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Board Presentation 2006

Group 8 Dickson CHAN / Michelle CHONG / Belle KWOK / Kevin LI / Jonathan WONG. Board Presentation 2006. Presentation Outline. Introduction Business model (comparison with similar airlines) Market Share Estimate Key Performance Indicators (Profit / Loss) Fleet Planning Summary.

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Board Presentation 2006

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  1. Group 8Dickson CHAN / Michelle CHONG / Belle KWOK / Kevin LI / Jonathan WONG Board Presentation 2006

  2. Presentation Outline • Introduction • Business model (comparison with similar airlines) • Market Share Estimate • Key Performance Indicators (Profit / Loss) • Fleet Planning • Summary

  3. Introduction Organisational Structure

  4. Introduction Mission Statement • To become the preferred airline • in the premium business travel market sector • in Australia and the World • DeliveringSafe, efficient and reliable air services • Innovative and personalised customer care Our Objectives • Provide at least one daily frequency between our destinations • To achieve average load factor of 70% in our first year • To become profitable within our first year

  5. Introduction Product and Services • All Business Class cabin • 60 passengers

  6. Introduction Product and Services • 2-2 configuration • 61 inch seat pitch • 22.9” inner seat width

  7. Introduction Network / Frequencies London (STN) Frequencies Hong Kong (HKG) HKG/SYD: 8 per week HKG/MEL: 7 per week HKG/STN: 12 per week Sydney (SYD) Melbourne (MEL)

  8. Business Model Developing the business model… Privatair Service operated on behalf of Lufthansa, KLM and Swiss International EOS premium business/first class service Maxjet: low fare business class service

  9. Business Model We are different from Ozjet... • Domestic: Network and Frequency • Fuel-inefficient 1970s aircraft • High cost of maintenance • Lack of travel agent support • High break-even seat factor • International: Comfort • Fuel-efficient (newest generation of 737) • New airframe, low maintenance costs • Ticket distributions on GDS • Better break-even seat factor

  10. Market Share Estimate Routes Forecasted NS06 Total Business Class Passenger Traffic Melbourne/ Hong Kong Melbourne/ London Sydney/ Hong Kong Sydney/ London Hong Kong/ London 36,600 32,700 60,200 74,700 102,600 Frequency Share (70%) 25.0% 33.3% 16.3% 16.7% 16.0% Capacity Share (30%) 22.4% 21.3% 13.5% 13.3% 10.2% Total Market Share 24.2% 29.7% 15.5% 15.6% 14.3%

  11. Key Performance Indicators • Yield (per route) • Unit Cost (per route) • Breakeven • Actual Seat Factor • Utilisation • Profit / Loss

  12. Key Performance Indicators Melbourne/ Hong Kong Melbourne/ London Sydney/ Hong Kong Sydney/ London Hong Kong/ London System-wide (NS06) Available Seat Km (million ASKs) 199.9 109.7 252.3 172.3 105.3 839.5 Expected Revenue Passenger Km (million RPKs) 637.3 65.6 164.8 68.6 198.1 112 75.9% Passenger Seat Factor 62.3% 82.4% 62.5% 78.5% 65.0% Allocated Capacity (one-way seats/day) - ~30 ~25 ~35 ~35 ~40 66.9% 60.0% 76.0% 59.8% 76.0% 56.2% Breakeven Seat Factor 28.8 31.1 24.7 31.1 24.7 33.7 Yield (cents/RPK) 18.8 Unit Cost (cents/ASK) 18.6 18.8 18.6 18.8 18.9 Aircraft Utilisation (hours/day) 14.7

  13. Key Performance Indicators Profit / Loss - NS06 (1) Melbourne/ Hong Kong Melbourne/ London Sydney/ Hong Kong Sydney/ London Hong Kong/ London System-wide Passenger Flight Revenue (A$ million) 20.4 40.7 21.3 49 47.2 178.6 Operating Expenditure (A$ million) (19.6) (37.5) (20.4) (47.3) (32.6) (157.5) Profit/Loss before interest and tax (A$ million) 0.8 3.2 0.9 1.6 14.6 21.1

  14. Key Performance Indicators Profit / Loss – NS06 (2) Skyways British Airways Cathay Pacific Qantas Operating Ratio 113.4% 109.5% 108.9% 110.3% Gross Profit Margin 11.8% 6.9% 7.8% 8.9%

  15. Fleet Planning Mission Requirements Boeing BBJ2 Range With 7 auxiliary fuel tanks - 10,460km Mission Requirements Route Distance (km) Sydney / Hong Kong 7372 Melbourne / Hong Kong 7387 London Stansted / Hong Kong 9582 Future Mission Requirements Brisbane / Hong Kong 6930 Perth / Hong Kong 6007 Paris / Hong Kong 9607 Frankfurt / Hong Kong 9171 Boeing BBJ2 Range Capability Chart

  16. Fleet Planning (2008-2012) Forecast 2006 Annual ASKs PRODUCED ASK (000s) Melbourne / Hong Kong 322,664 Sydney / Hong Kong 368,010 Stansted / Hong Kong 717,500 Annual ASKs required ASK (000s) 2008 2009 2010 2011 2012 Melbourne / Hong Kong 334,494 372,728 415,115 461,726 512,629 Sydney / Hong Kong 368,010 368,694 399,412 434,921 475,218 Stansted / Hong Kong 759,780 803,751 850,718 900,737 953,864 Note: Cells highlighted in Yellow indicates that the current ASKs would not meet the ASK requirements of that year

  17. Fleet Planning Aircraft Evaluations • Boeing 767-200ER • 102 seats / 2-2-2 configuration (similar to Maxjet) • max range 12,223km • Capable of carrying FRT • 10 tonnes on SYD-HKG • 3.7 tonnes on STN-HKG Figure: Boeing 767 family Range Capability Chart

  18. Summary • Business model proven in the Trans-Atlantic market • Applying this model on our market, avoiding Ozjet’s mistakes • Profit of $21.1 million AUD (NS06, before interest and tax) • Operating Ratio: 113.4%, Gross Profit Margin at 11.8% • Breakeven SF (66.9%); PAX SF (75.9%) • Aircraft Utilisation: 14.7 hrs per day • Fleet Planning: Acquiring additional BBJ2s for new routes 2 x 767-200ERs for London to Hong Kong

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