REG - Air Astana JSC - Full Year Results
15/03/2024 08:15
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RNS Number : 0198H Air Astana JSC 15 March 2024
15 March 2024
Air Astana Joint Stock Company
("Air Astana Group" or "the Group" or "the Company")
Full Year Results for the 12 months ending 31 December 2023
Strong passenger and capacity growth on sustained domestic and international
demand for air travel; positive outlook for 2024
Highlights
· Strong and resilient growth amid volatile market conditions
o Total revenue and other income was USD 1.2B (2022: 1.0B), an increase of
13.8% and 15.6% excluding extraordinary market event (EME)(1)
o Operating profit was USD 136.0M (2022: USD 148.7M), an increase of 12.9%
excluding EME and gain from fuel hedging (FH)(2)
o Profit after tax was USD 68.7M (2022: USD 78.4M), an increase of 21.5%
excluding EME and FH
o RPK increased by 11.3% to 14.6B (2022: 13.2B)
o ASK increased by 11.1% to 17.7B (2022: 15.9B)
o RASK increased by 2.4% to US 6.6¢ or 4.0% excluding EME
· Record passenger numbers; fleet and network expansion across Air
Astana and FlyArystan
o Total number of Group passengers carried increased by 10.1% to 8.1M with
an average load factor of 82.8% (2022: 82.7%)
o Group fleet size expanded to 49 aircraft during the period (2022: 43
aircraft)
o Number of flights increased to key destinations such as Turkey, India,
Thailand, Uzbekistan, Georgia and the Gulf, and expanded number of flights to
China with reinstatement of Beijing
o Group's international network further expanded with new routes to Jeddah
and Doha, as well as FlyArystan's seasonal routes from regions to Antalya and
Dubai
· High operational efficiency and industry-leading margins
o Adjusted EBITDAR(3) increased by 4.3% to USD 300.8M and by 15.7% excluding
EME and FH
o Adjusted EBITDAR margin(4) remained stable at 25.6% (2022: 27.9% and 25.6%
adjusted by EME and FH)
o CASK of USD5.9¢ (2022: USD5.6¢)
· Robust financial position
o Cash as of 31 December 2023 was USD 274.0M (2022: USD 252.9M), equivalent
to 23.3% of annual sales, excluding available facilities in the amount of USD
163.7M (pro forma liquidity ratio is 37.3%)
o Group NAD / Adjusted EBITDAR reduced to 1.5x (2022: 1.7x), driven by
organic cash generation and reduction in year-end lease liability balance
o Lease liabilities decreased to USD 718.9M (2022: USD 732.8M), despite
growth in fleet
o The Company is at a very advanced stage in positive negotiations for an
agreement with Pratt & Whitney that will provide compensation and other
support
· Continued delivery of operational excellence
o OTP was 79.5%, up 7.2% YoY
o Air Astana was awarded the Skytrax Award for "Best Airline in Central Asia
and CIS" for the 11th time and was awarded "Best Service in Central Asia
and CIS" for the second time. FlyArystan was awarded the Skytrax Award for
"Best low-cost carrier in Central Asia and CIS" for the first time.
o Commissioned a new Flight Training Centre in Astana, equipped with the
latest generation flight simulators and cabin crew training simulator,
certified by the EASA
o Successfully completed the first six-year C-Check at the carrier's
engineering and technical centre in Astana and the ninth IOSA audit.
(1) Adjusted EBITDAR for 2022 benefitted from the impact of partial
mobilization in Russia which caused an extraordinary market event (EME),
inflow citizens from Russia to and through Kazakhstan with impact of USD16.2M.
(2) Adjusted EBITDAR for 2022 benefitted from gain from fuel hedging (FH) in
the amount of USD 12.1M.
(3) 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).
(4) Defined as Adjusted EBITDAR expressed as a percentage of total revenue and
other income.
Peter Foster, CEO of Air Astana Group, said:
"We are pleased to report our first set of results as a public company
following our successful IPO across three stock exchanges last month. Air
Astana delivered another strong year of growth in 2023 with record passenger
numbers and increased capacity. All our markets continue to perform well and
we have demonstrated our ability to grow the business and maintain
sector-leading margins while managing cost headwinds across the industry. As
result, the Group EBITDAR excluding EME and FH has continued to expand by
another 16% in 2023.
The Group is scaling its operations across both the full-service and low-cost
carrier markets to gain market share and further develop our leadership
position in our extended home market of Central Asia and the Caucasus, which
is characterised by low air travel penetration. Our international customer
base continues to evolve with an expanded network of destinations as we
capitalise on our strategic location between air travel mega markets. This is
underpinned by our young, modern, fuel-efficient fleet, which increased during
2023 with the net addition of six new aircraft to close the year with a fleet
size of 49. This number has risen to 50 post period end and will increase to
at least 56 by the end of 2024.
The IPO proceeds will enable us to further expand our operations and increase
our carrying capacity. We are well positioned to capture the growth
opportunities from developing the underserved aviation market in Kazakhstan
and improving international connectivity."
Operational and Financial Summary
2023 2022 % YoY
Passengers (millions) 8.1 7.3 10.1%
Aircraft (end of period - fleet ) 49 43 14.0%
Load factor 82.8% 82.7% 0.1%
Revenue and other income (million USD) 1,174.5 1,032.4 13.8%
excluding EME and FH - 1,016.2 15.6%
Adjusted EBITDAR ('000 USD) 300,794 288,382 4.3%
excluding EME and FH - 260,084 15.7%
ASK (billions) 17.7 15.9 11.1%
RPK (billions) 14.6 13.2 11.3%
RASK (US cents) 6.64 6.48 2.4%
excluding EME and FH - 6.38 4.0%
CASK (US cents) 5.87 5.55 5.8%
excluding EME and FH - 5.63 4.3%
Cash and bank balances ('000 USD) 274,006 252,888 8.4%
NAD ('000 USD) 445,299 492,012 (9.5%)
OTP Group 79.5% 74.1% 7.2%
Outlook
The Group expects to report further growth in 2024, underpinned by increased
capacity and fleet expansion. This comprises the net addition of seven
aircraft, increasing the total fleet to 56 aircraft from 49 at 2023 year-end.
The growth will be sustained across both brands, in particular at FlyArystan
and on international routes.
The Group's extended home market of Central Asia and Caucasus remains a
leading growth opportunity, characterised by low penetration for air travel
and the Group's strong market position. In addition, nearby mega markets
including China and India as well as lifestyle destinations in Asia, Gulf,
Turkey and Europe present further growth opportunities for the Group.
While CASK is expected to outpace the RASK in 2024, the mid-term EBITDAR
expectation is mid-to-high 20s EBITDAR margin and the load factor to remain
broadly consistent with 2023.
In the medium term, financial robustness is expected to continue, with the
liquidity ratio above 25% and the leverage below 3.0x NAD/EBITDAR.
Conference Call
Management will host a presentation webcast and live Q&A conference call
on 15 March 2024 at 10:00 UK time (15:00 Astana time). The 2023 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 register for the event, visit the following pages:
In English language:
https://www.lsegissuerservices.com/spark/AIRASTANAJOINTSTOCKCOMPANY/events/77402f21-fe56-4a20-92f1-5b294f59e5fe
(https://www.lsegissuerservices.com/spark/AIRASTANAJOINTSTOCKCOMPANY/events/77402f21-fe56-4a20-92f1-5b294f59e5fe)
In Kazakh language:
https://www.lsegissuerservices.com/spark/AIRASTANAJOINTSTOCKCOMPANY/events/482972a9-a02e-4dd9-9010-e0c213af3981
(https://www.lsegissuerservices.com/spark/AIRASTANAJOINTSTOCKCOMPANY/events/482972a9-a02e-4dd9-9010-e0c213af3981)
In Russian language:
https://www.lsegissuerservices.com/spark/AIRASTANAJOINTSTOCKCOMPANY/events/529d095a-09dc-4807-b448-3eea4842e741
(https://www.lsegissuerservices.com/spark/AIRASTANAJOINTSTOCKCOMPANY/events/529d095a-09dc-4807-b448-3eea4842e741)
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 50 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
For definitions of terms, please refer to the Glossary below the Financial
Review.
Operational Review
In 2023, the Group made strong progress in its strategy to deliver profitable
growth in its domestic, near-home and international markets, capitalising on
an underserved domestic market in Kazakhstan and increased air travel
connectivity to neighbouring territories and further abroad.
Fleet and network expansion
The Group continues to support growth by fleet and network expansion. This is
strategically important as it provides its airline brands with increased
flexibility to add capacity on new routes as opportunities arise in the
fast-developing aviation markets of Central Asia.
In 2023, total aircraft increased from 43 to 49 at year end, flying to 43
destinations on 91 routes. Split out by brand, Air Astana added two aircraft -
an Airbus A321LRneo and A320neo - bringing its fleet size to 31 aircraft
across the A320 family, Boeing 767 and Embraer E190. FlyArystan increased its
fleet by four, taking delivery of A320 aircraft with 188 seat configuration,
which brings its total fleet to 18 aircraft exclusively across the A320
family. The net addition of six aircraft in 2023 focused on narrowbody A320neo
to service home and near-home markets, supporting the addition of new routes
and the densification of existing routes. The fleet remains young and modern
with an average age of 5.3 years across the Group.
The Group already operates more routes and serves more destinations than any
other airline in Kazakhstan, Central Asia and the Caucasus. This dominant
market position was extended in 2023 with the introduction of new routes to
important destinations in Asia. Air Astana introduced four new routes to
Jeddah, Doha and Tel Aviv (suspended), and reinstated flights to Beijing in
China. Meanwhile, FlyArystan launched routes to Delhi, Doha, Tashkent and
Urumchi, as well as seasonal routes from regions to Antalya and Dubai.
Increased carrying capacity and sustained load factor
The successful execution of the fleet expansion strategy in 2023 resulted in
an 11.1% increase in Group ASK to 17.7B and 11.3% increase in Group RPK to
14.6B. This continued the Group's sector-leading recovery post-COVID with ASK
up 19.7% and RPK up 40.2% on 2019. Despite the increased carrying capacity,
prudent management ensured the Company successfully maintained a strong load
factor of 82.8% at Group level, consistent with 82.7% in 2022 and
significantly up on pre-COVID levels of 70.7% in 2019. This was particularly
strong within FlyArystan, which increased its load factor from 86.7% to 89.2%
(flown; sold load factor 93%) while growing ASK by 14.8% YoY.
The Group RASK expanded by 2.4% in the period compared to the previous year, a
continuation of the positive trend for three consecutive years.
The Group stopped all flights to, from and over Russia in March 2022, which
remains the case. The RASK in 2022 had been positively impacted by the
non-recurring impact associated with the inflow of citizens from Russia to and
through Kazakhstan in Q4 2022 by road and other means, following partial
mobilization. This tailwind did not re-occur in Q4 2023. Excluding the impact
of Russia mobilization in 2022, RASK growth in 2023 was 4.0% YoY.
Split out by airline brand, the continued optimisation of Air Astana's
offering drove RASK growth of 2.4% for the airline in 2023, with a cumulative
RASK growth of 26.0% since 2019. Meanwhile, FlyArystan saw RASK growth of
11.0% in 2023, which reflected the continued optimisation of the network, as
well as growth in higher-RASK opportunities in international markets.
FlyArystan's independent management within the Air Astana Group allows it to
operate with one of the lowest CASK among internationally comparable LCCs.
This enables it to compete on new routes at a lower breakeven load factor
compared to the higher CASK airlines with which it competes.
A domestic champion and leader in the Central Asia and the Caucasus regions
The Air Astana Group remains the largest airline group in Central Asia and the
Caucasus based on number of seats. Within the domestic Kazakhstan market, the
Group's market share was 67% at 9.3M total seats. Since its launch in 2019,
FlyArystan has grown its share of the domestic market from 12% to 37%,
highlighting the popularity of FlyArystan's affordable airfares in its home
market and its important role in making low-cost travel attainable for a
greater proportion of the Kazakhstan population.
Despite recent growth, the Kazakhstan market continues to be underserved, with
a low propensity to travel creating significant untapped growth opportunities.
Air travel penetration in Kazakhstan remains only approximately half the level
of comparable emerging economies such as Turkey and Malaysia and even lower in
the region.
Significant growth in international traffic
Leveraging its leading position connecting Central Asia region with the rest
of the world and the continued liberalisation of air travel, the Air Astana
Group reached 45% market share on international routes from Kazakhstan in
2023. The Group's international passenger base has evolved significantly in
recent years, with both Air Astana and FlyArystan exiting the
Russian/Ukrainian markets. This has been replaced by expansion of their
networks to other international destinations, such as Turkey, Georgia, UAE,
Uzbekistan, Thailand, Greece, Montenegro and others. The Company saw
international ASK grow by 15.5% to 10.0B, compared to domestic ASK at 5.9% to
7.7B. International RPK increased by 13.4% to 7.6B, compared to domestic RPK
by 9.1% to 7.0B. In particular, FlyArystan's low-cost carrier model continues
to stimulate air traffic demand in Central Asia and Caucasus region, with an
exceptional 30.6% international ASK growth in 2023.
Management of Pratt & Whitney PW1100G Engines
In July 2023, Pratt & Whitney issued a product recall of engines due to
contaminated material used during engine manufacture, causing operational
disruptions for global airlines utilising A320neo aircraft. The Air Astana
Group currently has 28 A320neo aircraft equipped with the affected PW1100G
engines.
The Company has scheduled 32 engine removals. The Company is well placed to
continue to mitigate the operational impact through resting the existing
engines to manage the remaining cycles, net seven aircraft additions to the
fleet in 2024, optional additional CEO capacity and lease / purchase of spare
engines. To date, the Company has five existing additional spare engines and
is expecting three more engines (two leased and one purchased) in 2024.
Looking forward, the Company is pleased to note that it is at a very advanced
stage in positive negotiations for an agreement with Pratt & Whitney that
will provide compensation and other support to the Company for the impact to
its operations arising from the GTF neo engine availability issues.
Commitment to operational excellence and safety
The Group remains focused on delivering operational excellence to maintain its
fleet of aircraft with rigorous safety standards and providing advanced
training to its pilot and cabin crew staff.
In September 2023, the Group commissioned its new Flight Training Centre in
Astana, demonstrating its commitment to maintaining high standards of pilot
performance. The centre includes Kazakhstan's first full-flight simulator,
acquired from L3Harris and the first in Central Asia to be certified by the
EASA. The device, which simulates up to six levels of motion using accumulated
flight data, guarantees that the aerodynamics, flight control and ground
handling characteristics reflect reality. In addition to pilot training, the
Group invested training facilities for cabin crew, including a Cabin Emergency
Evacuation Trainer and a Real Fire Fighting Trainer required for mandatory
recurring training.
In December 2023, the Group successfully completed its first six-year C-Check
at the carrier's engineering and technical center in Astana. This was followed
by the completion of the Group's ninth IOSA audit. The Group was first audited
in 2007 and has subsequently reaffirmed its commitment to safety standards
every two years. The next audit will take place in 2025.
Fuel-efficiency with highest sustainability standards
The Group remains at the forefront of environmental initiatives, with one of
the youngest fleets in the industry and continuous efforts to reduce its CO(2)
footprint. In 2023, the Group's CO(2) emission per RPK dropped to 0.076,
demonstrating a consistent decrease since 2015.
A ten-year Low-Carbon Development Programme was developed in 2023, which has
set goals for the Group's reduction of greenhouse gas emissions and is
consistent with Kazakhstan's goal to achieve carbon neutrality by 2060. As
part of this programme, the Company is replacing old generation Airbus-family
aircraft with new generation A320 and A321neos equipped with new engines that,
according to Airbus, deliver up to 20% reduction in fuel consumption, 20%
reduction in CO(2) (NO(X)) emissions and 50% noise reduction when compared to
the prior generation of A320ceo family aircraft.
During this period, the Company also signed a Memorandum of Strategic
Partnership with PetroChina Int. Kazakhstan for SAF production. The Group is
part of the project sponsored by the EBRD, exploring options to develop SAF
production in Kazakhstan along with KazMunaiGas.
Award-winning customer service and employee engagement
The Group continues to be recognised for its award-winning levels of customer
service. In 2023, Air Astana was recognised as 'Best Airline in Central Asia
and CIS' at the Skytrax World Airline Awards for the eleventh consecutive year
and 'Best Service in Central Asia and CIS' for the second time. FlyArystan was
also recognised by Skytrax as 'Best low-cost carrier in Central Asia and CIS'
for the first time and was rated 4-Star by Skytrax, one of the twelve LCC's in
this category globally. Air Astana received several awards in the period by
the APEX, including a five-star rating in the major airline category.
Air Astana's NPS and CSAT averages in 2023 were 46 and 79, respectively, a 28%
and 5% improvement against 2022 averages of 36 and 75. FlyArystan's NPS and
CSAT averages in 2023 were 37 and 84, respectively, also an improvement of 16%
and 2% against 2022 averages of 32 and 84 respectively.
In 2023 FlyArystan launched several initiatives aimed at enhancing its
customer experience. This includes the launch of streaming in-flight
entertainment by adopting a bring your own device (BYOD) policy and installing
36 self-service check-in kiosks "iJan" across all domestic airports in which
FlyArystan operates.
The Group continues to engage with its staff as an employer of choice in
Kazakhstan. In 2023, the Group achieved recognition as the 'Most Attractive
Employer' within the transportation sector and ranked second among 100
companies in Kazakhstan with more than 1,000 employees, as revealed by The
Talentist, an extensive employer brand perception study conducted by Ipsos.
Furthermore, 2023 employee engagement survey results scored 4.13 out of 5.0,
an improvement from 4.10 in 2022.
Financial Review
2023 was the third year of sustained growth for the Group across operational
and financial metrics following the double crisis caused by the COVID-19
pandemic and the Russia-Ukraine conflict.
These results are presented on both a statutory basis and adjusted to exclude
the impact of two factors in 2022: firstly, the EME of the partial
mobilization in Russia in Q4 2022, which resulted in a one-off inflow citizens
from Russia to and through Kazakhstan between September and December 2022 with
a revenue impact of USD 16.2M; and secondly, a gain from FH to the amount of
USD 12.1M. It is management's belief that this adjustment better represents
the underlying performance of the Company.
Group revenue and other income increased by USD 142.1M or 13.8% in 2023 to USD
1,174.5M, compared to USD 1,032.4M in 2022. Excluding EME in 2022, revenue and
other income increased by USD 158.3M or 15.6%.
Adjusted EBITDAR grew by USD 12.4M or 4.3% to USD 300.8M compared to USD
288.4M in 2022. Excluding EME and FH, Adjusted EBITDAR increased by USD 40.7M
or 15.7% compared to USD 260.1M in 2022.
Operating profit fell by USD 12.7M or 8.6% to USD 136.0M compared to USD
148.7M in 2022. Excluding the effect of EME and FH, operating profit increased
by USD 15.6M or 12.9% from USD 120.4M in 2022.
Profit for the year was USD 68.7M, a reduction of USD 9.7M or 12.4% on 2022.
Excluding EME and FH in 2022, profit increased by USD 12.2M or 21.5%.
Net finance expenses increased by USD 2.8M or 8.8% to USD 35.1M in 2023
compared to USD 32.3M in 2022 primarily due to interest expense on lease
liabilities by USD 9.3M as a result of aircraft fleet expansion. However,
interest income on bank deposits increased by USD 7.8M.
Net foreign exchange loss for 2023 was USD 13.8M, an improvement of USD 1.3M
compared to a loss of USD 15.1M reported in 2022.
Total cash at the end of December 2023 was USD 274.0M, an increase of USD
21.1M or 8.4% compared to end of December 2022 (excluding available facilities
totalling USD 163.7M).
Revenue Drivers
The increase in 2023 revenue and other income was achieved by 11.1% and 2.4%
growth in ASK and RASK respectively.
Group (million USD) 2023 2022 Change (USD) Change, %
Revenue and other income
Passenger revenue 1,143.6 998.1 145.5 14.6%
Cargo and mail revenue 22.5 22.1 0.4 1.8%
Other income 8.4 12.1 (3.7) (30.8%)
Total revenue and other income 1,174.5 1,032.4 142.1 13.8%
During 2023, international ASK growth of 15.5% outpaced the domestic growth of
5.9% by almost three times. Both the Air Astana and FlyArystan brands expanded
in their extended home market of Central Asia and the Caucasus as well as
nearby international markets. While international ASK growth was double digit
across both brands, FlyArystan's international growth of 30.6% outpaced Air
Astana's 13.6%. The recovery of airport charges and the Kazakhstan Identity
& Security fee starting from June 2023 were further contributors to the
revenue increase.
Cargo revenue and mail revenue went up by USD 0.4M in total mainly due to a 2%
increase in cargo volumes, cargo type mix and increased co-mail revenue on
domestic routes.
Other income was lower by USD 3.7M due to insurance claims satisfied in
December 2022 totalling USD 4.6M.
Cost Drivers
Total operating costs increased by USD 154.9M or 17.5% compared to 2022, or by
USD 142.7M or 15.9% excluding FH. This mainly resulted from the 11.1% increase
in capacity YoY.
Group (million USD) 2023 2022 Change (USD) Change, %
Operating expenses
Fuel and oil costs 279.2 231.9 47.3 20.4%
Employee and crew costs 193.1 148.9 44.2 29.7%
Depreciation and amortization 162.0 135.2 26.8 19.9%
Engineering and maintenance 108.2 125.9 (17.7) (14.1%)
Handling, landing fees and route charges 105.7 84.9 20.8 24.5%
Passenger service 101.1 80.3 20.8 25.9%
Selling costs 40.4 33.3 7.2 21.6%
Other 48.8 43.3 5.5 12.7%
Total operating expenses 1,038.5 883.7 154.9 17.5%
In 2023, fuel costs went up by USD 47.3M or 20.4%. In the base year of 2022,
the Company recorded a fuel hedge gain totalling USD 12.1M, excluding which
the increase would have been USD 35.1M or 14.4%. The fuel consumption
increased by 8.8% while average fuel cost per metric ton in 2022 was USD 786,
up USD 32 or 4.2% compared to 2022.
Employee and crew costs increased by USD 44.2M or 29.7%, primarily impacted by
the adjustment of pilot salaries which are broadly in line with the
international market. In addition, number of employees across the Group
increased by 4.6% (number of operational personnel increased by 5.1%, while
number of administrative personnel went up by 2.0%). This cost base remains
one of the lowest in the industry.
The depreciation and amortization cost increased by USD 26.8M or 19.9%,
primarily driven by the growth in the fleet. This was partly offset by the
engineering and maintenance costs that were reduced by USD 17.7M or 14.1% in
2023. In addition, in 2022 expenses for the repair of the thrust reverser were
booked while the insurance claims reimbursement was recognised in December
2022 in the amount of USD 4.6M as other income.
Handling, landing fees and route charges, and passenger service charges
increased by USD 20.8M each or 24.5% and 25.9% respectively. While this was
impacted by general inflation, the key source of the cost growth was the
higher increase of international ASKs in comparison to domestic (15.5% and
5.9% respectively).
Selling costs went up by USD 7.2M or 21.6% compared to 2022 mainly due to
increased operations on higher cost international stations.
Other costs increased by USD 5.5M or 12.7% mainly due to increased expenses
for insurance by USD 2.7M as a result from fleet expansion and increased
operations as well as higher rates, and taxes by USD 2.5M mainly due to a
lower comparison base in 2022 (adjustment of previously posted accruals
withholding tax from non-resident companies) and increased expenses in 2023
due to taxes paid in India resulting from increased operations.
Mitigating industry-wide cost headwinds
The global airline industry continued to be impacted by cost inflationary
pressures in 2023. The Group CASK grew by 5.8%, including the effect of:
higher employee expenses mainly arising from pilot and crew salary increases;
higher depreciation expenses due to fleet expansion; and higher passenger
service expenses and handling, landing fees and route charges mainly due to
increased operations on international routes and inflation. The fuel component
of CASK grew by 8.4%, impacted by non-recurring USD 12.1M gain from fuel
hedging in 2022 and increase in average fuel price by 4.2%. Excluding fuel
hedge gain in 2022, the total Group CASK would have increased by 4.3% in 2023.
Fuel burn per ASK improved by 2.1%.
Jet fuel prices and availability are subject to market fluctuations, local and
global refining capacity, periods of market surplus and shortage, as well as
meteorological, economic and political factors and events occurring throughout
the world, which the Company can neither control nor accurately predict. Fuel
costs accounted for 27% the Group's total operating expenses in 2023, compared
to 26% in 2022. In 2023, the Group used approximately 348 thousand tonnes of
jet fuel, compared to 320 thousand tonnes in 2022. The Company continued to
take delivery of aircraft containing more fuel-efficient engines, such as the
Airbus A320neo, Airbus A321neo and Airbus A321LRneo models, replacing older
aircraft. Additionally, the Company seeks to manage fuel costs by procuring
directly from fuel producers and refineries in Kazakhstan whenever possible,
monitoring alternative suppliers for domestic and international stations, and
training its pilots for efficient fuel management.
Overall, the Company remains focused on mitigating the cost headwinds, for
example, carefully managing its relationship with key suppliers to ensure a
high level of quality and consistency of supply, while protecting its cost
position. Key suppliers for Air Astana Group include its airports, caterers
and external maintenance providers.
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.
Comfortable net debt position and strong balance sheet
Group NAD / Adjusted EBITDAR reduced from 1.7x in 2022 to 1.5x in 2023, driven
by organic cash generation and reduction in year-end lease liability balance,
comfortably within the Company's mid-term target of less than 3.0x.
The Company also repaid the EBRD loans of USD 47.7M (including the loan of USD
35M taken in 2023) and the finance lease deferrals of USD 21.6M ahead of
schedule.
In 2023, the Company saw a reduction in lease liabilities from USD 732.8M to
USD 718.9M despite growth in size of fleet. This was driven by the voluntary
early repayment of EXIM deferrals and the depreciation of capitalised leases
of existing aircraft.
The cash to sales ratio was at 23.3%, excluding the available facilities of
USD 163.7M. Pro forma liquidity ratio was 37.3%, including unutilised
facilities in the amount of USD 163.7M (14% of revenue).
Glossary of Terms
Adjusted 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
APEX: Airline Passenger Experience Association
CASK: Cost per Available Seat Kilometre
CIS: Commonwealth of Independent States
CSAT: Customer Satisfaction Score
EASA: European Aviation Safety Agency
EBRD: European Bank for Reconstruction and Development
EME: Extraordinary Market Event arising from the partial mobilization in
Russia in Q4 2022, which resulted in a one-off inflow citizens from Russia to
and through Kazakhstan between September and December 2022
EXIM: Export Import Bank of the United States
FH: Fuel Hedging
IOSA: International Air Transport Association's Operational Safety Audit
LCC: Low-cost carrier
NAD: Net Adjusted Debt
NPS: Net Promoter Score
OTP: On Time Performance
RASK: Revenue per Available Seat Kilometres
RPK: Revenue Passenger Kilometres
SAF: Sustainable Aviation Fuel
YoY: Year-on-Year
Income Statement
'000 USD 2023 2022 Change Change, %
(USD)
Revenue and other income
Passenger revenue 1,143,596 998,120 145,476 15%
Cargo and mail revenue 22,519 22,124 395 2%
Other income 8,399 12,138 (3,739) (31%)
Gain from sale and leaseback transaction - -
Total revenue and other income 1,174,514 1,032,382 142,132 14%
Operating expenses
Fuel and oil costs (279,172) (231,884) 47,288 20%
Employee and crew costs (193,067) (148,907) 44,160 30%
Depreciation and amortisation (162,011) (135,178) 26,833 20%
Engineering and maintenance (108,180) (125,891) (17,711) (14%)
Handling, landing fees and route charges (105,727) (84,933) 20,794 24%
Passenger service (101,136) (80,321) 20,815 26%
Selling costs (40,431) (33,254) 7,177 22%
Insurance (10,981) (8,317) 2,664 32%
IT and communication costs (6,538) (5,743) 795 14%
Consultancy, legal and professional services (5,729) (4,258) 1,471 35%
Taxes (3,920) (1,427) 2,493 175%
Property and office costs (3,865) (2,483) 1,382 56%
Aircraft lease costs (2,217) (3,893) (1,676) (43%)
Impairment loss on trade receivables (124) (394) (270) (69%)
Other operating costs (15,435) (16,784) (1,349) (8%)
Total operating expenses (1,038,533) (883,667) 154,866 18%
Operating profit 135,981 148,715 (12,734) (9%)
Finance income 14,806 6,995 7,811 112%
Finance costs (49,892) (39,254) 10,638 27%
Foreign exchange loss, net (13,803) (15,065) (1,262) (8%)
Profit before tax 87,092 101,391 (14,299) (14%)
Income tax expense (18,387) (22,977) (4,590) (20%)
Profit for the year 68,705 78,414 (9,709) (12%)
Basic and diluted earnings per share 0.225 0.256 (12%)
(USD)
(0.031)
Consolidated Balance Sheet
'000 USD 31 December 31 December Change Change, %
2023 2022 (USD)
ASSETS
Non-current assets
Property, plant and equipment 853,320 817,585 35,735 4%
Intangible assets 2,836 1,553 1,283 83%
Prepayments 18,451 15,517 2,934 19%
Guarantee deposits 33,302 29,520 3,782 13%
Deferred tax assets 37,040 18,487 18,553 100%
Trade and other receivables 1,343 1,300 43 3%
946,292 883,962 62,330 7%
Current assets
Inventories 67,548 49,175 18,373 37%
Prepayments 24,825 21,011 3,814 18%
Income tax prepaid 13,259 8,978 4,281 48%
Trade and other receivables 23,525 21,307 2,218 10%
Other taxes prepaid 10,247 8,378 1,869 22%
Guarantee deposits 1,979 3,516 (1,537) (44%)
Cash and bank balances 274,006 252,888 21,118 8%
Other financial assets 763 1,660 (897) (54%)
416,152 366,913 49,239 13%
Total assets 1,362,444 1,250,875 111,569 9%
EQUITY AND LIABILITIES
Equity
Share capital 17,000 17,000 - -
Functional currency transition reserve (9,324) (9,324) - -
Reserve on hedging instruments, net of tax (16,292) (25,398) 9,106 (36%)
Retained earnings 221,975 169,990 51,985 31%
Total equity 213,359 152,268 61,091 40%
Non-current liabilities
Loans - 4,162 (4,162) (100%)
Lease liabilities 543,896 574,211 (30,315) (5%)
Provision for aircraft maintenance 148,618 117,958 30,660 26%
Employee benefits 623 2,268 (1,645) (73%)
693,137 698,599 (5,462) (1%)
Current liabilities
Loans 412 7,934 (7,522) (95%)
Lease liabilities 174,997 158,593 16,404 10%
Deferred revenue 84,368 80,152 4,216 5%
Provision for aircraft maintenance 105,170 71,685 33,485 47%
Trade and other payables 91,001 81,405 9,596 12%
Other financial liabilities - 239 (239) (100%)
455,948 400,008 55,940 14%
Total liabilities 1,149,085 1,098,607 50,478 5%
Total equity and liabilities 1,362,444 1,250,875 111,569 9%
Cash Flows
'000 USD 2023 2022 Change Change, %
(USD)
OPERATING ACTIVITIES:
Profit before tax 87,092 101,391 (14,299) (14%)
Adjustments for:
Depreciation and amortisation of property, plant and equipment and intangible 162,011 135,178 26,833 20%
assets
Gain on disposal of property, equipment and other assets (3,499) (2,239) 1,260 56%
Change in impairment allowance for trade receivables, prepayments, guarantee (76) (2,428) (2,352) (97%)
deposits and cash and bank balances
Write-down of obsolete and slow-moving inventories (621) 4,290 (4,911) (114%)
Change in vacation accrual (316) (76) 240 316%
Accrual of provision for aircraft maintenance 85,830 80,514 5,316 7%
Change in customer loyalty program provision 2,774 962 1,812 188%
Foreign exchange loss, net 13,803 15,065 (1,262) (8%)
Finance income, excluding impairment (14,321) (6,274) 8,047 128%
Finance costs, excluding impairment 49,462 39,140 10,322 26%
Operating cash flow before movements in working capital 382,139 365,523 16,616 5%
Change in trade and other receivables (831) (3,807) (2,976) (78%)
Change in prepaid expenses and prepayments (5,625) 3,271 (8,896) (272%)
Change in inventories (16,787) (481) 16,306 3,390%
Change in trade and other payables and provision for aircraft maintenance (17,993) (732) 17,261 2,358%
Change in deferred revenue 1,442 21,930 (20,488) (93%)
Change in other financial instruments (129) 5,995 (6,124) (102%)
Cash generated from operations 342,216 391,699 (49,483) (13%)
Income tax paid (42,839) (47,003) (4,164) (9%)
Interest received 14,081 6,274 7,807 124%
Net cash generated from operating activities 313,458 350,970 (37,512) (11%)
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (41,777) (48,270) (6,493) (13%)
Proceeds from disposal of property, plant and equipment 4,980 1,974 3,006 152%
Purchase of intangible assets (2,116) (659) 1,457 221%
Bank and Guarantee deposits placed (9,979) (25,286) (15,307) (61%)
Bank and Guarantee deposits withdrawn 2,876 11,882 (9,006) (76%)
Net cash used in investing activities (46,016) (60,359) (14,343) (24%)
FINANCING ACTIVITIES:
Repayment of lease liabilities (173,302) (173,501) (199) 0.11%
Interest paid (42,717) (38,354) 4,363 11%
Repayment of borrowings and additional financing from sale and leaseback (46,640) (104,395) (57,755) (55%)
Proceeds from borrowings and additional financing from sale and leaseback 35,000 52,706 (17,706) (34%)
Dividends paid (16,776) - 16,776 -
Net cash used in financing activities (244,435) (263,544) (19,109) (7%)
NET INCREASE IN CASH AND BANK BALANCES 23,007 27,067 (4,060) (15%)
Effect of exchange rate changes on cash and bank balances held in foreign (1,888) (535) 1,353 253%
currencies
Effects of movements in ECL on cash and bank balances (1) (1) - -
CASH AND BANK BALANCES, at the beginning of the year 252,888 226,357 26,531 12%
CASH AND BANK BALANCES, at the end of the year 274,006 252,888 21,118 8%
Notes to the Financial Statements
For the full Financial Statements, including Notes, please refer to the
Group's Investor Relations website: https://ir.airastana.com/
(https://ir.airastana.com/)
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