ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
FOURTH QUARTER RESULTS 2016
KEY RESULTS
In the 4Q16 Interjet total revenues added $5,242.6 million pesos that
represented an increase of 21.6% over the income generated in the 4Q15.
During the 2016 the revenues totaled $17,990.0 million pesos, representing
an increase of 19.1% over the income generated in 2015.
In the 4Q16, operating income was $ 68.1 million, with a margin of 1.3%. In
2016, net income totaled $ 599.0 million pesos with a margin of 3.3%.
In 4Q16, EBITDAR decreased $ 225.4 million pesos compared to the same
period of 2015, reaching $ 1,016.2 million pesos with a margin of 19.4%, in
relation to total revenue. In 2016, EBITDAR increased $ 239.4 million pesos
compared to 2015, reaching $ 4,108.1 million pesos, with a margin of 22.8%
over total revenue.
INTERJET recorded a net loss of $ 299.6 million pesos in 4Q16, compared to a net income of $ 203.8 million pesos in the same period of 2015. In 2016 a net profit of $ 20.0 million pesos was recorded, compared to a net income of $ 411.9 obtained in 2015.
4Q= Fourth quarter
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
Below is a summary of the selected consolidated and operating information, which is derived from the comparison of Interjet´s unaudited internal consolidated financial information for the fourth quarter of 2016 vs. 2015.
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
2016 2015 % CHANGE
ASK'S (millon) 4,685 3,543 32.2%
RPK'S (millon) 3,650 2,830 29.0%
LOAD FACTOR 77.9% 79.9% (2.0)pp
PASSENGERS (thousand) 3,099 2,793 10.9%
TOTAL REVENUE (million) 5,243 4,311 21.6%
REVENUE PAX (million) 4,707 3,742 25.8%
YIELD (pesos) 1.29 1.32 -2.3%
RASK (pesos) 1.12 1.22 -8.0%
CASK (pesos) 1.10 1.10 0.0%
CASK EXCLUDING FUEL (pesos) 0.81 0.85 -4.7%
EBITDAR (millon) 1,016 1,242 -18.2%
EBITDAR MARGIN (as % of total revenue) 19.4% 28.8% (9.4)pp
OPERATING INCOME (millon) 68 399 -83.0%
OPERATING MARGIN (as % of total revenue) 1.3% 9.3% (8.0)pp
NET INCOME (million) 300- 204 NM
NET MARGIN (as % of total revenue) -5.7% 4.7% (10.4)pp
bp: porcentual po ints
NM : Non meaningful
SELECTED FINANCIAL AND OPERATING INFORMATION
FOURTH QUARTER
ITEM
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
2016 2015 % CHANGE
ASK'S (millon) 16,083 13,596 18.3%
RPK'S (millon) 12,371 10,643 16.2%
LOAD FACTOR 76.9% 78.3% (1.4)pp
PASSENGERS (thousand) 11,122 10,483 6.1%
TOTAL REVENUE (million) 17,990 15,101 19.1%
REVENUE PAX (million) 16,369 13,686 19.6%
YIELD (pesos) 1.20 1.29 -7.0%
RASK (pesos) 1.12 1.11 0.9%
CASK (pesos) 1.08 1.03 4.9%
CASK EXCLUDING FUEL (pesos) 0.82 0.76 7.9%
EBITDAR (millon) 4,108 3,869 6.2%
EBITDAR MARGIN (as % of total revenue) 22.8% 25.6% (2.8)pp
OPERATING INCOME (millon) 599 1,107 -45.9%
OPERATING MARGIN (as % of total revenue) 3.3% 7.3% (4.0)pp
NET INCOME (million) 20.0 411.9 NM
NET MARGIN (as % of total revenue) 0.11% 2.73% (2.6)pp
bp: porcentual po ints
NM : Non meaningful
SELECTED FINANCIAL AND OPERATING INFORMATION
TWELVE MONTHS
ITEM
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
Market environment INTERJET operated during the 4Q16 in an environment defined by the following factors:
Depreciation of the average exchange rate. The closing exchange rate
for the quarter recorded a depreciation of the peso against the US dollar of
19.2% compared to the end of 2015, going from $ 17.3398 pesos per US
dollar at the end of 2015 to $ 20.6640 pesos per US dollar at the end of
4Q16.
Increase in fuel prices in pesos. During the period October-December
2016 the average price of fuel per liter paid by INTERJET increased by
20.9% compared to the same period in 2015, reaching an average price
per liter of $ 8.6 compared to $ 7.17 average per liter in 4Q15.
Slight economic growth. During the 2016 the Mexican economy showed a
slight recovery in the pace of economic growth. The General Indicator of
Economic Activity (IGAE) in 2016 grew 0.4% compared to the same period
of 2015.
Growth of passenger traffic in the domestic industry. According to
figures published by the DGAC, the passenger market for Mexican airlines
increased by 13.8% in the fourth quarter of 2016 over the previous year.
The volume of passengers in the domestic market increased 12.5%, while
the international market grew 15.3%.
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
Revenue
In the 4Q16 INTERJET total revenue increased 21.6% from $ 4,311.3 million
pesos in the 4Q15 to $ 5,243.0 million pesos in the 4Q16. This increase was
mainly due to an increase in passenger revenue.
Passenger revenue increased 25.8% from $3,742.3 million pesos in the 4Q15 to
$4,707.1 million pesos in the 4Q16, mainly due to a 16.5% increase in the average
rate. The international passenger revenue increased 55.5% in relation to the same
period of 2014. The Company is constantly reviewing fares and itineraries to
maximize its revenue.
Passenger revenue increased 25.8% from $ 3,742.3 million in 4Q15 to $ 4,707.1
million in 4Q16, mainly due to a 16.5% increase in the average rate and a higher
volume of passengers, mainly due to the international expansion of the airline. This
increase was partially offset by the negative effect on sales, caused by the safety
precautionary measure requested through the directive issued by the Russian
Aeronautical Authority in December 2016, in relation to the aircraft line SSJET100
worldwide.
The seats supply (ASK's) increased by 32.2% in the 4Q16 compared to the same
period of 2015, mainly due to the opening of new routes and an increase of
operations by the planned expansion of the Company through incorporating new
fleet.
Other income decreased 5.9%, from $ 569.0 million pesos in the 4Q15 to $ 535.5
million pesos in the 4Q16, mainly due to lower revenue from maintenance services
to third parties.
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
Operating expenses
Operating expenses increased 32.3%, from $3,912.3 million pesos in the 4Q15 to
$5,174.5 million pesos in the 4Q16. This increase was mainly due to: i) growth in
operations by incorporating 2 A321 and 1 A320 aircrafts that originated higher
costs, such as: maintenance, wages, salaries and benefits for crews, airport
operating and landing fees, aircraft and engine rents, depreciation for the
acquisition of aircraft and inherent expenses to the expansion of operations; ii) and
to the impact of the devaluation of the peso against the dollar. At the closing of
4Q16 the Company operated 22 SSJ100, 45 A320's and 3 A321's.
The unit cost per ASK in pesos (CASK) remained unchanged in relation to 4Q15,
as a result of higher expenses for additional operations, a larger fleet and
international expansion, which were partially offset by the income generated
through the new routes. On the other hand, the CASK excluding fuel decreased
5.2% over the same period of the previous year, as a result of the implementation
of the control of expenses program, mentioned in the 3Q16 results report, and a
greater supply of ASK's.
Fuel expenses on the 4Q16 increased by 55.7% from $889.4 million pesos in
4Q15 to $1,384.8 million pesos in the same period of 2016, mainly due to the
increase of 20.9% in the price per liter of fuel paid by the Company reaching an
average price per liter from $8.67 compared to $7.17 of 4Q15, the increase of
operations by approximately 12.9% from 26,050 operations in the 4Q15 to 29,398
operations in the same period of 2016, and by the impact of the devaluation of the
peso against the dollar in 2016.
Maintenance expenses increased 34.6% from $424.2 million in 4Q15 to $571.2
million in 4Q16 as a result of higher services to our fleet due to the increase in
operations generated by new routes, and to the increase in the fleet; as well as to
the impact on the devaluation of the peso against the dollar in 2016. These
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
expenses were also partially impacted by the event related to the directive issued
by the Russian Aeronautical Authority last December, mentioned above.
The costs for Airport operating and landing fees increased 57.6% from $ 563.0
million pesos in the 4Q15 to $ 887.1 million pesos in the 4Q16 as a result of an
increase of 12.9% in the number of operations during the 4Q16 mainly in the
international market compared to the same period of 2015. Likewise, this item was
negatively impacted by the effect of the event of the directive issued by the
Russian Aeronautical Authority last December, as well as by the impact of the
devaluation of the peso against the dollar.
Expenses for wages, salaries and crew benefits increased 13.0%, from $345.7
million pesos in 4Q15 to $390.5 million in 4Q16, mainly due to the 26.2% increase
in the number of crew employees, going from 1,305 in 4Q15 to 1,647 in the same
period of 2016, and to an increase in training and travel expenses, as a result of
the additional aircraft that were added in this period.
Selling expenses and advertising increased 41.4% from $387.7 million pesos in
the 4Q15 to $548.3 million pesos in the 4Q16 as a result of an increase in
advertising to promote new routes and of higher bank fees due to the increase in
sales.
The technology and administrative expenses decreased 14.4% to $410.0 million
pesos in the 4Q15 to $351.0 million pesos in the 4Q16 as a result of a decrease in
technology expenses and advisory services.
Aircraft and engine rents increased 18.2% from $504.6 million pesos in the 4Q15
to $596.4 million pesos in the 4Q16 reflecting both the effect of the depreciation of
the peso against the dollar, considering that the aggregate of our rents is in dollars,
and the increase in the fleet.
Depreciation expenses increased 4.0% from $ 338.0 million pesos in the 4Q15 to $
351.6 million pesos in the 4Q16 as a result of additional fleet by the acquisition of 2
A321 and 1 A320.
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
EBITAR
EBITDAR decreased 18.2% from $ 1,241.6 million pesos in the 4Q15 to $ 1,016.2
million pesos in the 4Q16. The EBITDAR margin reached 19.4% in the 4Q16
compared to the 28.8% regarding the same period of 2015.
Operating Income
Operating income in 4Q16 was $ 68.1 million pesos, compared to $ 399.0 million
pesos in 4Q15, with margins of 1.3% and 9.3% respectively. In 2016, operating
income decreased 45.9% from a net income of $ 1,107.4 million pesos in 2015 to
$ 599.0 million pesos in 2016. This was mainly due to the increase in revenues of
the Company, which was exceeded by an increase in operating expenses.
Comprehensive financing cost
Comprehensive financing cost increased 94.1%, from a cost of $ 185.2 million in
4Q15 to a cost of $ 359.5 million in 4Q16, as a result of the depreciation of the
peso against the US dollar, and of higher interest paid due to an increase of dollar
bank debts for the acquisition of flight equipment.
Net result
INTERJET reflected a net loss of $ 300.0 million pesos in 4Q16 and a net profit of
$ 20.0 million pesos in 2016 compared to net profits of $ 203.8 and $ 411.9 million
pesos generated in 4Q15 and 2015 respectively.
Comments to the statement of financial position and liquidity
As of December 31 2016, the Company had $ 1,395.7 million pesos in cash and
cash equivalents.
The net cash generated by operating activities in 2016 amounted $ 3,368.0 million
pesos.
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
Net cash used in investing activities mainly reflects payments for maintenance and
aircraft investments in accordance with the Company's business plan.
The net cash used in financing activities reflects higher bank loans for the
acquisition of aircraft and for working capital.
Relevant Event
As of January 6, 2017, the Shareholders' Meeting approved a capital increase in
the amount of $ 4,000.00 million pesos, which will be subscribed during the first
quarter of 2017. Giving effect to this subscription in stockholders' equity as of
December 31 2016, the amount of stockholders' equity after the aforementioned
subscription will be $ 8,445.5 million pesos. The sources of this subscription will be
mainly applied to the reduction of financial borrowings. Below is a Proforma
summarized balance sheet, giving effect to this capital contribution:
2016 CAPITALIZATION2016
PROFORMA
CURRENT ASSETS 3,727,825 3,727,825
LONG-TERM ASSETS 31,921,187 31,921,187
35,649,012 35,649,012
CURRENT LIABILITIES 12,936,930 -4,000,000 8,936,930
LONG-TERM LIABILITIES 18,266,618 18,266,618
31,203,548 27,203,548
STOCKHOLDER'S EQUITY 4,445,464 4,000,000 8,445,464
35,649,012 35,649,012
TOTAL ASSETS
Unaudited Summarized Condensed Consolidated Interim Statements of Financial Position as of
December 31 2016 , giving effect to the increase in capital described above would be as follows:
TOTAL LIABILITIES
Investor Relations Contact: Raul Lopez/CFO/+52 (55) 91785512
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
December 31, 2016 December 31, 2015
Assets
Current assets:
Cash and cash equivalents $1,395.7 $2,014.4
Accounts receivable 1,184.5 894.2
Recoverable taxes, mainly income tax and value-added tax 29.5 35.7
Inventories 159.2 252.1
Prepaid expenses 693.8 484.0
Total current assets 3,727.8 3,680.4
Advance payments to purchase flight equipment 1,636.1 1,476.6
Flight equipment, leasehold improvements, and furniture and equipment -
Net21,847.6 17,103.7
Prepaid maintenance 6,967.3 5,134.7
Deferred tax assets 24.7 45.9
Other assets - Net 181.0 85.2
Concession 43.8 43.8
Deposits on aircraft leases 1,220.6 674.0
Total $35,649.0 $28,244.3
Liabilities and stockholders’ equity
Current liabilities:
Notes payable to financial institutions $6,534.0 $7,836.4
Accounts payable 3,614.9 1,717.9
Other accounts payable and accrued expenses 1,259.5 819.9
Payable taxes other than income taxes 250.9 128.2
Air traffic liability 1,277.6 858.9
Total current liabilities 12,936.9 11,361.3
Long-term debt 12,227.5 10,104.2
Employee benefits and other deferred liabilities 1,675.4 9.4
Provision of maintenance and retirement conditions 4,349.3 3,034.8
Total liabilities 31,203.5 24,509.7
Stockholders’ equity:
Capital stock 900.0 900.0
Contributions for future capital increases 5.0 0.0
Translation effects of foreign operation 966.0 275.3
Retained earnings 2,541.3 2,528.4
Controlling interest 4,407.3 3,703.7
Noncontrolling interest 38.2 30.9
Total stockholders’ equity 4,445.5 3,734.6
Total $35,649.0 $28,244.3
ABC Aerolíneas, S.A. de C.V. and Subsidiaries
Unaudited Condensed Consolidated Interim Statements of Financial Position
(In millions of Mexican pesos)
As of December 31, 2016 and December 31, 2015
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
2,016.0 2,015.0 2,016.0 2,015.0
Operating revenues:
Passengers 4,707.1 3,742.3 16,369.0 13,686.2
Other 535.5 569.0 1,621.0 1,414.8
5,242.6 4,311.3 17,989.9 15,101.0
Operating expenses:
Aircraft fuel 1,384.8 889.4 4,268.1 3,702.7
Maintenance and return conditions 571.2 424.2 2,331.2 1,675.8
Airport operating and landing fees 887.1 563.0 2,747.6 2,029.0
Wages, salaries and benefits 390.5 345.7 1,422.4 1,121.5
Insurance and passenger service 93.8 49.7 247.9 191.2
Selling 548.3 387.7 1,678.6 1,337.5
Administrative and other 350.9 410.0 1,186.1 1,174.5
Flight equipment rentals 596.4 504.6 2,172.4 1,723.5
Depreciation and amortization 351.6 338.0 1,336.7 1,037.8
5,174.5 3,912.3 17,391.0 13,993.6
Operating income 68.1 399.0 598.9 1,107.4
Comprehensive financing cost:
Interest income 12.9 12.9 39.7 45.3
Interest expense -296.2 -297.6 -922.6 -739.6
Exchange loss – Net -76.2 99.5 309.4 3.8
-359.5 -185.2 -573.4 -690.6
Income before income taxes -291.3 213.8 25.5 416.8
Income taxes 8.3 10.0 5.4 4.9
Net income -299.6 203.8 20.0 411.9
ABC Aerolineas, S.A. de C.V. and Subsidiaries
Unaudited Condensed Consolidated Interim Statements of Profit
Three months ended December
31
Twelve months ended December
31
For the three and twelve months ended December 31, 2016 and 2015, respectively
(In millons of Mexican pesos)
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
Capital
Stock
Contributions
for future
capital
increases
Translation
effects of
foreign
operations
Retained
earnings
Non controlling
interests
Total
Stockholder´s
Equity
Balances as of December 31, 2014 $900.0 $5.0 $101.0 $2,127.5 $20.0 $3,148.5
Comprehensive Income:
Translation effects of foreign operations 0.0 0.0 174.2 0 0.0 174.2
Net income for the year 0.0 0.0 0.0 401.0 10.9 411.9
0.0 0.0 174.2 401.0 10.9 586.1
Balances as of December 31, 2015 $900.0 $5.0 $275.2 $2,528.4 $30.9 $3,734.6
Comprehensive Income:
Translation effects of foreign operations 0.0 0.0 690.8 0.0 0.0 690.8
Net income for the year 0.0 0.0 0.0 12.8 7.2 20.0
0.0 0.0 690.8 12.8 7.2 710.9
Balances as of December 31, 2016 $900.0 $5.0 $966.0 $2,541.3 $38.2 $4,445.5
ABC Aerolineas, S.A. de C.V. and Subsidiaries
Unaudited Condensed Consolidated Interim Statements of Changes in Stockholder´s Equity
For the years ended December 31, 2016 and 2015, respectively
(Millions of Mexican pesos)
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
December 31,
2016
December 31,
2015
Operating activities:
Net income (loss) 20.0 411.9
Income taxes recognized in income 5.4 4.9
Depreciation and amortization 1,336.7 1,037.8
Provision of maintenance and retirement conditions 1,314.5 1,675.8
Interest expense 922.6 739.6
Unrealized foreign exchange -1,915.5 -771.4
(Increase) decrease accounts receivable -290.1 -431.4
(Increase) decrease due from related parties 0.0 0.0
(Increase) decrease recoverable taxes, mainly income tax and valueadded tax -259.0 64.2
(Increase) decrease inventories 92.8 156.6
(Increase ) decrease prepaid expenses -209.8 -118.2
(Increase ) decrease deposits on aircraft leases -546.6 -124.3
Increase (decrease) accounts payable 1,897.0 710.3
Increase (decrease) other accounts payable and accrued expenses 453.4 202.1
Increase (decrease) payable taxes 122.8 -49.4
Increase (decrease) air traffic liability 418.6 79.0
Increase (decrease) employee benefits and other deferred liabilities 5.1 3.5
Net cash provided by operating activities 3,368.0 3,590.9
Investing activities:
Flight equipment, leasehold improvements, and furniture and equipment -2,421.7 -5,667.3
Long - term prepaid expenses -159.5 -276.6
Other assets -95.8 66.6
Prepaid maintenance -1,832.6 -1,034.3
Net cash used in investing activities -4,509.7 -6,911.6
Financing activities:
Net Financing 1,445.5 4,432.9
Interest paid -922.6 -739.6
Net cash provided by financing activities 523.0 3,693.2
Effects from exchange rates 0.0 -718.4
Net decrease in cash and cash equivalents -618.7 -345.9
Cash and cash equivalents at beginning of period 2,014.4 2,360.3
Cash and cash equivalents at end of period 1,395.7 2,014.4
ABC Aerolíneas, S.A. de C.V. and Subsidiaries
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(In millions of Mexican pesos)
For the twelve months ended December 31, 2016 and 2015
ABC Aerolíneas, SA de CV * Blvd. Puerto Aéreo S/N Zona Federal del Aeropuerto Internacional “Benito Juárez”
(AICM) C.P. 15620 México, D.F.
Glossary
ASK
Means, (available seat kilometer).
Represents the total number of seats flown by an airline multiplied by the number of kilometers
flown.
RPK
Means, (revenue passenger kilometer)
Represents the number of kilometers flown by paying customers.
Load Factor
It means the total seats filled airplane seats average.
It is determined by dividing the total RPK's between ASK's.
YIELD
It means performance indicator of pesos per kilometer.
YIELD POR RPK
It is determined by dividing passenger revenues divided by RPK's.
RASK
Means, (Revenues per Available Seat Kilometer)
It is determined dividing the TOTAL INCOMES between ASK's.
CASK
Means (Cost of Available Seat Kilometer)
Unitary average cost calculated by dividing total operating expenses by ASKs
CASK excluding fuel
It is determined by dividing total expenses, less fuel consumption, including ASK's.