REG - Air Astana JSC - Results for the six months ended 30 June 2024

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05/08/2024 08:15

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RNS Number : 0763Z  Air Astana JSC  05 August 2024

5 August 2024

"Air Astana" Joint Stock Company

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

 

Financial and operational results for the six months ended 30 June 2024

 

Record passenger demand supports strong revenue growth

Proactive capacity management enabled significant improvement in RASK and
EBITDAR in second quarter

 

Highlights

 

·      Strong growth of revenue and EBITDAR in H1

o  Total revenue and other income excluding non-recurring items(1) increased
12.9% YoY to USD 586.2M (H1 2023: USD 519.1M).

o  Adjusted EBITDAR excluding non-recurring items(1) was up 9.8% YoY to USD
138.7M. Adjusted EBITDAR margin excluding non-recurring items(1) was 23.7% (H1
2023: 24.3%).

o  ASK increased 11.8% YoY to 8.7B (H1 2023: 7.8B).

o  RASK excluding non-recurring items(1) increased 1.0% YoY to USD 6.73¢ (H1
2023: USD 6.67¢), offsetting 2.5% increase in CASK.

 

·      Growing momentum in Q2

o  Total revenue and other income excluding non-recurring items(1) increased
12.6% YoY to USD 321.4M (Q2 2023: USD 285.4M).

o  Adjusted EBITDAR excluding non-recurring items(1) was up 11.5% YoY to USD
88.7M with an improved Adjusted EBITDAR margin excluding non-recurring
items(1) in Q2 of 27.6%.

o  Proactive yield management across both airline brands resulted in RASK
excluding non-recurring items(1) growing 3.4% YoY to USD 7.02¢ (Q2 2023:
6.79¢).

 

·      Record first half passengers on increased capacity and new route
launches

o  Total number of Group passengers carried increased 14.6% to 4.0M with a
steady average load factor of 82.0% (H1 2023: 82.7%).

o  Strong growth across Asia.

o  Expanded capacity to China routes following higher growth of demand than
anticipated.

o  Strengthened connections to South Korea with resumption of twice-weekly,
direct Astana-Seoul flights in addition to daily Almaty-Seoul flights.

o  Launched four new charter destinations.

 

·      Fleet development ahead of plan

o  Added six aircraft in H1 2024, focused on narrow body fleet to service
home and near-home markets.

o  Group fleet size expanded ahead of plan from 49 aircraft at the end of
2023 to 54 aircraft during the period. By the end of the year, the Group now
expects to expand the fleet by an extra three aircraft than initially planned
(from 49 to 59 instead of 56).

o  Fleet simplification accelerated by bringing forward the redelivery of the
two Embraer E2s; in April and, post period, in early July.

o  Up to five additional A320ceo family aircraft in 2024-2025, two of which
were delivered in June-July 2024 with a third to be delivered in September
(A321ceo) and a further two in the first quarter of 2025.

o  In July 2024, an agreement for the operating lease of seven Airbus A321neo
LR was signed with deliveries starting from 2026.

 

·      Proactive mitigation of Pratt & Whitney engine issues, ahead
of the industry

o  Reached an agreement with Pratt & Whitney in March 2024 for
compensation and other support for the impact to the Group's operations.

o  Successfully rested fleet in low seasons to optimise fleet during high
season in summer.

o  Adding capacity with A320ceo aircraft in 2024-2025.

o  By the end of H1 2024 the Company purchased 7 spare engines.

o  One more spare engine added on lease in July 2024 in addition to two
leased in April 2024.

 

·      Industry-wide cost pressures mitigated by low-cost, flexible
model and optimising yield across brands

o  Continued focus on operational cost efficiency.

o  CASK excluding non-recurring items(1) increased 2.5% in H1 to US 6.21¢
(H1 2023: US 6.06¢), 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 partly
offset by lower Engineering and Maintenance costs.

o  Six in-house C-checks performed in H1 2024 and preparations underway for
12-year C-check planned for Airbus fleet in Q3 2024.

o  Sourcing Crew Rostering & Pairing Optimisers and a Document Management
System to contribute towards further improvement of operational efficiency.

 

·      New international terminal opened in main hub Almaty to support
structural growth

o  New international terminal at Almaty Airport became fully operational in
June 2024, increasing capacity from 8 million to more than 14 million
passengers per year and strengthening Almaty's position as the busiest hub in
Central Asia.

o  Brand new Shanyraq lounge in Almaty Airport dedicated to Air Astana's
Business Class and Nomad Club elite status customers to open in the coming
months in addition to the revamped Astana Shanyraq that was reopened in Q2.

 

·      Robust balance sheet and leverage ratio

o  Cash increased to USD 418.2M (H1 2023: USD 300.2M) with cash to sales
ratio of 33.9% (H1 2023: 26.1%) before available facilities.

o  Group Net Debt / Adjusted EBITDAR reduced from 1.5x in FY23 to 1.4x in H1
2024, driven by organic cash generation and IPO proceeds.

 

·      Outlook

o  The Group is well positioned for the summer with increased fleet and
network capacity.  Passenger demand remains strong across Air Astana and
FlyArystan with a positive booking curve for the seasonally stronger Q3.

o  RASK growth performance is on track, although this is still expected to be
outpaced by CASK in 2024, as previously guided. Capacity continues to be
realigned to ensure highest margin delivery and mitigate inflationary cost
pressures, while retaining a load factor broadly consistent with 2023.

o  Fleet development to close out the year ahead of expectations, with 12
additional aircraft joining the fleet and redelivery of two E2 ahead of
schedule. This will bring the total fleet to 59 aircraft by the end of 2024
across both brands (initial plan was 56 aircraft).

o  As a result of proactive fleet management, and despite the ongoing
challenges arising from Pratt & Whitney GTF engines, 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.

 

Notes:

(1) Non-recurring item (NRI):  H1 2024 include net IPO related expenses of
US$ 9.4m and donations in connection with the flood situation in the regions
of Kazakhstan of US$ 2.7m. H1 2023 include IPO related expenses of US$ 0.4 m
and revenue from the extraordinary market event (EME) impacted by partial
mobilization in Russia of US$ 8.9m. Q2 2024 include net IPO related expenses
of US$ 3.1m and donations in connection with the flood situation in the
regions of Kazakhstan of US$ 2.7m. Q2 2023 include IPO related expenses of US$
0.1 m and revenue from the EME of US$ 3.5m.

 

Peter Foster, CEO of Air Astana Group, said:

"Our team delivered a robust performance in the first half of 2024 against a
backdrop of inflationary cost pressures across the sector. Total revenue
excluding non-recurring items increased 12.9% YoY in the first half of 2024
and 12.6% in the second quarter; adjusted EBITDAR excluding non-recurring
items was up 9.8% YoY in the first half with a margin of 23.7%, accelerating
to 11.5% growth in the second quarter with a 27.6% margin. We proactively
managed capacity in the first half to increase RASK by 1.0% YoY, accelerating
in the second quarter to 3.4% YoY and helping to offset a 2.5% H1 rise in
CASK. The Group's dual-brand model has enabled us to be flexible in allocating
resources to higher RASK routes, thereby balancing passenger growth with a
continued focus on operational cost efficiency.

Our fleet development plan is progressing ahead of schedule and we expect to
expand the total fleet by three more than originally planned to 59 by the end
of 2024. This increased capacity is one of several actions to mitigate
off-wing time from Pratt & Whitney engines and enable us to meet rising
demand for air travel across Kazakhstan and Central Asia. We also continue to
expand the network and strategically allocate capacity to important growth
regions such as China and South Korea.

I would like to congratulate my colleagues for their continued commitment to
excellence and the highest levels of customer service. This was recognised at
the recent Skytrax World Airline Awards as Air Astana and FlyArystan were once
again named the Best Airline and Low-Cost Carrier in Central Asia & CIS.

With passenger numbers at record highs and a strong booking curve for the
third quarter, we are well positioned for the peak summer season. Despite the
ongoing management of Pratt & Whitney engines and industry-wide cost
pressures, we are on track with our growth strategy and remain confident in
the Group's prospects in 2024 and beyond."

Summary

                                                                   H1-24   H1-23   % YoY    Q2-24   Q2-23   %YoY
 Passengers (millions)                                             4.03    3.52    14.6%    2.15    1.93    11.4%
 Aircraft (end of period - fleet)                                  54      44      22.7%    54      44      22.7%
 Load factor                                                       82.0%   82.7%   (0.7)pp  82.8%   83.0%   (0.2)pp
 Revenue and other income excl. non-recurring items (million USD)  586.17  519.11  12.9%    321.43  285.41  12.6%
 Revenue and other income (statutory)                              587.17  528.05  11.2%    322.43  288.93  11.6%
 Adjusted EBITDAR excl. non-recurring items (million USD)          138.68  126.30  9.8%     88.72   79.56   11.5%
 Adjusted EBITDAR (statutory)                                      126.54  134.80  (6.1%)   82.85   82.98   (0.2%)
 Adjusted EBITDAR margin excl. non-recurring items (million USD)   23.7%   24.3%   (0.7)pp  27.6%   27.9%   (0.3)pp
 Adjusted EBITDAR margin (statutory)                               21.6%   25.5%   (4.0)pp  25.7%   28.7%   (3.0)pp
 ASK (billion)                                                     8.71    7.79    11.8%    4.58    4.20    8.9%
 RPK (billion)                                                     7.14    6.44    10.9%    3.79    3.49    8.7%
 RASK excl. non-recurring items (US cents)                         6.73    6.67    1.0%     7.02    6.79    3.4%
 RASK (statutory)                                                  6.74    6.78    (0.6%)   7.05    6.88    2.4%
 CASK excl. non-recurring items (US cents)                         6.21    6.06    2.5%     6.12    5.86    4.5%
 CASK (statutory)                                                  6.36    6.06    4.9%     6.27    5.86    7.0%
 Cash and bank balances (million USD)                              418.19  300.23  39.3%    418.19  300.23  39.3%
 Net Debt (million USD)                                            407.47  405.96  0.4%     407.47  405.96  0.4%
 OTP Group                                                         75.9%   79.3%   (3.4)pp  79.9%   84.9%   (5.0)pp

Rounding differences may occur

 

Operational Update

 

The Group remains focused on delivering operational excellence to maintain its
fleet of aircraft with rigorous safety standards and providing advanced
training to its pilots and cabin crew staff.

 

During H1 2024, the Company achieved 97% utilisation of its Full Flight
Simulator following its opening last September. The device is the first in
Central Asia to be certified by the European Union Aviation Safety Agency
(EASA), reducing the overall training cost for the Company and travel time for
its staff. The Group signed a purchase agreement with L3 Harris in July 2024
for a second Full Flight Simulator. The enhanced infrastructure is expected to
enter service in H2 2025 and will provide the airline with increased capacity
to fulfil its growing Airbus pilot training requirements. In addition, the
Company plans to purchase Crew Rostering & Pairing Optimisers and a
Document Management System, as well as trialling flight optimisation
technology, all of which are expected to contribute to increased operational
efficiency.

 

Alongside these initiatives, management remains focused on efficiencies across
the business. Following the re-implementation of the Fuel Tankering programme
in mid-April, the Company achieved significant savings. Approximately 30% of
fuel is sourced internationally, which the Company hedges using call options.
The Group is fully hedged for the anticipated uplift in international fuel
prices for 2024 at levels of $80-85 with options without downside risk.

 

 

Sustainability Update

 

Air Astana is committed to becoming the most sustainable airline in the CIS
and Central Asia and achieving net zero emissions by 2050. The Group has
partnered with KazMunayGas and the European Bank for Reconstruction and
Development (EBRD) to co-finance a pre-feasibility study on the production and
utilisation of Sustainable Aviation Fuel (SAF) in the Republic of Kazakhstan.
The Group has committed to support the Association of Asia Pacific Airlines
resolution, setting a target of collective 5% SAF blending by 2030.

 

To support the new international terminal at Almaty Airport, Air Astana
donated upcycled furniture created by local artists using parts from an Airbus
A321 fuselage and interior structures from a Boeing 767. The project aims to
promote sustainability and reduce environmental impact.

 

In April 2024, Air Astana and FlyArystan provided humanitarian aid of KZT 1
billion as well as assistance to those affected by extreme flooding in Western
Kazakhstani regions. The airlines transported over 75 tons of food and
emergency goods without charge, offered free transport to volunteers helping
the victims, and operated an extra 41 relief flights from Western Kazakhstan.

 

 

Governance Update

 

In accordance with the previously announced plans, as provided for in the
Prospectus published before the IPO of the Company in February 2024, the
Non-Executive Director Mr. Myles St John Westcott, representative of
shareholder BAE Systems (Kazakhstan) Limited, stepped down from the Board of
Directors of the Company effective from 30 May 2024. Diyas Assanov, General
Director of the Siemens Regional company in Kazakhstan, was appointed as an
Independent Director, effective from 31 May 2024. As a result, the Company now
has five independent Non-Executive Directors on its Board of nine members,
further underscoring its commitment to high levels of corporate governance. In
May 2024, Richard Ledger was appointed Acting CEO of FlyArystan following the
resignation of Adrian Hamilton-Manns.

 

 

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 the end of July, the Company had purchased 808,037 Shares and 134,798
GDRs (representing 539,192 Shares) for a total consideration of USD 2.75M.

 

 

Air Astana and FlyArystan recognised for industry excellence in global awards

 

The Group was recognised with top honours at the 2024 Skytrax World Airline
Awards, in June 2024. Air Astana was named the Best Airline in Central Asia
& CIS for the twelfth time and received the Best Airline Staff Service in
Central Asia & CIS award for the eighth time. FlyArystan, Air Astana's
100% owned low-cost carrier, won the Best Low-Cost Carrier in Central Asia
& CIS award for the second time.

 

The Group also received several awards in the first half of the year for its
training and operations including "Most Innovative Education/Training
Programme" from AMCHAM Kazakhstan and across a range of categories at the 2024
World Travel Catering and Onboard Services Exhibition for the onboard service
experience.

 

The Group's leadership team was commended for its contribution to the business
and wider industry. In July, CEO Peter Foster received the Airline Business
Award at the Airline Strategy Awards 2024. This special award recognises
industry leaders seen to have made a lasting strategic contribution to the air
transport business and demonstrated strong leadership over an extended period.
The Group's CFO Ibrahim Canliel was also awarded 'The Best CFO' at the CFO
Summit Kazakhstan 2024.

 

 

Conference Call

 

Management will host a presentation webcast and live Q&A conference call
today, 5(th) August 2024 at 10.30 BST (14.30 Astana time). The H1 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 register for the event, visit the following pages:

 

In English language: Air (https://mm.closir.com/slidestranslated?id=165396)
(https://mm.closir.com/slidestranslated?id=165396) Astana
(https://mm.closir.com/slidestranslated?id=165396)
(https://mm.closir.com/slidestranslated?id=165396) H
(https://mm.closir.com/slidestranslated?id=165396) 1 2024
(https://mm.closir.com/slidestranslated?id=165396)
(https://mm.closir.com/slidestranslated?id=165396) Webcast
(https://mm.closir.com/slidestranslated?id=165396)

In Kazakh language: Air
(https://mm.closir.com/slidestranslated?id=777884&locale=kz)
(https://mm.closir.com/slidestranslated?id=777884&locale=kz) Astana
(https://mm.closir.com/slidestranslated?id=777884&locale=kz)
(https://mm.closir.com/slidestranslated?id=777884&locale=kz) H
(https://mm.closir.com/slidestranslated?id=777884&locale=kz) 1 2024
(https://mm.closir.com/slidestranslated?id=777884&locale=kz)
(https://mm.closir.com/slidestranslated?id=777884&locale=kz) Webcast
(https://mm.closir.com/slidestranslated?id=777884&locale=kz)
(https://mm.closir.com/slidestranslated?id=777884&locale=kz)

In Russian language: Air Astana H1 2024 Webcast
(https://mm.closir.com/slidestranslated?id=826269&locale=ru)

 

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)
 Hannah Scott                                                 +44 20 7457 2020
 Joe Quinlan
 Vivian Lai

 

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 54 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

 

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