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Icelandair Group Investor Presentation 2021
2197_rns_2021-02-09_c5f0d564-428d-4d7a-b490-55e2e1f5d640.pdf
Investor Presentation
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ICELANDAIR GROUP
Q4 and 12M 2020 results
Investor meeting 9 February 2021
Highlights
Results Q4 2020
Resurgence of COVID-19 and associated travel restrictions in key markets discouraged demand recovery
Revenues down by 81%, EBIT negative of USD 60.6 million and net loss USD 38.2 million
Liquidity position strong
Total liquidity USD 331.4 million at year-end
Focus on preserving cash as well as being well prepared to act as soon as demand improves
Boeing 737 MAX recertified as safe to fly
Reintroduction of the aircraft into our network in spring following extensive updates and pilot training
The aircraft is both cost effective and environmentally friendly and will support the future development of our route network
Outlook for coming weeks
Near-term outlook challenging and operations remaining at minimal levels in the coming weeks
Modest ramp-up assumed to begin in Q2 2021
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2020 what a year!
Bogi Nils Bogason
CEO Icelandair Group
A
We were optimistic at the start of 2020
Number of passengers
millions
Flights were offered to 40 destinations...
... but due to C-19 and related travel restrictions they decreased to four
The number of take-offs went down drastically...
... and we carried more passengers in the first two months than in the remaining ten months of 2020
335k passengers
20 aircraft were prepared for on-ground storage
Effective technical solutions built and implemented to improve service
Flexible booking policies introduced to make travel easier
| Solution to issue travel credit vouchers | |
|---|---|
| Chat bot, which lightened the load on our service center | |
| Automated refunds to shorten the refund process considerably | |
| New terms and conditions policy to make bookings, changes of flights, dates and destinations easier |
A
Six passenger aircraft retrofitted to fly 80 cargo flights with medical equipment from China to Europe and North America
Number of shareholders
| Jan | 3,171 |
|---|---|
| Dec | 13,508 |
Financial restructuring completed including a successful share offering...
Our valuable infrastructure has enabled us to maintain flexibility in challenging times
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| Our excellent people | Valuable ecosystem of businesses | Slots at strategic airports | Strong international brand | Effective distribution channels | Beneficial partnership | Flexible fleet |
|---|---|---|---|---|---|---|
Financials
Eva Sóley Guðbjörnsdóttir
CFO Icelandair Group
A
Net loss USD 83.3 million
Operations heavily impacted by COVID-19
- The capacity of Icelandair's route network decreased by 95% and the number of passengers dropped by 97% between years
- Freight services were less affected
- Cost lower due to less production and actions taken to decrease negative effects of COVID-19
- Key focus on preserving cash as well as being well prepared to act as soon as demand improves
- Cash burn USD 68 million
| USD million | Q4 2020 | Q4 2019 | Change |
|---|---|---|---|
| Transport revenue | 37.8 | 245.0 | -207.2 |
| Aircraft and aircrew lease | 6.7 | 23.9 | -17.1 |
| Other operating revenue | 15.6 | 50.3 | -34.6 |
| Operating Income | 60.2 | 319.2 | -259.0 |
| Salaries and other personnel expenses | 46.1 | 110.1 | -64.0 |
| Aviation expenses | 26.3 | 113.1 | -86.8 |
| Other operating expenses | 21.1 | 84.0 | -62.9 |
| Operating Expenses | 93.5 | 307.2 | -213.7 |
| Depreciation and impairment | 26.9 | 48.7 | -21.7 |
| EBIT | -60.2 | -36.7 | -23.5 |
| EBIT ratio | -100.0% | -11.5% | -88.5 ppt |
| EBT | -97.0 | -40.1 | -56.9 |
| Net loss | -83.3 | -29.9 | -53.4 |
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Net loss USD 376.2 million
All main deviations from LY are directly related to C-19
- Revenue down by USD 1,071 million or 71%
- Freight services less affected with cargo revenue increasing by 14% year-on-year
- COVID related impairments of USD 136.1 million
- Impairments related to goodwill of USD 116.2 million
- Impairments of investments in associates of USD 19.9 million
- USD 10.5 million were recognized as loss on fair value changes in the Company's warrant liability due to a rise in its share price.
| USD million | 12M 2020 | 12M 2019 | Change |
|---|---|---|---|
| Transport revenue | 265.5 | 1,159.5 | -894.0 |
| Aircraft and aircrew lease | 64.7 | 91.6 | -26.9 |
| Other operating revenue | 103.3 | 253.3 | -150.0 |
| Operating Income | 433.6 | 1,504.5 | -1,070.9 |
| Salaries and other personell expenses | 207.9 | 429.3 | -221.4 |
| Aviation expenses | 171.5 | 568.5 | -397.0 |
| Other operating expenses | 140.7 | 368.8 | -228.0 |
| Operating Expenses | 520.1 | 1,366.5 | -846.4 |
| Depreciation and impairment | 276.5 | 177.3 | 99.2 |
| EBIT | -363.0 | -39.3 | -323.7 |
| EBIT ratio | -83.7% | -2.6% | -81.1 ppt |
| EBT | -437.8 | -72.6 | -365.2 |
| Net Loss | -376.2 | -57.8 | -318.4 |
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Traffic Data
All operation heavily affected by COVID-19
2020 - changes from 2019
Pax = Passengers, ASK = Available Seat Km, LF = Load Factor, BH = Block Hours, FTK = Freight Tonne KM
A
Salaries and salary-related cost USD 207.9 million in 2020
Number of full-time employees down by 2,725 between years
Salaries and salary-related cost USD million
Number of FTEs end of year
Gender ratio
18
Fuel cost USD 76.5 million
Fuel cost
USD million
Fuel hedges
- Restructuring in July 2020 resulted in considerable reduction in hedged volume and a longer horizon
- Settlements accounted for in Fuel cost (USD 11.5 million) and financial expenses (USD 32.6 million)
- No new hedge contracts have been entered into since early 2020
- Negative mark-to-market of open hedge positions at year-end amounted to USD 17.3 million with a strike price of 663 USD/tonne
- Hedging policy under review
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All main deviations in expenses between years are directly related to the adverse effects of the pandemic
All figures are in USD millions
- H-L-C = Handling, Landing, Communication
RASK and CASK comparison between years difficult due to the significant drop in capacity
RASK and CASK overview
US cents
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Balance sheet
Assets
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Operating assets | 498.4 | 630.4 |
| Right-of-use assets | 119.8 | 134.0 |
| Intangible assets and goodwill | 60.3 | 175.2 |
| Other non-current assets | 73.7 | 75.5 |
| Total non-current assets | 752.2 | 1,015.2 |
| Other current assets | 23.4 | 22.7 |
| Derivatives used for hedging | 0.0 | 1.9 |
| Trade and other receivables | 99.3 | 124.9 |
| Assets classified as held for sale | 0.0 | 276.9 |
| Marketable securities | 41.7 | 0.0 |
| Cash and cash equivalents | 117.7 | 235.1 |
| Total current assets | 282.1 | 661.4 |
| Total assets | 1,034.2 | 1,676.6 |
Equity and liabilities
| 31 Dec 2020 | 31 Dec 2019 | |
|---|---|---|
| Shareholders' equity | 232.8 | 482.5 |
| Loans and borrowings non-current | 239.6 | 241.3 |
| Lease liabilities | 119.7 | 135.5 |
| Derivatives for hedging | 6.0 | 0.0 |
| Warrants | 18.6 | 0.0 |
| Other non-current liabilities | 17.1 | 49.1 |
| Total non-current liabilities | 401.0 | 425.9 |
| Loans and borrowings current | 24.0 | 80.0 |
| Lease liabilities | 26.9 | 23.0 |
| Warrants | 9.1 | 0.0 |
| Derivatives used for hedging | 11.3 | 1.6 |
| Liabilities classified as held for sale | 0.0 | 238.7 |
| Trade and other payables | 141.7 | 221.0 |
| Deferred income | 187.4 | 204.0 |
| Total current liabilities | 400.5 | 768.2 |
| Total liabilities | 801.4 | 1,194.1 |
| Total equity and liabilities | 1,034.2 | 1,676.6 |
Amounts in USD million
Net interest-bearing debt excluding lease liabilities USD 104 million
Decreased by USD 36 million from the beginning of the year
Equity ratio
Interest-bearing debt
Net lease liabilities
NIBD excl. lease liabilities
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Deferred income
USD 187 million
Vouchers valid for 3 years representing 50% thereof
Deferred income at year-end 2020
USD million
A
Liquidity position
USD 331 million at year-end
Liquidity developments in Q4 2020
USD million
Outlook
Bogi Nils Bogason
President and CEO Icelandair Group
A
We expect to reach previous capacity in 2024
Number of available seat kilometers (ASK) per year:
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|---|---|---|---|
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Iceland will continue to be an attractive tourist destination post-COVID
Iceland's small population, spaciousness and untouched nature are seen as positive attributes
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Lelandair route network
Changes in the competitive landscape are likely to rationalize capacity across the North Atlantic, creating opportunities for Icelandair's business model
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Increased focus on cargo operations which were successful in 2020
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Sales process for Iceland Travel initiated in line with Icelandair Group's strategy to focus on aviation
Iceland Travel is the leading incoming travel agency in Iceland
Boeing 737 MAX recertified as safe to fly
After almost two years on the ground
Icelandair has started preparation for the reintroduction with safety as #1 priority
- Software updates
- Various maintenance tasks
- Extensive pilot training
- Test flights
Delivery schedule
Spring 2021 Winter 2021/22
The Boeing 737 MAX is both cost-effective and more environmentally friendly
- Additional operational flexibility
- Supporting future development of the route network
- 37% fuel savings per trip compared to the Boeing 757
- 40% noise reduction despite more powerful engines
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Icelandair Group is in a strong position to scale up as soon as markets open again
| Proven and flexible business model | Improved competitiveness to ensure profitability going forward | Strong position in highly attractive Icelandic tourism market | Opportunities to grow unique transatlantic hub | Strong balance sheet and liquidity position |
|---|---|---|---|---|
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Q&A
Disclaimer
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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.
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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.
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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.
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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.
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This document must not be construed as investment advice or an offer to invest.
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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.
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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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