REG - Air Astana JSC - Q1 Financial and Operational Results

Airbus SEAnnouncement

30/04/2024 08:15

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RNS Number : 4738M  Air Astana JSC  30 April 2024

30 April 2024

 

Air Astana Joint Stock Company

("Air Astana Group" or "the Group" or "the Company")

 

Financial and operational results for three months ended 31 March 2024

 

Robust financial performance on strong passenger demand

Increasing capacity ahead of peak summer period

 

Highlights

 

·      Strong revenue growth in seasonally weaker first quarter

o  Total revenue and other income excluding non-recurring items(1) increased
13.3% YoY to USD 264.7M.

o  EBITDAR excluding non-recurring items(1) was up 6.9% YoY to USD 50.0M.

o  RPK increased 13.5% YoY to 3.4B.

o  RASK excluding non-recurring items(1) decreased 1.6% YoY to US 6.41¢,
largely driven by the higher growth of FlyArystan which has a relatively lower
RASK compared to Air Astana.

 

·    Further passenger and capacity growth ahead of summer; fleet and route
expansion in line with growth strategy

o  Total number of carried passengers grew 18.5% YoY to 1.9M on load factor
of 81.2%.

o  ASK was up 15.2% YoY to 4.1B, comprising growth of 8.5% at Air Astana and
35.1% at FlyArystan.

o  Group fleet increased to 50 aircraft following delivery of one Airbus
A321neo to Air Astana in January (51 post-period with delivery of one Airbus
A320neo to FlyArystan in April).

o  FlyArystan executed a lease agreement for a further two A320ceo aircraft,
in addition to the earlier fleet plan, with deliveries expected in the first
quarter of 2025.

o  Rested engines during the first quarter as per plan in order to maximise
production during the summer peak.

o  Planning to add further capacity on certain Air Astana flights during peak
season due to high demand.

 

·      Cost-efficient model remains a key advantage in volatile market

o  The Company reached an agreement with Pratt & Whitney for compensation
and other support for the impact to the Group's operations arising from the
GTF neo engine availability issues.

o  CASK growth excluding non-recurring items(1) slowed 0.3% to US 6.31¢, a
significant cost advantage versus peers. This was supported by the higher
growth of lower CASK FlyArystan compared to the Air Astana brand.

 

·      Cost-efficiency continued

o  Delivery of three de-icing trucks to Almaty reducing dependence and
contributing to improved cost efficiency.

o  Installation and on-site-acceptance of the Cabin Emergency Evacuation
Training system. The facilities are now ready for use.

o  Internationally sourced fuel fully hedged for the first half of 2024 with
positions at USD 80/bbl and USD 85/bbl.

 

·      Robust balance sheet

o  Cash increased 33.8% to USD 369.5M with cash to sales ratio of 30.8%
(25.1% in Q1 2023) and leverage ratio reduced to 1.2x Net Debt/EBITDAR
compared to 1.6x in first quarter 2023, reflecting primary receipts from IPO
of USD 120M in February 2024.

 

·      Outlook for summer

o  The forward booking curve enables us to look at the summer with
confidence. The international booking curve is ahead of last year while
domestic bookings, which are characterised by last minute demand, are being
managed below 2023 in order to achieve higher RASK.

o  Summer schedule increases flights to popular and seasonal destinations:

§ Adding seasonal international flights to Podgorica, Tbilisi and Heraklion.

§ Increasing frequency to Central Asian and Caucasus capitals of Tashkent,
Bishkek, Tbilisi, Dushanbe, Baku as well as Urumqi in China.

§ Resuming direct international flights from Astana to Seoul and domestic
flights from Astana to Kostanay.

o  Additional summer capacity has been added to the routes demonstrating
strong demand such as Antalya, Georgia, China and South Korea.

o  Opening of the new international terminal in Almaty airport will support
our growth ambitions.

 

·      On track for medium-term targets

o  Strong customer demand across both brands, in particular international
routes.

o  The Group is on track to add net seven aircraft in 2024, bringing the
total fleet to 56 aircraft across both brands.

o  Fleet simplification has been accelerated by bringing forward the
redelivery of the first E2s into the second quarter of 2024.

o  CASK still expected to outpace the RASK in 2024 with load factor to remain
broadly consistent with 2023.

o  Medium-term expectation remains mid-to-high 20s EBITDAR margin with
liquidity ratio above 25% and leverage below 3.0x Net Debt/EBITDAR.

o  The Company is in the process of starting a share repurchase programme for
the first part of the Employee Incentive Programmes, with an amount of up to
US $12M. This part of the programme is expected to be completed by February
2025.

 

Notes:

1 Non-recurring items: impact of partial mobilization in Russia which caused
an extraordinary market event (EME) in first quarter of 2023 and IPO expenses
in first quarter of 2024.

 

Peter Foster, CEO of Air Astana Group, said:

"I'm pleased to report such a robust performance against strong prior-year
comparatives. This was achieved despite the traditionally weaker first quarter
demand and the impact of the quieter Ramadan period which fell almost entirely
into the first quarter this year.

Passenger demand remains strong across both Air Astana and FlyArystan,
underpinned by increasing levels of air travel within Kazakhstan, across
Central Asia and to our nearby mega markets of China and India. With
international bookings for the important summer period ahead of last year, we
are ramping up capacity by expanding the fleet and optimising resources.

Our unit cost remains a strategic advantage enabling us to expand short and
long haul routes while competing effectively with other airlines.

The Group's compensation and support agreement with Pratt & Whitney is
particularly important for helping to address costs incurred and capacity
constraints from the grounding of GTF engines. As part of our mitigation plan,
we have now taken delivery of a sixth purchased spare engine, two leased
engines and signed a lease agreement for a further two A320ceo aircraft in the
first quarter of 2025. This makes us well positioned to deliver further
profitable growth in the forthcoming summer season and beyond.

In recognition of the hard work and commitment shown by my colleagues, we have
also commenced share repurchases to enable our long term incentive programme.

Finally, I would like to extend my thanks to Adrian Hamilton-Manns for all he
has achieved over the last four years as he steps down from his role as
FlyArystan CEO for family reasons. I'm delighted to welcome Richard Ledger
back to Kazakhstan as Acting CEO of FlyArystan, and have no doubt he will
continue to deliver profitable growth at our low-cost carrier."

 

Summary

 

                                                                   Q1-24    Q1-23  % YoY
 Passengers (millions)                                             1.9      1.6    18.5%
 Aircraft (end of period - fleet)                                  50       43     16.3%
 Load factor                                                       81.2%    82.4%  (1.2pp)
 Revenue and other income excl. non-recurring items (million USD)  264.7    233.7  13.3%
 Revenue and other income (statutory)                              264.7    239.1  10.7%
 EBITDAR excl. non-recurring items (million USD)                   50.0     46.7   6.9%
 EBITDAR (statutory)                                               43.7     51.8   (15.7 %)
 ASK (billions)                                                    4.1      3.6    15.2%
 RPK (billions)                                                    3.4      3.0    13.5%
 RASK excl. non-recurring items (US cents)                         6.41     6.51   (1.6 %)
 RASK (statutory)                                                  6.41     6.67   (3.9 %)
 CASK excl. non-recurring items (US cents)                         6.31     6.29   0.3%
 CASK (statutory)                                                  6.46     6.30   2.6%
 Cash and bank balances (million USD)                              369.5    276.1  33.8%
 Net Debt (million USD)                                            350.9    485.9  (27.8%)
 OTP Group                                                         71.5%    72.5%  1.0pp

 

Compensation Agreement for Pratt & Whitney PW1100G Engines

In March, the Group reached an agreement with Pratt & Whitney that
provides compensation and other support for the impact to the Group's
operations arising from the GTF neo engine availability issues. The agreements
that we have with Pratt & Whitney, including our long term maintenance
contracts, will help address costs and will supplement the existing range of
robust operational initiatives to address these issues in a sustainable
manner.

The Group has also executed the purchase agreement for a sixth spare
engine PW1100 with IAE. This engine, which was delivered in April 2024, and
two additional leased engines, are aligned with the Group's mitigation plan
for engine issues.

 

Hedging strategy

Approximately 70% of the Company's fuel uplift is from Kazakhstan where it
sources primarily direct from the refineries and manages the logistics
including transportation. As result of avoiding intermediary organisations,
the Company benefits from reduced costs.

Approximately 30% of fuel is sourced internationally, which the Company hedges
using call options. The Group has fully hedged the anticipated international
uplift for the first half of 2024 with positions at USD 80/bbl and USD 85/bbl.

 

For more information, please contact:

 Air Astana Group
 Irina Martinez (Head of Investor Relations)                  investor.relations@airastana.com (mailto:investor.relations@airastana.com)

                                                              +7 727 258 41 36
 Bella Tormysheva (Vice-President, Corporate Communications)  media@airastana.com (mailto:media@airastana.com)

                                                              +7 727 258 41 35

 Instinctif Partners (IR and PR Adviser to Air Astana Group)  airastana@instinctif.com (mailto:airastana@instinctif.com)
 Damian Reece                                                 +44 7931 598 593
 Joe Quinlan                                                  +44 7493 867 439
 Vivian Lai                                                   +44 7493 867 459

 

About the Air Astana Group

Air Astana Group is the largest airline group in Central Asia and the Caucasus
regions by revenue and fleet size. The Group operates a fleet of 51 aircraft
split between Air Astana, its full-service airline that operated its inaugural
flight in 2002, and FlyArystan, its low-cost airline established in 2019. The
Group provides scheduled, point-to-point and transit, short-haul and long-haul
air travel and cargo on domestic, regional and international routes across
Central Asia, the Caucasus, the Far East, the Middle East, India and Europe.
In 2023, Air Astana was recognised eleven times in a row as the "Best Airline
in Central Asia and CIS" at the Skytrax World Airline Awards and received a
five-star rating in the major airline category by the APEX. FlyArystan was
also awarded the Skytrax Award for "Best low-cost carrier in Central Asia and
CIS" for the first time, and is one of the twelve Skytrax 4-Star airlines
globally. The Group is listed on the Kazakhstan Stock Exchange, Astana
International Exchange and London Stock Exchange (ticker symbol: AIRA).

 

Glossary of Terms

EBITDAR: Defined as profit for the period before income tax (expense)/
benefit, finance income, finance costs, foreign exchange loss, net and
depreciation and amortisation and lease costs (comprising aircraft variable
lease charges, spare engine lease charges, lease of spare parts, property
lease costs (office accommodation rent), rental of plant, machinery and ground
equipment).

ASK: Available Seat Kilometres

CASK: Cost per Available Seat Kilometre

OTP: On Time Performance

RASK: Revenue per Available Seat Kilometres

RPK: Revenue Passenger Kilometres

YoY: Year-on-Year

 

 

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