#1العربية للطيران airarabia.com "Get to know who we are, and how we are painting the world map red!" Investor Presentation Q2 2012#2Disclaimer العربية للطيران airarabia.com Information contained in this presentation is subject to change without notice, its accuracy is not guaranteed and it may not contain all material information concerning the company. Neither we nor our advisors make any representation regarding, and assume no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. In addition, the information contains projections and forward-looking statements that reflect the company's current views with respect to future events and financial performance. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the company's assumptions are correct. Actual results may differ materially from those projected. This presentation is strictly not to be distributed without the explicit consent of Company management under any circumstance.#3Agenda 1. Business Description and Update 2. Industry Snapshot 3. Key Operating Metrics 4. Financial Performance 5. Funding Plan 6. The Way Forward العربية للطيران airarabia.com#4Aite airarabia.com العربية A6-ABJ 1. Business Description and Update#5Air Arabia at a Glance العربية للطيران airarabia.com Air Arabia is the national carrier of Sharjah, and a designated national carrier of the UAE First and largest low-cost airline in the MENA region 9.6 billion RPK 2011 (4.3% growth over the past year) Current fleet of 31 owned and leased Airbus 320s Currently operates to 75 destinations in 35 countries from three hubs (Sharjah, Casablanca & Alexandria) Highly profitable Low Cost Carrier business model. Break-even within the first full year of operations Strong balance sheet with over AED 1.3 billion in cash - 5-#6Q1 Key Highlights العربية للطيران airarabia.com Despite the continuous political and economic challenges, Air Arabia achieved strong year on year results by all metrics: 1.34 million passengers carried in Q2 (vs. 1.16 millions for Q2 2011) 85% load factor (vs. 83% 2011) 2 new aircraft were received in H1 2012 New destinations launched recently – Kazan (Russia), Taif (KSA), Salalah (Oman), Gasim, Yanbu (KSA), Moscow, Yekaterinburg (Russia) and Donetsk, Kharkiv (Ukraine) European credit agencies continue to finance Air Arabia's fleet -6-#7Robust Financial and Operational Performance (Q1) Financial Highlights (AED MM) Q2'12 Q2'11 Change Total Revenue Net Profit 729.6 592.2 23% 66 50.6 31% Operational Highlights Number of Pax (Millions) 1.34 1.16 15.5% RPK (Billions) 2.7 2.36 14.4% ASK (Billions) 3.15 2.87 9.8% Average Load Factor 85% 82.5% 3% -7- العربية للطيران airarabia.com#8Vision and Mission Vision - "To be one of the world's leading budget airlines” in terms of: Operational Excellence Reputation Innovation العربية للطيران airarabia.com Profitability Mission - "To revolutionize air travel in the region through an innovative business approach, offering superb value for money, and safe reliable reputation". To achieve that we will: Be Known for our Low Fares Grow our Business Profitably Demonstrate the Highest Operational Standards 8- Build Motivated Multi- Functional Teams Manage our Costs Ruthlessly#9Air Arabia Network □ Currently operates to 75 destinations in 35 countries from three hubs (Sharjah, Casablanca & Alexandria) ☐ Recent expansion into Eastern Europe (Ukraine) and Central Asia (Russia) Saudi is becoming an attractive destination from Sharjah and Alexandria □ Remains biggest international airline to fly to India with 13 destinations and over 102 flights per week Tanger Arimedan omles Cologne Bale Lyon Venise Montpeller Turin Barcelone Nador Casablanca Moscow Kiev Kharkiv Titanbul Donetsk Shehb Hub Destination Alexandra Hub Casablance Hab Nairobi Yekaterinburg العربية للطيران airarabia.com Almaty Aleppo Latakis Beink Damascus Tehran Kabul Peshawa Najaf Alexandria Shiras Kawat Assiut Sohag Dannan Bahrain Oxhi +Jaipur Kathmandu Gassim Lunor Tanbu Riyadh. Doha Sharjah Karachi Abu Dhabi Muscat Dhaka Ahmedabad Chittagong Jeddah Nagpur Mumbai Hyderabad Khartoum Goa Bangalore, Chenna -9- Cokin Colesbotare Kodi Thiruvananthapur Colombo العربية للطيران airarabia.com#10Air Arabia Group Structure JV'S & Subsidiaries الشارقة لخدمات الطيران Sharjah Aviation Services cozmo travel مقر العالم للسفريات . بسنترو CENTRO الشارقة Air Arabia Group 100% alpha flight services 41% ISA information systems associates Air Arabia Hangar Radisson BLU HOTELS & RESORTE Alpha Aviation Academy 49% العربية للطيران airarabia.com العربية للطيران airarabia.com المغرب maroc العربية للطيران airarabia.com مصر egypt العربية للطيران airarabia.com All Air Arabia hubs and JV's are managed by independent management teams that report directly to the Group Management Air Arabia Group supports and oversees its subsidiaries to ensure brand unity and financial strength - 10 -#11Hubs Overview Hub العربية للطيران airarabia.com العربية للطيران airarabia.com المغرب maroc . العربية للطيران airarabia.com egypt no Country Stake Description / Update UAE 100% Morocco 41% Egypt 49% -11- العربية للطيران airarabia.com Incorporated on October, 2003, Air Arabia, Sharjah- based, is the first and largest low cost airline in the MENA region JV between Moroccan investors, Air Arabia (41%). Air Arabia Maroc, managed by Air Arabia, started operations on April 29, 2009 The Casablanca hub serves niche destinations in Europe through several locations in Morocco and continues procuring for rights to fly into Africa to link it to Europe through Morocco In addition to Casablanca, Air Arabia Maroc also operates from Nador, Fez and Oujda into Europe JV between Travco Group (51%) and Air Arabia (49%), Air Arabia Egypt, managed by Air Arabia, started operations on May 22, 2010 Alexandria serves the Middle East and Europe and operates tourist charter flights to West Europe and Russia#12Key Data of Selected JVs and Subsidiaries الشارقة لخدمات الطيران Sharjah Aviation Services alpha flight services cozmo travel مقر العالم للسفريات ISA information systems associates Centro الشارقة العربية للطيران airarabia.com Revenue (AED MM) Stake H111 H1’12 50% 41.2 44.8 51% 16.3 19.6 AED 250 51% 10.9 20.4 51% 1.6 6.5 100% 11.9 150 room hotel situated BLU 100% 17.5 in Dubai Marina Radisson HOTELS & ASSORTE -12-#13Experienced Management Team العربية للطيران airarabia.com Air Arabia is led and managed by a core team of industry seasoned professional with a proven track record of successfully operating a company in a booming and competitive industry Adel Ali has been awarded a number of awards for his outstanding leadership and management Adel Ali Group CEO Paul Suckling Hubs COO's Finance M. Ahmad Operations Mohamed Ismail Engineering A. Bin Taliah Ali Al Hamdany Tony Whitbi Rachel Abraham Rohit R. Corporate Affairs IT Revenue Mgt. HR Commercial - 13-#14Corporate Governance العربية للطيران airarabia.com Air Arabia has put into practice international corporate governance standards, regulations and policies. This was recognized by ESCA and Air Arabia was awarded for being the first company in the UAE to successfully implement them Today, Air Arabia's board consists predominately of independent directors (4), one non- executive director, one executive director, and the Chairman ☐ 2 committees have been formed to serve under the board of directors: Audit Committee and the Remuneration and Follow up committee Board of Directors Sheikh Abdullah Bin Mohamed Al Thani Chairman Mr. Adel Abdulla Ali Executive Member Mr. Arif Naqvi Non Executive Member Dr. Ghanem Mohammed Al Hajri Non Executive Member Sheikh Mohammed Bin Abdullah Al Thani Non Executive Member Mr. Abdulwahab Mohammed Al Roomi Non Executive Member Mr. Taryam Matar Taryam Non Executive Member - 14-#15Recent Awards World Airline Award for best LCC in MENA by Skytrax (2007, 2008, 2009 & 2010) Low-cost carrier of the year at the Aviation Business Awards (2007, 2008, 2009 & 2010) □ World's best LCC for 2009 by Aviation week Worlds most profitable airline in 2008 ☐ Super brands Award 2010 & 2011 ESCA award for excellence in Corporate Governance ☐ Best managed company in Middle East aviation by Euromoney Innovation in Operation Award by Express Travel World Awards العربية للطيران airarabia.com AIRBUS A320 Family Award Best Operational Excellence For MUROMON air arabia 430 Family Fleets-10 aircra DOGG-00D World's Best A320 Operator Since 2005 Second Top Performing Airline WorldWide by Aviation week. العربية للطيران airarabia.com AVIATION -15- At A#16bewerbung unterszent R Air Arabia ma 1-20 NCHEN 2018 Candidate Cry viduell.de 2. Industry Snapshot - 16- Deutsche Post 51 55 www.marke-individuell.de العربية للطيران airarabia.com X55 Deutsche Post#17Air Transport Market Analysis RPKs Growth (Y-o-Y) "Only airlines in the Latin American and Middle East regions to have seen volumes grow at a double figure pace" 14% 12% 12% 10% 10% 1 9% 8% 6% 4% 2% 0% Latin America Middle East Europe Source: IATA, July 2011 5% 6% Industry: 6% 4% 4% 3% 2% Asia Pacific Africa North America العربية للطيران airarabia.com ASKS Growth (Y-o-Y) Total Passenger Load Factor 10% 9% 1 I 8% 8% 8% 90% 87% 84% 1 85% 82% 80% 80% Industry: 5% 4% 3% (% of ASKS) 80% 75% 70% 2% 65% 0% Middle East Europe Latin America Asia Pacific North America Africa -17- 60% Africa 73%#18Arab World Aviation Sector Overview (CAGR) 8% 6% 4% 2% 0% Middle East Traffic Growth ■2009-2018 2009-2028 16% 12% 8% 4% 500 0% العربية للطيران airarabia.com Int'l Passenger Growth Evolution in MENA Domestic & Intra- International Traffic Total Passenger Regional Traffic Traffic LCC Penetration - MENA Region (2007) Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 LCC Penetration - MENA Region 2011 Traditional Carriers, 98.6% Note: Penetration is based on number of passengers Source: IATA, SRS Analyzer, Airbus and AACO LCC, 1.4% Traditional Carriers, 94-95% - 18- LCC, 5-6%#19Existing Challenges العربية للطيران airarabia.com - Political Turbulence Further escalation in the political turmoil in several countries across the region continues, Restricted Skies - Even though more countries in the region are gradually opening up their skies, restriction on traffic rights remains an ongoing. challenge, Fuel Price - The global upward trend in fuel costs adds additional pressure upon all operating airlines globally. Two airlines in the Gulf filed for bankruptcy this year, Competition Scene - Gulf airlines seem to continue expansion plans amidst political & economical conditions. Arab intra-regional traffic shows increasing demand on air travel as a preferred method of transportation. Despite all the existing challenges, Air Arabia had a seat factor of 82% and achieved over 11% yield improvement YOY. - 19 -#20NC 3. Key Operating Metrics العربية للطيران - 20 -#21Operational Metrics - Keep On Growing Destinations CAGR (04-10): 28% 69 65 59 Fleet Size 44 37 32 23 15 2004 2005 2006 2007 2008 2009 2010 2011 Load Factor 68% 86% 85% 83% 82% 79% 80% 80% العربية للطيران airarabia.com 29 2 CAGR (04-10): 42% 25 21 16 11 8 5 2004 Total Passengers (MM) CAGR (04-10): 42% 2005 2006 2007 2008 2009 2010 2011 4.7 4.5 4.1 3.6 2.7 1.8 1.1 0.5 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 -21-#22RPK and ASK Evolution 2009 RPK: 8.5 billion 2009 ASK: 10.5 billion 2010 RPK: 9.2 billion 2010 ASK: 11.0 billion RPK & ASK Evolution 3.5 لالالالا لا لا لا لان له لایان به تان تان به ن 3.3 2.9 2.5 2.3 In Billions 2011 YTD RPK: 9.6 billion 2011 YTD ASK: 11.7 billion 2012 YTD RPK: 5.2 billion 2012 YTD ASK: 6.1 billion Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2009 2010 2011 2012 -22- ASK's RPK's العربية للطيران airarabia.com#23Hubs Key Highlights العربية للطيران airarabia.com 3 2 1 Air Arabia Maroc Air Arabia Egypt Sharjah Hub 15 8 10 5 4 50 45 2 0 40 2009 June 2010 2011 June June 2012 1 June 2010 June 2011 June 2012 June 2009 2010 2011 June June June June 2012 1549 60 55 2 1 Despite the political situation in North Africa the hubs are operating in excess of 70% load factor and have reached cash flow and profitability breakeven -23-#2460.0% easyJet 40 6.0 5.4 5.1 5.0 4.7 5.0 4.0 3.0 2.0 1.0 0.0 WestJet easyJet GOL Southwest Air Arabia RyanAir 70.0% RyanAir Load Factor 90.0% 87.0% 83.0% 82.7% 79.9% 79.3% 78.0% 80.0% Air Arabia WestJet Cost (Ex-Fuel) / ASKS (US$ Cents) Southwest Air Asia Highly Profitable LCC Business Model (2010) GOL 6.0 ...0 16.0 14.1 14.0 12.8 12.5 12.2 11.6 12.0 10.8 10.0 67.1% 8.0 43.8% 25.0% 23.8% 20.0% 2.9 2.5 15.0% 2.0 10.0% 5.0% Air Asia -24- Air Asia RyanAir Air Arabia GOL WestJet Southwest Air Arabia GOL Southwest EBITDAR Margin 23.1% 22.0% 20.0% easyJet 14.8% 12.2% Air Asia Daily Utilization (Hours) 8.4 العربية للطيران : airarabia.com#25Operating Statistics (Airline) العربية للطيران airarabia.com (Figures in AED) 2004 2005 2006 2007 2008 2009 2010 2011 H1 2012 Number of Aircrafts 3 5 8 11 16 21 25 29 31 Average Aircrafts 3.0 4.9 6.0 9.5 14.5 17.0 23.0 27.5 30 30 Destinations 15 23 32 37 44 45 65 69 75 Number of Pax (Millions) 0.5 1.1 1.8 2.7 3.6 4.1 4.5 4.7 2.6 RPK (Billions) 1.2 2.5 3.7 5.0 7.1 8.5 9.2 9.6 5.2 ASK (Billions) 1.8 3.2 4.7 5.8 8.3 10.5 11.0 11.7 6.2 Average Load Factor 68% 79% 80% 86% 85% 80% 83% 82% 83.3% - 25-#26H 4. Financial Performance - 26-#27(AED MM) Historical Financial Group Performance العربية للطيران airarabia.com 3,000 2,500 .2,000 1,500 .1,000 500 Revenues 1,283 749 411 EBITDAR 600 539 40% 2,435 33% 522 500 2,066 2,091 1,972 25% 25% 400 (AED MM) 27% 17% 300 186 200 72 100 0 2005 2006 2007 2008 2009 2010 2011 îttti 480 451 30% 20% 23% 19% 10% 0 0% 2005 2006 2007 2008 2009 2010 2011 Margin (AED MM) Net Profit 600 35% 29% 510 30% 500 452 25% 25% 369 400 23% 310 20% 274 300 14% 15% 200 8% 15% 10% 101 100 5% 31 0% T 2005 2006 2007 2008 2009 2010 2011 27-#28Revenue and Cost per Passenger (AED) AID Revenue Passenger / Passenger 467 2,011 9.9% Increased 425 2,010 -28- (AED) 457 العربية للطيران airarabia.com Cost / Passenger 414 2,011 2,010 10.4% Increased Exc. Fuel 6% decrease.#29Fuel Hedging Policy and Strategy Average Hedge Price: US$90.45/bbl Average Hedge Price: US$99.5/bbl Average Hedge Price: US$96.55/bbl 48% 66% 75% 25% 52% 34% 2012E 2013E 2014E ■Hedge Fuel ■Not Hedge Fuel العربية للطيران airarabia.com □ Air Arabia's management team has a conservative approach when it comes to hedging, which is regulated by its hedging committee -29-#30airarabia.com 3333333300000 العربية للطيران 5. Funding Plan - 30-#31Fleet Expansion العربية للطيران airarabia.com Out of the first 14 deliveries of our 44 order, 12 have been achieved through finance supported by the European ECA's (at extremely competitive rates) It is anticipated that the remaining aircraft will be a mixture of ECA financing, commercial finance and sale and lease back options Air Arabia will capitalize on the current low interest rate environment to partially finance new aircraft purchases -31-#327. The Way Forward - 32 - Somi العربية للطيران airarabia.com Audi Sport Bahrain om ияд BRN Com#33The Way Forward العربية للطيران airarabia.com To expand operation from Sharjah to Central Asia, Russian Federation, CIS and Eastern Europe, Grow operations from Egypt hub organically to serve GCC, Europe and Africa, To expand Morocco hub operations into Europe and seek further flying rights to Africa, To focus on growing ancillary revenues, and Remain a customer & product focused airline and commercially driven business. - 33 -#34Contact Us Thank you This material is available on our website www.airarabia.com Tel: +971.6.5088977 E-mail: [email protected] -34- العربية للطيران airarabia.com