REG - Air Astana JSC - Financial and operational results for 3Q and 9M

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05/11/2024 08:00

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RNS Number : 8819K  Air Astana JSC  05 November 2024

5 November 2024

Financial and operational results for the third quarter

and nine months ended 30 September 2024

Strengthened financial performance

Key drivers: successful execution of mitigation plan for Pratt & Whitney
engine issues and reallocation of capacity to destinations with higher yield

 

Air Astana Joint Stock Company (the "Company" and, together with its
subsidiary FlyArystan, the "Group"), the largest airline group in Central Asia
and the Caucasus regions by revenue and fleet size, today announces its
financial and operational results for the third quarter and nine months ended
30 September 2024.

 

Highlights

Robust RASK, EBITDAR and margin growth continued in Q3

·      Total revenue and other income excluding non-recurring items(1)
increased 10.4% YoY to USD 410.0M (Q3 2023: USD 371.5M).

·      Adjusted EBITDAR excluding non-recurring items(1) was up 12.6%
YoY to USD 128.8M (Q3 2023: USD 114.4M). Adjusted EBITDAR margin excluding
non-recurring items(1) expanded to 31.4% (Q3 2023: 30.8%).

·      ASK up 8.4% YoY to 5.9B (Q3 2023: 5.4B).

·      RPK of 5.1B, an increase of 9.8% YoY (Q3 2023: 4.7B).

·      Proactive yield management across both airline brands resulted in
RASK excluding non-recurring items(1) growing 1.8% YoY to USD 6.95¢ (Q3 2023:
6.83¢), while CASK rose 2.8% YoY.

·      Negative growth gap between RASK and CASK improved from 2.0pp in
Q1 to 1.0pp in Q3.

·      Along with 8.4% capacity growth, the number of Group passengers
carried in the reporting quarter totalled 2.8M, an increase of 9.9% YoY, with
an average load factor of 87.0%, a 4.2pp uplift on the previous quarter and
1.1pp on Q3 2023.

 

Strong 9M performance with accelerated EBITDAR growth and margin

·      Total revenue and other income excluding non-recurring items(1)
increased 11.9% YoY to USD 996.2M (9M 2023: USD 890.6M).

·      Adjusted EBITDAR excluding non-recurring items(1) was up 11.1%
YoY to USD 267.4M (9M 2023: 240.7M) with adjusted EBITDAR margin excluding
non-recurring items(1) of 26.8% (9M 2023: 27.0%).

·      ASK increased 10.4% YoY to 14.6B (9M 2023: 13.2B).

·      RPK amounted to 12.3B, up 10.4% YoY (9M 2023: 11.1B).

·      RASK excluding non-recurring items(1) up 1.3% YoY to USD 6.82¢
(9M 2023: USD 6.73¢); CASK increased 2.7% YoY.

·      Total number of Group passengers carried in 9M 2024 grew by 12.6%
to 6.8M with a steady average load factor of 84.0%.

Notes:

(1) Non-recurring item (NRI):  Q3 2024 included net IPO related expenses of
US $2.0m. Q3 2023 included IPO related expenses of US $0.5m and revenue of US
$1.1m from the extraordinary market event (EME) impacted by partial
mobilisation in Russia. 9M 2024 included net IPO related expenses of US $11.4m
and donations of US $2.7m in connection with the flood situation in
Kazakhstan. 9M 2023 included IPO related expenses of US $0.9m and revenue of
US $10.0m from the extraordinary market event (EME) impacted by partial
mobilisation in Russia.

 

Peter Foster, CEO of Air Astana Group, commented:

"I'm pleased to report such a strong third quarter performance from the Group,
despite ongoing pressures across the broader aviation industry.

The successful execution of our Pratt & Whitney mitigation plan has
enabled us to outperform the wider sector and achieve accelerated EBITDAR
growth in the third quarter's peak season. It also demonstrates the value of
our central geographical location and flexible, dual-brand model. This has
enabled us to optimise capacity by swiftly reallocating aircraft from lower
performing Western routes towards higher margin routes in Asia and the Middle
East creating internal margin competition between our two airlines and
hundreds of routes. As a result, the Group has mitigated cost pressures and
delivered a robust adjusted EBITDAR margin of 31.4% 1 .

We are also making great strides in increasing the Group's capacity and
operational efficiency. Our fleet development plan remains ahead of schedule,
reaching 57 aircraft, and we have accelerated the simplification of our fleet
with the redelivery of two E2s in 2024, with the remainder scheduled for 2025.

We have successfully introduced additional central fuel tanks on the Airbus
A321LR enabling non-stop flights over long-haul distances. Starting with a
non-stop flight to London, Air Astana now offers one of the longest
narrow-body routes in the world on our most efficient fleet.

In August, we announced the signing of a codeshare agreement with Japan
Airlines (JAL), one of the world's best airlines. Together we will enhance
connectivity between Kazakhstan and Japan for both business and leisure
travellers, as well as more widely fostering greater movement of people and
goods between our two countries. The agreement with Japan Airlines is in the
context of ongoing evaluation of enhanced strategic partnerships with leading
airlines, in order to improve connectivity and access to key markets.

I would like to thank my colleagues for their hard work and continued
commitment to excellence and the highest levels of customer service, which is
the foundation of our growth. Our strong competitive position in a growing
aviation market provides a solid platform as we look to the future with
confidence."

 

Outlook

Guidance maintained on robust financial performance

As previously guided, RASK is expected to be outpaced by CASK in 2024 due to
industry-wide pressures. RASK growth is on track as proactive yield management
successfully narrows the negative gap between RASK and CASK. Capacity
continues to be realigned to ensure highest margin delivery and to mitigate
inflationary cost pressures, while retaining a load factor broadly consistent
with 2023, with Q3 2024 1.1pp ahead of Q3 2023.

Fleet development is expected to close out the year ahead of expectations,
with redelivery of E2s ahead of schedule. This will bring the total fleet to
57 aircraft by the end of 2024 across both brands (the initial plan was 56
aircraft), up from 49 at the end of 2023.

As a result of proactive and efficient cost management, and successful
execution of the mitigation plan for the Pratt & Whitney engine issues,
including a proactive resting programme in low seasons, the Group remains on
track to meet its medium-term expectation of mid-to-high 20s EBITDAR margin
with liquidity ratio above 25% and leverage below 3.0x Net Debt/EBITDAR.

 

Financial and Operational review

                                                                   9M-24  9M-23  % YoY   Q3-24  Q3-23  %YoY
 Passengers (millions)                                             6.8    6.0    12.6    2.8    2.5    9.9
 Aircraft (end of period - fleet)                                  56     47     19.1    56     47     19.1
 Load factor (%)                                                   84.0   84.0   0pp     87.0   85.9   1.1pp
 Revenue and other income excl. non-recurring items (million USD)  996.2  890.6  11.9    410.0  371.5  10.4
 Revenue and other income (statutory)                              996.5  900.6  10.6    409.3  372.6  9.9
 Adjusted EBITDAR excl. non-recurring items (million USD)          267.4  240.7  11.1    128.8  114.4  12.6
 Adjusted EBITDAR (statutory)                                      253.3  249.8  1.4     126.7  115.0  10.2
 Adjusted EBITDAR margin excl. non-recurring items (million USD)   26.8   27.0   -0.2pp  31.4   30.8   0.6pp
 Adjusted EBITDAR margin (statutory)                               25.4   27.7   -2.3pp  31.0   30.9   0.1pp
 ASK (billion)                                                     14.6   13.2   10.4    5.9    5.4    8.4
 RPK (billion)                                                     12.3   11.1   10.4    5.1    4.7    9.8
 RASK excl. non-recurring items (US cents)                         6.82   6.73   1.3     6.95   6.83   1.8
 RASK (statutory)                                                  6.82   6.81   0.2     6.94   6.85   1.4
 CASK excl. non-recurring items (US cents)                         5.98   5.83   2.7     5.65   5.49   2.8
 CASK (statutory)                                                  6.08   5.83   4.3     5,67   5.50   3.1
 Cash and bank balances (million USD)                              473.9  314.4  50.7    473.9  314.4  50.7
 Net Debt/EBITDAR (%)                                              1.3    1.2    0.1pp   1.3    1.2    0.1pp
 Cash/sales (%)                                                    37.3   26.5   10.8pp  37.3   26.5   10.8pp

 

Proactive capacity management supports continued RASK expansion

In the first 9M 2024, Air Astana reported a 10.4% YoY increase in Group ASK to
14.6B, with domestic ASK growing 15.7% YoY vs international of 6.4% YoY. This
growth reflects the Group's successful execution of its fleet expansion
strategy.

The unique geographical location along with its dual-brand model has enabled
the Group to be flexible in allocating resources to higher RASK routes. This
balanced passenger growth with a continued focus on operational cost
efficiency, which led to an improvement in the EBITDAR margin.

The Group RASK excluding non-recurring items(1) expanded by 1.8% YoY in Q3 and
by 1.3% YoY in 9M 2024, reflecting the Group's proactive capacity management
across both airline brands.

 

Unique geographical location provides flexibility to reallocate capacity to
higher performance routes in Asia and the Middle East

The Group's geographical location allows it to dynamically reallocate capacity
from lower performing markets such as Europe to stronger markets in Asia. In
Q3, particularly high demand was seen in regions across Asia, including India,
China (which benefitted from a visa-free scheme), Thailand, and the Middle
East as well as in the domestic Kazakh market.

During the reporting period, the Group announced new lifestyle services to
destinations in Asia - Vietnam and Thailand, while further boosting its
presence in the Middle East with new services to Dubai and Abu Dhabi,
reflecting the rapid growth in business and leisure traffic between Kazakhstan
and the region. The Company also expanded its network of services to Saudi
Arabia by launching direct flights to Jeddah and Medina from Shymkent and
Almaty, respectively.

In August 2024, Air Astana signed a codeshare agreement with JAL, one of the
world's best airlines, enhancing connectivity between Kazakhstan and Japan for
both business and leisure travellers, as well as more widely fostering greater
movement of people and goods between the two countries. The agreement with JAL
is in the context of ongoing evaluation of enhanced strategic partnerships
with leading airlines, in order to improve connectivity and access to key
markets.

In September 2024, Air Astana announced that it had completed the installation
of the first Additional Central fuel Tanks (ACT) on the Airbus A321LR enabling
non-stop flights over long-haul distances, making it possible to offer one of
the longest narrow body routes in the world. This modernisation is a key
component of Air Astana's long-term strategy to enhance operational
efficiency. It incorporates all the necessary technical and safety features,
providing passengers with more comfortable conditions for long-haul flights
and improving the airline's operational performance.

 

Highly effective cost management supports EBITDAR growth and keeps unit cost
at a very competitive industry level

As a result of operational cost efficiencies, the Group's CASK remains a key
competitive advantage. In the reporting quarter, the Group maintained
competitive CASK levels which resulted in the EBITDAR margin growing to 31.4%
from an already impressive 30.8% in Q3 2023. The moderate increase of 2.8% in
CASK excluding non-recurring items(1) was driven by industry-wide cost
inflation, higher airport rates, the Company's continued investment into
customer experience, and higher aircraft depreciation expenses from the fleet
expansion. This was largely offset by lower engineering and maintenance costs.

The Group remains focused on delivering operational excellence to contribute
to the operational cost efficiency. In Q3, the Group successfully completed
its first in-house 12-year C-check for the Airbus fleet, which allowed for
further cost optimisation.

Following the re-implementation of the Fuel Tankering programme earlier this
year, the Company achieved significant cost savings. Approximately 30% of fuel
is sourced internationally, which the Company hedges using call options. The
Group is fully hedged for the anticipated international fuel uplift for 2024
and Q1 2025, and partly for Q2 2025, at levels of USD 75-85 with options
without downside risk.

 

Robust balance sheet and leverage ratio

As at 30 September 2024, the Group cash position stood at USD 473.9M (9M 2023:
USD 314.4M) with a cash-to-sales ratio of 37.3% (9M 2023: 26.5%) before
available facilities.

Group Net Debt / Adjusted EBITDAR reduced from 1.5x in FY23 to 1.3x for 9M
2024, driven by organic cash generation and IPO proceeds.

On the back of strong cash flow and operating results, the Company has
voluntarily brought forward the remaining payments of finance leases for two
A320 family aircraft to Q3 and two more will be repaid in Q4. By the end of Q4
2024, all A320 family aircraft finance leases will have been fully repaid.

 

Fleet development ahead of plan

The Group's fleet expanded ahead of schedule from 49 aircraft at the end of
2023 to 57 aircraft year to date, already exceeding the Company's plan for
2024.

In line with the Group's fleet simplification strategy, Air Astana brought
forward the redelivery of Embraer E2s to 2024 with the remainder to complete
in 2025.

As part of the Pratt & Whitney mitigation plan, three additional A320ceo
family aircraft were delivered this year, and a further two are expected in Q1
2025.

The Group also signed the operating lease of seven additional Airbus A321neo
LR with deliveries expected to start from 2026. This is the largest ever
single order in our history, reflecting our confidence in the future of
Kazakhstan as an air transport hub.

 

Successful execution of the mitigation plan for Pratt & Whitney engine
issues - ahead of the industry

In March, Air Astana 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.

In Q3, the Company successfully executed its mitigation plan through
strategically resting the existing engines to optimise fleet deployment during
the peak season, increasing the number of A320 classic aircraft, and
purchasing seven and leasing three additional spare engines.

Successful execution of this plan resulted in accelerated EBITDAR growth in
the peak season of Q3.

 

Year-to-date results of share buy-back programme

 

On 30 April 2024, the Company commenced a buyback programme to purchase
ordinary shares of the Company ("Shares") and global depositary receipts
representing Shares ("GDRs") (the "Programme") in order to meet the Company's
obligations arising from its employee incentive programmes. For the first part
of the programme, the Company intends to purchase up to 4,786,800 Shares (in
the form of Shares and GDRs), which currently constitutes approximately 1.3%
of the total number of placed Shares of the Company (including those
represented by GDRs), for a maximum consideration of USD 12 million (including
ancillary costs).

 

As at 30 September 2024, the Company had purchased 1,936,620 Shares and
278,427 GDRs (representing 1,113,708 Shares) for a total consideration of USD
5.7M, completing 64% of the Programme.

 

Conference Call

 

Management will host a presentation webcast and live Q&A conference call
today, 5(th) November 2024 at 9.30 GMT (14.30 Astana time). The Q3 2024
results presentation and recording of the webcast will be made available on
the Company's website at https://ir.airastana.com (https://ir.airastana.com)
.

 

To join the event, visit the following pages:

 

In English language: Air Astana Q3 2024 Webcast
(https://url.uk.m.mimecastprotect.com/s/PEu3CERBZS6wMMJtwhJF7b5Vo?domain=mm.closir.com)

In Russian language: Air Astana Q3 2024 Webcast
(https://url.uk.m.mimecastprotect.com/s/GN8MCDkAYiO700KcWf0FjEEDG?domain=mm.closir.com)

The IFRS financial statements for 9M 2024 are available on the Company's
website in the "Financial Statements" section (https://ir.airastana.com
(https://ir.airastana.com) ).

 

For more information, please contact:

 Air Astana Group
 Irina Martinez (Head of Investor Relations)                  investor.relations@airastana.com (mailto:investor.relations@airastana.com)
 Bella Tormysheva (Vice-President, Corporate Communications)  media@airastana.com (mailto:media@airastana.com)

 Instinctif Partners (IR and PR Adviser to Air Astana Group)  airastana@instinctif.com (mailto:airastana@instinctif.com)
 Galyna Kulachek                                              +44 20 7457 2020

 Hannah Scott

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 Company operates a fleet of 57 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
Company 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. Air Astana was recognised by SkyTrax as the Best Airline in Central
Asia & CIS twelve times and received the Best Airline Staff Service in
Central Asia & CIS award eight times in a row. FlyArystan was recognised
as the Best Low-Cost Carrier in Central Asia & CIS at the SkyTrax awards
twice. Additionally, Air Astana was awarded a five-star rating in the major
airline category by the Airline Passenger Experience Association (APEX). The
Company 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

 

Disclaimer

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"Group") and the following applies to the information in this document (the
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This Information includes certain financial measures not presented in
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The Information contains forward-looking statements. All statements other than
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