average Fare (RM)
Aircraft (end of period)
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Operating Data – Third Quarter Jul-Sep 2008
Jul-Sep 2007
∆ (%)
Average fare (RM)
195.1
174.0
12%
Ancillary Income / pax (RM)
23.1
15.2
52%
Unit Revenue / pax (RM)
218.2
189.2
15%
Fuel consumed ( barrels)
813,641
662,821
23%
Unit fuel price ($/barrel)
162.0
83.6
94%
Average stage length (km)
1,231
1,166
6%
No. of flights
22,475
18,012
25%
46
37
24%
Quarter Ended: 30 September
No. aircraft at end of period
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Fleet Composition Operational Aircraft Count
Sep 2008
Malaysia
46
Thailand
16
Indonesia
13
Group Total
75
Aircraft Type # Airbus A320 # Boeing 737-300
50 25
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