AVIANCA HOLDINGS S.A. Avianca Holdings S.A. (NYSE: AVH) (BVC: PFAVH) presents the following results pertaining to the second quarter 2016 (2Q 2016). Financial and operational information is provided in millions of US dollars unless stated otherwise. The following information is presented in accordance with International Financial Reporting Standards (IFRS). The reconciliation between IFRS and non-IFRS financial information can be seen in the financial tables section of this report. Except when noted, all comparisons refer to second quarter 2015 (2Q 2015) numbers. Figures and operating metrics of Avianca Holdings S.A. (“Avianca Holdings” or “the Company”) are presented on a consolidated basis.
AVIANCA HOLDINGS S.A.
NYSE: AVH BVC: PFAVH
Financial Highlights
(6 months ended June 30th)
| ($ millions) | 1H-15 | 1H-16 | |||
| Revenues | 2.2Bn | 2.0Bn | |||
| EBITDAR | 329.4 | 381.2 | |||
| EBIT | 57.8 | 97.8 | |||
| EBITDAR1 | 345.1 | 393.3 | |||
| EBIT1 | 73.5 | 109.9 | |||
| Net Income | 10.7 | -20.0 | |||
Net income*1 | -2.9 | 17.4 |
*Excluding Fx and Derivative Charges
(3 months ended June 30th)
| ($ millions) | 2015 | 2016 | |||
| Revenues | 1.1Bn | 1.0Bn | |||
| EBITDAR | 135.7 | 166.3 | |||
| EBIT | 0.8 | 25.5 | |||
| EBITDAR1 | 140.0 | 178.4 | |||
| EBIT1 | 5.1 | 37.6 | |||
| Net Income | -22.8 | -23.2 | |||
| Net income*1 | -24.8 | -4.0 |
*Excluding Fx and Derivative Charges
Profitability
(6 months ended June 30th)
| 1H-15 | 1H-16 | ||||
| EBITDAR% | 15.1% | 19.3% | |||
| EBIT % | 2.7% | 5.0% | |||
| EBITDAR %1 | 15.9% | 20.0% | |||
| EBIT %1 | 3.4% | 5.6% | |||
| Net income % | 0.5% | -1.0% | |||
| Net Income%*1 | -0.1% | 0.9% |
*Excluding Fx and Derivative Charges
(3 months ended June 30th)
| 2015 | 2016 | ||||
| EBITDAR% | 12.8% | 17.2% | |||
| EBIT % | 0.1 % | 2.6% | |||
| EBITDAR %1 | 13.2% | 18.5% | |||
| EBIT %1 | 0.5% | 3.9% | |||
| Net income % | -2.1% | -2.4% | |||
| Net Income%*1 | -2.3% | -0.4% |
*Excluding Fx and Derivative Charges
Operational Highlights
(6 months ended June 30th)
| 1H-15 | 1H-16 | ||||
| Passengers | 13.62M | 14.20M | |||
| ASKs | 21.33Bn | 23.08Bn | |||
| RPKs | 16.82Bn | 18.10Bn | |||
| Load Factor | 78.9% | 78.4% | |||
| RASK | 10.21 | 8.54 | |||
| CASK | 9.94 | 8.12 |
(3 months ended June 30th)
| 2015 | 2016 | ||||
| Passengers | 6.9M | 7.1M | |||
| ASKs | 10.8Bn | 11.6Bn | |||
| RPKs | 8.5Bn | 9.0Bn | |||
| Load Factor | 78.7% | 78.1% | |||
| RASK | 9.85 | 8.35 | |||
| CASK | 9.84 | 8.13 |
Second Quarter 2016 Highlights
- The second quarter of the year proved to be a strong quarter for Avianca, as such, operating income (EBIT1) reached $37.6 million, posting an operating margin1 of 3.9%, a 341 bps increase over the same quarter of last year. Furthermore operating revenues amounted to $966.2 million for the quarter.
- These results were mainly driven by a 12.1% reduction in total operating costs1 as the Company continued to further capture benefits from lower oil prices, which in hand with the cost saving initiatives have led to a leaner cost structure. These figures were partially offset by a 10.7% decrease in passenger revenues due to a yield dilution of 16.1%, partly compensated by growth in traffic numbers (RPKs).
- Cost per available seat kilometer (CASK1) decreased 18.1% to 8.02 cents in 2Q 2016, compared to 9.80 cents in 2Q 2015. This figure was mainly driven by lower jet fuel prices which dropped 35% over the quarter. As the cost control initiatives continue to yield efficiencies, CASK ex-fuel1 declined 12.3% to 6.37 cents.
- EBITDAR1 for the 2Q 2016 was $178.4 million, while the EBITDAR margin1 reached 18.5%, a 528 bps increase when compared to 2015.
- Adjusted Net income1, excluding special items totaled -$4.0 million. As such, adjusted net income margin for 2Q 2016 reached -0.4%, a 192bps increase over the same period of 2015.
- Capacity, measured in ASKs (available seat kilometers), increased 7.4% during 2Q 2016, mostly due to the annualized effect of the international capacity deployed to Europe during 2015. Moreover the company continued to see robust traffic numbers in Europe, South America and the Caribbean. Furthermore, passenger traffic, measured in RPKs (revenue passenger kilometers), grew 6.5%, reaching a consolidated load factor of 78.1%.
- In accordance with the Company’s fleet plan, between April and June 2016, the Company took delivery of one A320S, while phasing out three A319's and two E190's. The phase out of these last two aircraft from the Embraer E190 family is part of Avianca's fleet optimization process which seeks to reduce operational complexity. Consequently, Avianca Holdings S.A. and its subsidiaries ended the quarter with a consolidated operating fleet of 174 aircraft.
CEO Message
Dear Shareholders
After over 100 days at the helm of the Company, I would like to share with you the flight plan that we have put together that will take Avianca to new heights. As we continue to strengthen the Company, we acknowledge that growing technology penetration in our markets, allow our customers to better compare different offerings in more detail. As such, our clients demand best in class products and services which Avianca strives to provide throughout its product offerings.
Thus, our new business plan is centered on our customers as the fundamental driver of our strategy. Supported by technology, our aim is to enhance customer experience and boost productivity. In order to set forth this action plan, we have defined four fronts that we will prioritize as follows: strengthen our hubs and core markets, develop a world class technological platform to constantly improve customer satisfaction and operational excellence, promote the full development of other business units and finally, develop long term strategic partnerships that will set the base for profitable business sustainability.
We strongly believe that a new customer centric organization will be the foundation for the new Avianca: “A world class airline based in Latin America that serves the globe with customers at the core of its strategy”. Therefore in the month of July, the Board of Directors approved a new organizational model as the foundation of the Avianca of the future. The new structure was designed based on best in class industry practices by all senior management of the Company in collaboration with an international consulting firm. This new model is meant to bring the Company closer to its customers and markets by empowering managers, increasing the number of direct reports and hence reducing organizational layers within the company. Leveraged on new technologies, this new structure aims to align corporate goals, increase team work, and improve productivity as we introduce a dual reporting matrix structure that will enable the Company to make faster and smarter decisions.
Despite seasonality and a traditionally weak second quarter for airlines in the region, the second quarter of the year proved to be strong for Avianca, as traffic numbers across our markets gained traction and the macroeconomic fundamentals continued to stabilize. As such, passenger traffic numbers expressed in RPKs grew by 6.5% over the same period of 2015. The latter mainly driven by stronger domestic markets and incremental traffic numbers in South America, the Caribbean and Europe. As part of our ongoing network optimization process, we continued to selectively grow in specific markets. Accordingly, we are proud to say that Avianca is the first airline to launch an international direct service to Cuzco, with 3 weekly frequencies from our Bogota Hub. Furthermore, over the second quarter of 2016 we managed to maintain a stable load factor of 78.1% across our network.
In line with our objective of developing a state of the art technological platform, we successfully inaugurated a brand new MRO facility near Medellin, with a total area of 42,125 square meters and 19,799 square meters in hangars and aircraft component repair facilities. This facility is one of the most advanced maintenance centers in the world and will enable us to achieve economies of scale in our maintenance operation across the regions we serve.
With the purpose of better serving our clients, we have continued to expand and strengthen our network through our international strategic partnerships, in line with this, we signed a new code share agreement with Etihad Airways. The latter will now enable our travelers to purchase their tickets to Abu Dhabi or Bogota with Avianca on flights operated by both carriers.
As part of our deleveraging strategy, we continued to work on our cost saving initiatives program launched in 2015. As such, we signed a new agreement with Amadeus, one of our key global distribution system providers. This new agreement will not only include new system features that will enable us to better interact with our customers, but also is expected to generate additional savings that will support a leaner cost structure.
Over the quarter, our loyalty program LifeMiles, continued to expand as our cobranded credit card base grew 25.5%, reaching 485,000 credit cards by quarter end. Furthermore the program ended with more than 6.7 million members, which represents a 9.3% increase over the same quarter of 2015.
Moreover, we managed to expand Avianca’s profitability as our revenues for the quarter reached more than USD 966 million while operational costs1 dropped by more than 12.0%. As a result, our operating margin1 grew by more than 341 basis points, reaching a consolidated EBIT1 margin of 3.9% for the quarter and 5.6% for the first half of the year. As such we reaffirm our 2016 EBIT margin guidance between 5.5% and 7.5%. Finally we reiterate our commitment with our stake holders to continue to focus on profitability and competitiveness as we put our customers and technology at the core of our strategy.
Sincerely,
Hernán Rincón
Chief Executive Officer
Consolidated Financial and Operational | 2Q-15 | 2Q-16 | ∆ Vs. 2Q-15 | ||||||||||||
ASKs (mm) | 10,780 | 11,575 | 7.4 | % | |||||||||||
RPKs (mm) | 8,488 | 9,037 | 6.5 | % | |||||||||||
| Total Passengers (in millions) | 6,936 | 7,073 | 2.0 | % | |||||||||||
| Load Factor | 78.7 | % | 78.1 | % | -67bp | ||||||||||
| Departures | 74,082 | 75,938 | 2.5 | % | |||||||||||
| Block Hours | 134,653 | 141.440 | 5.0 | % | |||||||||||
| Stage length (km) | 987 | 1,012 | 2.5 | % | |||||||||||
| Fuel Consumption Gallons (000's) | 112,045 | 120,446 | 7.5 | % | |||||||||||
| Yield (cents) | 9.8 | 8.2 | -16.1 | % | |||||||||||
| RASK (cents) | 9.8 | 8.3 | -15.2 | % | |||||||||||
| PRASK (cents) | 7.7 | 6.4 | -16.8 | % | |||||||||||
| CASK (cents) | 9.8 | 8.1 | -17.4 | % | |||||||||||
| CASK ex. Fuel (cents) | 7.3 | 6.5 | -11.3 | % | |||||||||||
| CASK (Adjusted) (cents) | 9.8 | 8.0 | -18.1 | % | |||||||||||
| CASK ex. Fuel (Adjusted) (cents) | 7.3 | 6.4 | -12.3 | % | |||||||||||
| Foreign exchange (average) COP/US$ | $ | 2,501.8 | $ | 3,249.0 | 29.9 | % | |||||||||
| Foreign exchange (end of period) COP/US$ | $ | 2,585.1 | $ | 3,022.4 | 16.9 | % | |||||||||
| WTI (average) per barrel | $ | 57.8 | $ | 45.4 | -21.5 | % | |||||||||
| Jet Fuel Crack (average) per barrel | $ | 16.1 | $ | 8.2 | -49.2 | % | |||||||||
| US Gulf Coast ( Jet Fuel average) per barrel | $ | 74.0 | $ | 53.6 | -27.5 | % | |||||||||
| Fuel price per Gallon (including hedge) | $ | 2.44 | $ | 1.58 | -35.0 | % | |||||||||
| Operating Revenues ($M) | $ | 1,061.3 | $ | 966.2 | -9.0 | % | |||||||||
| EBITDAR ($M) | $ | 135.7 | $ | 166.3 | 22.6 | % | |||||||||
| EBITDAR Margin | 12.8 | % | 17.2 | % | 443 bp | ||||||||||
| EBITDA ($M) | $ | 53.0 | $ | 89.4 | 68.6 | % | |||||||||
| EBITDA Margin | 5.0 | % | 9.3 | % | 426 bp | ||||||||||
| Operating Income ($M) | $ | 0.8 | $ | 25.5 | 3048.2 | % | |||||||||
| Operating Margin ($M) | 0.1 | % | 2.6 | % | 257 bp | ||||||||||
| Net Income ($M) | $ | (22.8 | ) | $ | (23.2 | ) | -1.9 | % | |||||||
| Net Income Margin | -2.1 | % | -2.4 | % | -26 bp | ||||||||||
| EBITDAR (Adjusted) ($M) | $ | 140.0 | $ | 178.4 | 27.5 | % | |||||||||
| EBITDAR Margin (Adjusted) | 13.2 | % | 18.5 | % | 528 bp | ||||||||||
| EBITDA (Adjusted) ($M) | $ | 57.3 | $ | 101.5 | 77.1 | % | |||||||||
| EBITDA Margin(Adjusted) | 5.4 | % | 10.5 | % | 510 bp | ||||||||||
| Operating Income (Adjusted) ($M) | $ | 5.1 | $ | 37.6 | 636.3 | % | |||||||||
| Operating Margin ($M) (Adjusted) | 0.5 | % | 3.9 | % | 341 bp | ||||||||||
| Adjusted Net Income ($M) | $ | (24.8 | ) | $ | (4.0 | ) | 83.9 | % | |||||||
| Net Income Margin (Adjusted) | -2.3 | % | -0.4 | % | 192 bp | ||||||||||
(Adjusted: Excluding non-cash Fx charges, gain or loss on derivative instruments and special items associated to one-time expenses described in footnote (1)) |
Management Comments on 2Q 2016 Results
The second quarter of the year proved to be a strong quarter for Avianca, the company reached an operating income (EBIT1) of $37.6 million while the operating income (EBIT1) margin came in at 3.9%, an increase of 341 bps over the same period of 2015. These results were mainly driven by a 12.1% reduction in total operating costs1 as the Company continued to capture lower fuel costs and efficiencies from its cost cutting initiatives. As such, CASK ex-fuel1 during 2Q 2016 declined 12.3% to 6.37 cents. The latter was partially offset by a 9.0% decline in total revenues, as passenger revenues continued to be pressured by FX depreciation and consequently lower yields, which dropped at the slowest pace over the last twelve months.
Total operating revenues amounted to approximately $966.2 million during 2Q 2016. This represents a decrease of 9.0% over the same quarter in 2015, primarily due to a 10.7% decline in passenger revenue as yields declined 16.1%. Cargo and other revenues, which represent 23.3% of total revenues, decreased 2.9% to $225.3 million during the quarter. The latter was mainly driven by a 2.3% decline in the average fare as well as a decrease in the total tons of transported associated to a lower volume of imports from North America to Colombia, Brazil and Ecuador. The latter was partially offset by higher courier revenues.
During 2Q 2016 the LifeMiles Loyalty Program continued to deliver positive results, revenues grew 33.5% when compared to the same period of 2015. In terms of membership growth, the quarter ended with more than 6.7 million members, which represents a 9.3% increase over 2Q 2015. During the same period, the retail coalition program continued to expand, as such commercial partners increased 13.2% to 300. Finally, in terms of active co-branded cards, LifeMiles ended the quarter with more than 485,000 cards, which represents a 25.5% growth when compared to 2Q 2015.
Throughout 2Q 2016, the Company carried more than 7.0 million passengers, an increase of 2.0% when compared to 2Q 2015. Traffic figures (RPKs) grew slightly below capacity (ASKs) leading to a consolidated load factor of 78.1% as the capacity deployed in 2015 continued to mature over the first quarter of 2016. As such, during June 2016, routes to Europe reached an average consolidated load factor of 92.8% and 86.6% from Bogota to Los Angeles. Furthermore, traffic numbers to South America and the Caribbean, over the quarter, continued to expand by 7.8% and 10.0% respectively.
Operating expenses1 for 2Q 2016 reached $928.6 million, which represents a decrease of 12.1% when compared to 2Q 2015. The latter was mainly driven by a decline of 30.1% in Fuel Expenses, associated to lower jet fuel prices and a decrease of 23.4% in Sales and Marketing mainly driven by the new agreement with Amadeus and the positive impact of COP depreciation. Furthermore, Aircraft Rentals decreased 6.9% as fleet deliveries over the last twelve months, such as the B787, have been financed through lower yielding financial leases. These results were partially offset by a 22.3% increase in Depreciations and Amortizations as the Company adjusted the selected aircraft family’s useful life and salvage value due to changes in market prices, as well as the amortization of pre-operative assets such as the MRO facility.
As part of the Company’s on-going fuel hedging strategy by the end of the 2Q 2016, a total of 148.7 million gallons were hedged, out of which 122.1 million gallons correspond to approximately 57.5% of the total expected volume to be consumed over 2016. The remaining volume represents around 3.0% of the total expected volume to be consumed from 2017 to 2018. The average price of the hedges was set at $1.38/gallon. During 2016 hedging expenses are expected to range between $5 to $7 million per quarter allowing us to cap hedging expenses and seize additional benefits from lower fuel prices throughout the year.
In accordance with the Company’s fleet plan, between April and June 2016, the Company took delivery of one A320S, while phasing out three A319's and two E190's. The phase out of these last two aircraft from the Embraer E190 family is part of Avianca's fleet optimization process which seeks to reduce operational complexity. Consequently, Avianca Holdings S.A. and its subsidiaries ended the quarter with a consolidated operating fleet of 174 aircraft.
The Company recorded other non-operating expenses of $47.2 million for the 2Q 2016, compared to a non-operating expense of $25.5 million for the same quarter of 2015. Non-operating expenses include interest expenses related to incremental aircraft debt and additional corporate debt as well as FX gain or losses. In addition the Company recorded expenses related to the foreign exchange non-cash translation adjustments of $12.4 million compared to a $4.4 million gain for the same period of 2015. This effect is primarily due to a loss in foreign exchange translation adjustments, consisting of the net non-cash gain (or loss from) of our monetary assets and liabilities denominated in Colombian Pesos, Argentinian Pesos, and Venezuelan Bolivares subject to the USD exchange rate.
The Company’s cash and cash equivalents and available-for-sale securities, ended the quarter at $372.3 million. Including short-term certificates and bank deposits, adjusted cash and cash equivalents and available-for-sale securities (other current assets) came in at $406.22 million, equivalent to about 9.8% of revenues for the last twelve months. As of June 30, 2016 the Company valuated its cash balances held in Venezuela at the latest DICOM exchange rate of 628.3 VEF per 1.00 USD, resulting in a total loss of $4.8 million. Accordingly, the carrying amount of cash balances held in Venezuela of $1.6 million have been classified as follows: $0.9 million as cash and cash equivalents, which is expected to be used over the next three months as part of the normal operations in Venezuela; $0.7 million as short-term restricted cash, which is expected to be used in the following 9 months.
In line with the deleveraging strategy, as of June 30, 2016, the Company’s leverage position (Net Adjusted debt to EBITDAR3) decreased to 6.3x from 6.8x on December 31, 2015. As such, the Company’s total long term debt amounted to $2.93 billion, while total liabilities came in at $5.00 billion.
Full Year 2016 – Outlook
We will continue to execute cost saving initiatives as well as revenue enhancing projects that are expected to yield results over the next two years. As such, the Company maintains its guidance for 2016 as follows:
Outlook Summary | Full Year 2016 | ||
| Total Passengers Increase from 2015 | 3.0% - 5.0% | ||
Capacity (ASKs) Increase from 2015 | 3.0% - 5.0% | ||
| Load Factor | 78.0% - 80.0% | ||
| EBIT Margin | 5.5% - 7.5% | ||
Analysis by ASKs (in U.S. cents)
| 2Q 2015 | 2Q 2016 | Var% | ||||||||
| Operating revenue: | ||||||||||
Passenger | 7,69 | 6,40 | -16,8% | |||||||
| Cargo and other | 2,15 | 1,95 | -9,6% | |||||||
| Total Operating revenues | 9,85 | 8,35 | -15,2% | |||||||
| Operating expenses: | ||||||||||
| Flight Operations | 0,14 | 0,13 | -5,5% | |||||||
| Aircraft fuel | 2,53 | 1,65 | -34,9% | |||||||
| Ground Operations | 0,95 | 0,88 | -7,3% | |||||||
| Aircraft rentals | 0,77 | 0,66 | -13,3% | |||||||
| Passenger services | 0,33 | 0,31 | -4,4% | |||||||
| Maintenance and repairs | 0,68 | 0,60 | -11,6% | |||||||
| Air traffic | 0,48 | 0,43 | -10,8% | |||||||
| Sales and marketing | 1,49 | 1,06 | -28,6% | |||||||
| General, administrative, and other | 0,37 | 0,44 | 19,3% | |||||||
| Salaries, wages and benefits | 1,62 | 1,41 | -13,2% | |||||||
| Depreciation and amortization | 0,48 | 0,55 | 13,9% | |||||||
| Total operating expense | 9,84 | 8,13 | -17,4% | |||||||
| Operating income | 0,01 | 0,22 | 2831,9% | |||||||
| Total CASK | 9,84 | 8,13 | -17,4% | |||||||
| CASK ex. Fuel | 7,31 | 6,48 | -11,3% | |||||||
| Total Cask (Adjusted) | 9,80 | 8,02 | -18,1% | |||||||
| CASK ex. Fuel (Adjusted) | 7,27 | 6,37 | -12,3% | |||||||
| Yield | 9,77 | 8,20 | -16,1% | |||||||
Non-IFRS Financial Measure Reconciliation
In USD Millions | ||||||||||
| 2Q2015 | 2Q2016 | Var% | ||||||||
| Net Income as Reported | (22,8) | (23,2) | -1,9% | |||||||
| Special items (adjustments): | ||||||||||
| (-) Gain on Sale of Property and Equipment (F100) | - | -2,0 | ||||||||
| (+) Loss on Sale of Property and Equipment (A319) | - | 6,4 | ||||||||
| (+) Loss on Adjustment of Aircraft Reasonable Value | - | 7,7 | ||||||||
| (+) Foreign Object Damage | 4,3 | - | ||||||||
| (-) Derivative Instruments | 1,9 | 5,3 | ||||||||
| (-) Foreign exchange gain (loss) | 4,4 | -12,4 | ||||||||
| Net Income Adjusted | (24,8) | (4,0) | 83,9% | |||||||
Reconciliation of Operating Cost per ASK Excluding Special Items
In US Cents | ||||||||||
| 2Q2015 | 2Q2016 | Var% | ||||||||
| Total CASK as reported | 9,84 | 8,13 | -17,4% | |||||||
| Aircraft Fuel | 2,53 | 1,65 | ||||||||
| Total CASK excluding Fuel as reported | 7,31 | 6,48 | -11,3% | |||||||
| (-) Gain on Sale of Property and Equipment (F100) | - | 0,02 | ||||||||
| (+) Loss on Sale of Property and Equipment (A319) | - | (0,06) | ||||||||
| (+) Loss on Adjustment of Aircraft Reasonable Value | - | (0,07) | ||||||||
| (+) Foreign Object Damage | (0,0) | - | ||||||||
| Total CASK excluding Fuel and special items | 7,27 | 6,37 | -12,3% | |||||||
Adjusted EBITDAR Calculation excluding special items
in US$ Millions | 2Q2015 | 2Q2016 | Var% | ||||||||
| Operating Revenues as Reported | 1.061,3 | 966,2 | |||||||||
| Operating Expenses | 787,6 | 750,0 | |||||||||
| Aircraft Fuel | 272,9 | 190,7 | |||||||||
| Operating Income as reported | 0,81 | 25,5 | 3048,2% | ||||||||
| (-) Gain on Sale of Property and Equipment (F100) | - | (2,0) | |||||||||
| (+) Loss on Sale of Property and Equipment (A319) | - | 6,4 | |||||||||
| (+) Loss on Adjustment of Aircraft Reasonable Value | - | 7,7 | |||||||||
| (+) Foreign Object Damage | 4,3 | - | |||||||||
| Operating Income adjusted | 5,1 | 37,6 | 636,3% | ||||||||
| Margin | 0,5% | 3,9% | |||||||||
| (+) Depreciation and amortization | 52,2 | 63,9 | |||||||||
| Adjusted EBITDA | 57,3 | 101,5 | 77,1% | ||||||||
| Margin | 5,4% | 10,5% | |||||||||
| (+) Aircraft Rentals | 82,6 | 76,9 | |||||||||
| Adjusted EBITDAR | 140,0 | 178,4 | 27,5% | ||||||||
| Margin | 13,2% | 18,5% | |||||||||
Interim Condensed Consolidated Statement of Comprehensive Income for the Six-month period ended June 30, 2015 and 2016 (Unaudited USD thousands)
| 2016 | 2015 | ||||||||||
| Operating revenue: | |||||||||||
| Passenger | $ | 1,532,733 | $ | 1,728,428 | |||||||
| Cargo and other | 438,412 | 448,581 | |||||||||
| Total operating revenue | 1,971,145 | 2,177,009 | |||||||||
| Operating expenses: | |||||||||||
| Flight Operations | 27,810 | 33,090 | |||||||||
| Aircraft fuel | 356,380 | 538,008 | |||||||||
| Ground operations | 203,632 | 205,347 | |||||||||
| Aircraft rentals | 156,515 | 162,311 | |||||||||
| Passenger services | 71,587 | 72,037 | |||||||||
| Maintenance and repairs | 142,851 | 153,270 | |||||||||
| Air traffic | 99,465 | 100,819 | |||||||||
| Sales and marketing | 278,934 | 315,029 | |||||||||
| General, administrative, and other | 91,029 | 85,791 | |||||||||
| Salaries, wages and benefits | 318,250 | 344,217 | |||||||||
| Depreciation, amortization | 126,912 | 109,273 | |||||||||
| Total operating expenses | 1,873,365 | 2,119,192 | |||||||||
| Operating profit | 97,780 | 57,817 | |||||||||
| Other non-operating income (expense): | |||||||||||
| Interest expense | (89,573 | ) | (78,284 | ) | |||||||
| Interest income | 6,457 | 10,484 | |||||||||
| Derivative instruments | 4,521 | 1,562 | |||||||||
| Foreign Exchange | (29,787 | ) | 27,743 | ||||||||
| Profit before income tax | (10,602 | ) | 19,322 | ||||||||
| Income tax expense- current | (13,798 | ) | (12,859 | ) | |||||||
| Income tax expense- deferred | 4,407 | 4,195 | |||||||||
| Total income tax expense | (9,391 | ) | (8,664 | ) | |||||||
| Net profit for the period | $ | (19,992 | ) | $ | 10,658 | ||||||
Interim Condensed Consolidated Statement of Financial Position (in USD thousands)
As of |
As of | ||||||
| (Unaudited) | (Audited) | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | 372,344 | 479,381 | |||||
| Restricted cash | 4,642 | 5,397 | |||||
| Accounts receivable, net of provision for doubtful accounts | 294,431 | 279,620 | |||||
| Accounts receivable from related parties | 27,831 | 23,073 | |||||
| Expendable spare parts and supplies, net of provision for obsolescence | 74,191 | 68,768 | |||||
| Prepaid expenses | 47,036 | 45,708 | |||||
| Assets held for sale | 7,677 | 3,323 | |||||
| Deposits and other assets | 159,736 | 130,724 | |||||
| Total current assets | 987,888 | 1,035,994 | |||||
| Non-current assets: | |||||||
| Available-for-sale securities | 71 | 793 | |||||
| Deposits and other assets | 177,311 | 246,486 | |||||
| Accounts receivable, net of provision for doubtful accounts | 99.176 | 59.713 | |||||
| Intangible assets | 408,404 | 413,766 | |||||
| Deferred tax assets | 17,341 | 5,847 | |||||
| Property and equipment, net | 4,589,054 | 4,599,346 | |||||
| Total non-current assets | 5,291,357 | 5,325,951 | |||||
| Total assets | 6,279,245 | 6,361,945 | |||||
Interim Condensed Consolidated Statement of Financial Position (in USD thousands)
As of |
As of | ||||||
| Liabilities and equity | |||||||
| Current liabilities: | |||||||
| Current portion of long-term debt | 403,547 | 412,884 | |||||
| Accounts payable | 482,118 | 480,592 | |||||
| Accounts payable to related parties | 10,604 | 9,449 | |||||
| Accrued expenses | 111,776 | 118,192 | |||||
| Provisions for legal claims | 17,761 | 13,386 | |||||
| Provisions for return conditions | 66,970 | 52,636 | |||||
| Employee benefits | 35,372 | 32,876 | |||||
| Air traffic liability | 496,017 | 433,575 | |||||
| Other liabilities | 14,102 | 12,691 | |||||
| Total current liabilities | 1,638,267 | 1,566,281 | |||||
| Non-current liabilities: | |||||||
| Long-term debt | 2,928,059 | 3,060,110 | |||||
| Accounts payable | 3,069 | 3,599 | |||||
| Provisions for return conditions | 104,785 | 109,231 | |||||
| Employee benefits | 158,115 | 127,720 | |||||
| Deferred tax liabilities | 20,438 | 13,475 | |||||
| Air traffic liability | 90,377 | 93,519 | |||||
| Other liabilities non-current | 24,501 | 15,375 | |||||
| Total non-current liabilities | 3,329,344 | 3,423,029 | |||||
| Total liabilities | 4,967,611 | 4,989,310 | |||||
| Equity: | |||||||
| Common stock | 82,600 | 82,600 | |||||
| Preferred stock | 42,023 | 42,023 | |||||
| Other capital reserve | 458 | — | |||||
| Additional paid-in capital on common stock | 234,567 | 234,567 | |||||
| Additional paid-in capital on preferred stock | 469,273 | 469,273 | |||||
| Retained earnings | 446,713 | 507,132 | |||||
| Revaluation and other reserves | 18,394 | 18,394 | |||||
| Total equity attributable to the Company | 1,294,028 | 1,353,989 | |||||
| Non-controlling interest | 17,606 | 18,646 | |||||
| Total equity | 1,311,634 | 1,372,635 | |||||
| Total liabilities and equity | 6,279,245 | 6,361,945 | |||||
Notes with regard to the statement of future expectations
This report contains statements of future expectations.
These may include words such as “expect”, “estimate”, “anticipate” “forecast”, “plan”, “believe” and similar expressions. These statements and the statements regarding the Company’s beliefs and expectations do not represent historical facts and are based on current plans, projections, estimates, forecasts and therefore you should not place undue reliance on them. Statements regarding future expectations involve certain risks and uncertainties. Forward-looking statements involve inherent known and unknown risks, uncertainties and other factors, many of which are outside of the Company’s control and difficult to predict. Avianca Holdings S.A. warns that a significant number of factors may cause the actual results to be materially different from those contained in any statement with regard to future expectations. Statements of this kind refer only to the date on which they are made, and the Company does not take responsibility for publicly updating any of them due to the occurrence of future or other events.
Glossary of Operating Performance Terms
This report contains terms relating to operating performance that are commonly used in the airline industry and are defined as follows:
A
ASK: Available seat kilometers represents aircraft seating capacity multiplied by the number of kilometers the seats are flown.
ATK: Available ton kilometers represents cargo ton capacity multiplied by the number of kilometers the cargo is flown.
B
Block Hours: Refers to the elapsed time between an aircraft leaving an airport gate and arriving at an airport gate.
C
CASK: Cost per available seat kilometer represents operating expenses divided by available seat kilometers (ASKs).
CASK ex-fuel: Represents operating expenses other than fuel divided by available seat kilometers (ASKs).
Code Share Agreement: refers to our code share agreements with other airlines with whom we have business arrangements to share the same flight. A seat can be purchased on one airline but is actually operated by a cooperating airline under a different flight number or code. The term “code” refers to the identifier used in flight schedules, generally the two-character IATA airline designator code and flight number. Code share alliances allow greater access to cities through a given airline’s network without having to offer extra flights, and makes connections simpler by allowing single bookings across multiple planes.
L
Load Factor: Represents the percentage of aircraft seating capacity that is actually utilized and is calculated by dividing revenue passenger kilometers by available seat kilometers (ASKs).
R
RASK: Operating revenue per available seat kilometer represents operating revenue divided by available seat kilometers.
Revenue Passenger: Represents the total number of paying passengers (which do not include passengers redeeming LifeMiles, frequent flyer miles or other travel awards) flown on all flight segments (with each connecting segment being considered a separate flight segment).
RPK: Revenue passenger kilometers represent the number of kilometers flown by revenue passengers.
RTK: Revenue ton kilometers represents the total cargo tonnage uplifted multiplied by the number of kilometers the cargo is flown.
T
Technical Dispatch Reliability: Represents the percentage of scheduled flights that are not delayed at departure more than 15 minutes or cancelled, in each case due to technical problems.
Y
Yield: Represents the average amount one passenger pays to fly one kilometer, or passenger revenue divided by revenue passenger kilometers (RPKs).
Second Quarter 2016 Earnings Results Conference
Call Day: August 22
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The Company has reported the 2Q 2016 numbers to the Colombian Financial Superintendence (Superintendencia Financiera de Colombia) and the U.S. Securities and Exchange Commission on August 19th after market close.
For further information please contact the Investor Relations Office at ir@avianca.com.
1 When indicated the figures exclude the following one-time items: $2.0M: Accounting gain on sale of a Fokker 100; $6.4M: Accounting loss on sale of an Airbus A319; $7.7M: Accounting loss on adjustment of Aircraft reasonable value. (6M and 2Q2015 figures exclude one-time expenses informed on previous earnings releases)
2 Cash and cash equivalents + Restricted Cash + Available for sale securities + Short Term Certificates of bank deposits (Financial Statements -Note 8)
3 Net Adjusted Debt to EBITDAR: (Current Portion of Long Term debt + Long Term Debt + (Annual Rents Expense x 7) – (Cash and Cash Equivalents + Restricted Cash + Available for sale securities)) /12M EBITDAR
View source version on businesswire.com: http://www.businesswire.com/news/home/20160822005190/en/
