first power point presentation

Welcome to our Investment Proposal

Agenda • Strategy and Product

• Markets and Network

• Marketing

• Fleet and Revenue

• Human Capital

• Operations

• Financials

Our Creed We provide guests with an effortless and unique journey,

using state-of-the-art technology, a distinctive and comfortable environment and convenient city-centre

airports

We aim to bring back the Golden Age of flying

Our Vision Creating a niche airline, capturing a very targeted

and lucrative segment: the discerning business and affluent leisure traveller seeking a higher level of

convenience and service from his air transport experience

Business Model • Medium-haul, point-to-point,

full-service

• Connecting main business centres’ city airports of Asia

• FIRST connects TAIWAN to: • Japan • South Korea • Singapore • Hong Kong • Mainland China

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo

Shanghai Hongqiao Haneda

5

Strategy Product Forecast Network Market Marketing Fleet Revenue HR Operations Finance

Product

6


Effortless Travel Process

• Tailored service in every stage of the travel process

Booking Journey to

Airport

Airport Welcome &

Check-In Boarding In-Flight

Arrival & Destination


Convenience & Speed • TSA

• City Centre Airports => Total Journey Time

3.84

6.47

3.58

5.33 4.67 4.67

7.30

4.38

6.67 6.50

Hong Kong Singapore China Japan South Korea

TSA TPE


Engaging the Connected Traveler • NFC (Near Field Communication) Tags

• Mobile Phone Application

Market Forecast

11


East Asia

• IMF GDP: +7%

• Air Travel CAGR: • Boeing: +6.7%

• Airbus: +5.4%

$-

$5,000.00

$10,000.00

$15,000.00

$20,000.00

$25,000.00

$30,000.00

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200

400

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1,000

1,200

1,4001

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GD

P p

er

cap

ita

Pas

sen

gers

Mill

ion

s

Year

Demand & GDP East Asia

Passengers GDP

12


World Trade

• 31% East Asia

• Driver for Business

• Goldmine for Travel

East Asia

EU

USA South America

Rest of World

13


World Trade

• Top Six Trading Nations

• High Foreign Direct Investment

• Largest Generators in Business Travel

$-

$500.00

$1,000.00

$1,500.00

$2,000.00

$2,500.00

Bill

ion

s

Imports Exports

14


East Asian Development

• Contribution to GDP

• Agriculture

• Industry

• Service

Taiwan

China

Singapore

Japan

Korea

Hong Kong

Agriculture

Industry

Services

15



• Growth in Trade

• Industry & Service

• Increase Disposable Income

• Tourism Development

• Introduction of LCC

• Increase Leisure Travel

$-

$10,000.00

$20,000.00

$30,000.00

$40,000.00

US

Do

llar

Average Disposable Income per Capita

2009

2010

2011

2012

$-

$10,000.00

$20,000.00

$30,000.00

US

Do

llar

(Mill

ion

)

Country

Tourism Receipts

2009

2010

2011

2012

16



• Resilient Growth

• Sensitivity in Premium Demand

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10

20

30

40

50

60

-

200

400

600

800

1,000

1,200

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Firs

t &

Bu

sin

ess

Mill

ion

s

Eco

no

my

Mill

ion

s

Year

Passenger Demand and Forecast East Asia

Economy First&Business

17



• Seasonality

• China & Western Holiday Pattern

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

ASK

s

Bill

ion

s

Month

Seasonality

2004

2005

2006

2007

2008

2009

2010

2011

2012

18


Quality Service Index

• Quality Indicators: • Frequency

• Capacity

• Service Offered

• Home Base Factor

• Total Journey Time; Door to Door

• Route Market Shares • Opportunities on Inner-City Airports

• Golden Aviation Circle

19



20

Fares Weekly

frequency Weekly capacity

TSA- GMP

TPE- ICN

TSA-GMP

TPE- ICN

TSA-GMP

TPE- ICN

Quality Factor

Base Factor

Time factor

A/C Seats

QSI Market share

Asiana Airlines $381 20 2272 1 0.9 0.23 113 1.22 15.2% Cathay Pacific $721 14 2347 1 0.9 0.23 166 0.67 8.3% China Airlines $646 25 3505 1 0.9 0.23 142 1.11 13.8% EVA Airways $636 17 2312 1 0.9 0.23 132 0.74 9.2% Korean Air $336 23 2869 1 0.9 0.23 123 1.75 21.7%

Thai Airways $788 14 2142 1 0.9 0.23 152 0.56 6.9% FIRST $700 14 1400 1 1 1 100 2.00 24.9%


• Route Monopoly TSA - GMP


• Route Trend & Qualitative Analysis

0

100

200

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400

500

600

0

100000

200000

300000

400000

500000

600000

700000

Pa

ss

en

ge

rs

Year

Demand Forecast Taipei - Singapore

Demand BEST WORST AVERAGE Singapore GDP

21


East Asia

• Region

• Growth

• Market Size

• Time Sensitive

22


Network

23


Business Network

• FIRST connects TAIWAN and: • Japan

• South Korea

• Singapore

• Hong Kong

• Mainland China

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo


24


Competitive market

0

2

4

6

8

10

12

14

0 1000 2000 3000 4000 5000 6000

Yield & Sector Length

Thai

EVA Air

Air China

China Airlines

CX

China Eastern Airlines

ANA Airlines

SIA

China Southern

25


Competitive market

0

2

4

6

8

10

12

14

0 1000 2000 3000 4000 5000 6000

Yield & Sector Length

Thai

EVA Air

Air China

China Airlines

CX

China Eastern Airlines

ANA Airlines

SIA

China Southern

26


Business Network • FIRST connects

TAIWAN and: • Japan

• South Korea

• Singapore

• Hong Kong

• Mainland China

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo


16%

19%

16%

27




• South Korea

• Singapore

• Hong Kong

• Mainland China

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo


21%

16%

19%

16%

28




• South Korea

• Singapore

• Hong Kong

• Mainland China

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo


21%

16%

19%

16%

28%

29


Regulatory Environment

30

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo


• Domestic Regulation Ownership requirements Air Operator Certificate Operating requirements

• Air Service Agreement (ASA) for Japan, South Korea and Hong Kong



31

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo



• “Open Sky” in 2018 between Taiwan and Singapore




32

Taipei Songshan

Singapore

Hong Kong

Seoul Gimpo



• Cross-Strait Air Transport Agreement & Supplementary Agreement (Tax-Free, avoidance for double taxation)

• “Open Sky” in 2018 between Taiwan and Singapore



Market

33


34

Task

Time

Milestone

• Register the company

• Secure Taiwanese

Investment

• Apply for AOC

• Apply for operating license

• Apply for Fares and Tariffs

• Schedule Filing

• Filing for Slots

• Employ personnel

• Train personnel

• Negotiate outsource

contracts

• Set up IT

• Marketing

• Preparing Business

• Start of web sales

• Delivery of aircrafts

• Launch of operation

2014-4 2014-5 2014-6 2014-7 2014-8 2014-9 2014-10

Mile

sto

ne

Star

tin

g p

oin

t

Lega

l Du

rati

on

Es

tim

ated

Du

rati

on


5 Year plan:

• Scale vertically – improving efficiency of the existing routes

• Scale horizontally- additional resources (aircraft, frequencies)

2015

2018

2017

2016

•Frequency to Hong Kong & Shanghai •One more aircraft

•New route to Tianjin •One more aircraft

•New route to Kuala Lumpur •One more aircraft + frequency on Shanghai

•New route to Guangzhou •One more aircraft


Scalability

35

Market Segmentation

Taiwan - 19%

China - 17.86%

Japan - more than 15% are business travellers

Singapore - more than 38% of Taiwanese

business travellers

South Korea - third largest economy in Asia

Hong Kong - prime business destination, Asia´s world city

Taiwan

Singapore

Hong Kong

South Korea China

Japan


36

Marketing

37


Traditional advertising campaigns

• Mixture of traditional and westernized appeal

• Competitive advertisement is considered impolite

• Media used: • Newspaper advertising, credible and respected

newspapers, ads in both native and English languages

• Magazine advertising: Business and luxurious magazines, in order to target our guests

• Billboards: Tradition extended through the Asian market, raise brand awareness

38


Social Media

• Engaging them towards social media helps FIRST to keep costs at minimal, as few people can keep contact with lots

• For Internet users in Taiwan, social networking sites have become a source of information that is just as influential as any other form of media

• Lot of people said they would trust their friend’s recommendations on social network sites and would be more likely to go for the same product

39


Social Media

40


Launch Campaigns

• Treasure Hunt at the airport

• Events in city centers: Showcase of FIRST main features

• “Seat for a Seat Campaign”

41


“A Seat for a Seat”

• Passengers with a ticket from one of our peers in the market can have the opportunity to show up at the airport and travel with FIRST for free if there is any seat available at the moment of departure

• Taipei – Singapore: Singapore Airlines and EVA Air

• Taipei – Seoul: Korean Air and EVA Air • Taipei – Hong Kong: Cathay Pacific and EVA Air

• Taipei – Tokyo: ANA Airlines and EVA Air

• Taipei – Shanghai: China Eastern and EVA Air

• Is an opportunity to improve the brand awareness via media coverage and get to know FIRST’s product

42


Fleet Selection

43


Fleet Selection

44


Fleet Selection

45

E195 Availability

25 deliveries listed for 2014 in the world,

including 11 with lessors

Embraer 195 Advanced Range Version


Cabin Configuration

46

Business Class 12 Recliner Seats

1-2 Layout 42.0’’ Seat Pitch

19.0’’ Seat Width

Economy Class 88 Standard Seats

2-2 Layout 33.0’’ Seat Pitch

18.25’’ Seat Width

Dual-class-cabin configuration:


• Highest economy class seat width & pitch among main

competitors

• Highest business class seat pitch among competitors’

narrow-body aircraft

* Airlines operating wide-body aircraft

Seat Comfort Comparison

0

5

10

15

20

25

Economy Class Business Class

Ave

rage

se

at w

idth

(in

che

s)

Seat width comparison

FIRST Singapore Airlines China Airlines EVA Air Cathay Pacific* *

0 10 20 30 40 50 60 70

Economy Class

Business Class

Average seat pitch (inches)

Seat pitch comparison

FIRST Singapore Airlines China Airlines EVA Air Cathay Pacific* *


Revenue Management

48


Fare Structure Strategy Product Forecast Network Market Marketing Fleet Revenue HR Operations Finance

49

Online Fare

Tour Operator

Fares

General Booking

Fares

+20 +20 Corporate Fares

VFR Fares

Payable by the customer

Fuel Surcharge

Monday/Friday Surcharge

Security / Airport Tax

+

+

+

+

Booking Classes

50

• Child/infant discount

• One-way fares

• Same-day return tickets

• Seasonality-based fare


Fares

51

• Highly regulated market

Economy TSA - SHA LHR - CDG

01.09.14 - 31.12.14, 1.1.15 - 19.1.15, 4.2.15 - 30.6.15,

01.09.15 - 23.12.15

633 182

01.07.15 - 31.08.15, 30.3.15 - 12.04.15

567 182

24.12.14 - 02.01.15, 20.1.15 - 3.2.15

689 230


Human Capital

52


CEO

SVP Finance

Accounts & Expenditure

Leasing & Purchasing

SVP Human Capital

Recruitment

Employee Development

Payroll

Staff Loyalty Programme

Staff Management

SVP Flight Operations

Chief Pilot

Training

Intergrated Ops Control

Crew Scheduling

SVP Technical

QA & HS

Fleet Management

Engineering

SVP Commercial

Strategy

Operations Research

Revenue Management

Pricing

Scheduling

Marketing

SVP Guest Hospitality

Cabin Crew Management

Ground Hospitality

Guest Service

SVP Technology

IT

IS

SVP QA & HISS

Management Assistance

53


Outsourced Elements • Start-up Airline, Avoid Costly Investments During Start-up

• Ensure High Quality Service

• Import Knowledge

• Request for Proposal (RFP) to All Potential Partners in Region

• IT

• Catering

• Maintenance

• Ground Handling

• Legal Services

54


Staff Cost

Flight Crew

Cabin Crew Flight Operations

Engineering

Ground Crew

Commercial

Flight Crew

Cabin Crew

Flight Operations

Engineering

Ground Crew

Commercial

Other

Finance

Technology

Guest Hospitality

Human Resources

55


Staff Numbers

0

2

4

6

8

10

75

95

115

135

155

175

195

215

2014 2015 2016 2017 2018 2019

Nu

mb

er o

f A

ircr

aft

Staf

f

Year

Number of Staff Aircraft

56


Operations

57


Aircraft Maintenance • Outsource to avoid costly in-house investment

• E-195 capabilities • Evergreen Aviation Technologies

Corp.

• Tender to all companies in the

region for more options

• Block program

• Stagger maintenance

Year Aircraft January September October November DecemberE195_1

E195_2

E195_3

E195_4

E195_5

E195_1

E195_2

E195_3

E195_4

E195_5

E195_6

E195_1

E195_2

E195_3

E195_4

E195_5

E195_6

E195_7

"B" Check (2 days) "C" Check (5 days)

"A" Check is due over night

20

14

20

15

20

16

58


Flight and Cabin Crew • Flight time limitations based on the Taiwanese CAA

• Cabin Crew

• 1 Cab. Crew per 50 pax.

• Flight Crew

• Max of 1,000 FH and

a min of 750 FH for

12 months

• FIRST average of

800 FH

0

10

20

30

40

50

60

70

2014 2015 2016 2017

No

. of

Cre

w

Year

Flight/Cabin Crew

Flight Cabin

59


Schedule • Aircraft average utilisation of 10 Block Hours per day

SHA – Shanghai HKG – Hong Kong GMP – Gimpo, Seoul HND – Haneda, Tokyo

SIN – Singapore CAN – Baiyun, Guangzhou TSN – Tianjin KUL – Kuala Lumpur

60


Aircraft1

Aircraft2TSA-SINAircraft3

Aircraft4

Aircraft5

00:00 00:30 #

T T T

T

T

T T TTSA-GMP T TGMP-TSA T

05:3004:00 04:30 05:00 11:3006:00 06:30 07:00 07:30 08:00 08:30 09:00 09:30 10:00 10:30 11:00 17:3012:00 12:30 13:00 13:30 14:00 14:30 15:00 15:30 16:00 16:30 17:00 23:3018:00 18:30 19:00 19:30 20:00 20:30 21:00 21:30 22:00 22:30 23:00

T

T

T

T

T

T

TTSA-SIN

TSA-HKGTSA-HKG

T

T

T

T

TT

TT

HKG-TSA

T

T

T

T

SIN-TSA

TT

TSA-HKG

SIN-TSA

TSA-HND HND-TSA

TSA-HND HND-TSA

SHA-TSATSA-SHASHA-TSATSA-SHA

TSA-GMP GMP-TSA

T

T

T T

TSA-SIN

T

TT

T

T

Type Startyear Flighttime WeeklyFrequency

E195 2014 TSA-SHA 14

E195 2014 TSA-HGK 14

E195 2014 TSA-GMP 14

E195 2014 TSA-HND 14

E195 2014 TSA-SIN 14

E195 2015 TSA-CAN 14

E195 2016 TSA-KUL 14

E195 2017 TSA-TSN 14

CAN

TSN

KUL

04:30

SIN

00:30 01:00 01:30

GMP

02:00 02:30 03:00 03:30 04:00

HND

SHA

HKG

Finance

61


Financing Structure

• FIRST is a partnership between existing directors and Taiwanese and foreign investors

• Maximum foreign ownership limited by law to 50%

• An investment of US$15 million is sought to close the last stage of the financing

• Total financing of US$35 million • US$33 million

minimum capital required to apply for Taiwanese AOC

• Provides 5% cash buffer before operational phase

62


Investment Vehicle

• 428 000 class A convertible preferred shares • Convertible to class C common stock on 2:1 ratio

• Right to a 15% annual non-cumulative dividend

• Right to a 40% special dividend upon reaching a profitability threshold of 20% in a financial year

• Right of first refusal/Co-sale, ‘’Tag-along’’ and anti-dilution

• Restriction on share transfer to outside investors

• Restriction on transfer to non-Taiwanese nationals

• Shareholder 5-year lock-in

63


Tax-Mitigation Structure

64


Economics

• FIRST leverages its unique business model, presence in the fast-growing Asian market and monopolistic status on key business route to outperform the market

Year

2014 2015 2016

Revenue Growth

177% 29%

Net Profit Growth

641% 22%

Net Margin

RASK 25% 66% 63%

CASK $0.21 $0.12 $0.12

Passenger Load Factor

58% 67% 62%

2014 2015 2016

REVENUES $166,904,129 $461,914,762 $596,883,786

Scheduled Passenger Services

99.93% 95.44% 91.24%

Ancillary Revenues 5.00% 9.54% 13.69%

Cargo 0.33% 0.28% 0.34%

EXPENSES $125,747,220 $156,769,208 $223,674,572

NET PROFIT $41,156,908 $305,145,553 $373,209,214

65


Investment Appraisal

• Profitability

• FIRST generates a substantial profit due to:

• Unique nature of its product

• Network of high-yielding destinations

• High aircraft utilization

Profitability

2014 2015 2016

Operating Ratio 75.34% 33.94% 37.47%

Net Profit Margin 24.66% 66.06% 62.53%

66



• Return to Shareholders • Venture presents shareholders with abnormal returns

above market averages

• Financing structure optimizes cash in/out flows to maximize shareholder return

67

2014 2015 2016

ROE 55% 55% 55%

EPS $16.45 $148.45 $182.48

Fully-Diluted EPS $14.86 $134.10 $164.84

DPS $16.45 $148.45 $182.48

Dividend Payout Ratio 1 1 1


Investment Appraisal • Net Present Value (NPV)

Year 1 Year 2 Year 3 Year 4 Year 5 Apr-14 Jul-14 Oct-14 Mar-15

Initial Equity Investment -$2,000,000 -$4,000,000 -$9,000,000

Preferred Dividend (15%) $2,250,000 $2,250,000 $2,250,000 $2,250,000 $2,250,000

Profit Margin 25% 66% 63%

Special Preferred Dividend (40%) $6,000,000 $6,000,000 $6,000,000 $6,000,000 $6,000,000

Total -$2,000,000 -$4,000,000 -$9,000,000 $8,250,000 $8,250,000 $8,250,000 $8,250,000 $8,250,000

NPV (9% Discount Rate) -$2,000,000 -$3,914,744 -$8,620,437 $7,568,807 $6,943,860 $6,370,514 $5,844,508 $5,361,934

Accrued Value -$2,000,000 -$5,914,744 -$14,535,181 -$6,966,373 -$22,513 $6,348,000 $12,192,508 $17,554,442

Payback Period (Years) 5

Total Return 117.03%

Return per Year 23.41%

IRR 35.64%

68



• Highly attractive and profitable investment • FIRST annualized return outpaces market return for

similar risk-adjusted position

• Return on equity covers virtually any investor’s cost of capital

• Preferred convertible share structure offers both the security and priority of a debt instrument with the capital appreciation potential of common stock

69


Risk Analysis

• Sensitivity Analysis

Effect on Net Profit of a 1% Change in

2014 2015 2016

Fuel Cost -4.54% 0.70% 0.75%

Passenger Load Factor

-8.03% -3.00% -3.17%

Lease Rate -3.70% -0.57% -0.60%

Maintenance Cost -3.48% -0.56% -0.59%

Staff Cost -0.12% -0.02% -0.02%

Cost of Services -3.24% -0.51% -0.54%

Cost of Ancillaries -0.44% -0.19% -0.27%

70


Risk Analysis

• Resilience Analysis

Bottom-Line Resilience Analysis

Net Profit with 2014 2015 2016

With 100% Revenues - $305,145,553 $373,209,214

With 75% Revenues - $189,126,506 $223,264,439

With 50% Revenues - $74,802,603 $75,535,701

71


Exit Strategy

5 Year Horizon

Within the restrictions imposed by regulations

Through the share tender mechanism and exercise of coat tail rights

72


73


Invest FIRST!

• A unique business model

• A lucrative and niche market segment

• An incremental growth protential in Asia

• Outstanding innovations

Thank you very much!

Maxime Leveille Montreal, Canada

Yang Baksa Seoul, Korea

Heshan Karunaratne Delphine Wermeister

Paris, France Cherie Lu Taipei, Taiwan

Gloria Elena Guevara Nieto Saltillo, Mexico

Sylvain Gloux London, UK Vincent Chow

Hong Kong

Norbert Lambriex Tilburg, The Netherlands

77


CSR and Environment • CSR

• Women in Aviation International • Sponsor Jingmei Girls' Senior High School in Taipei • Sponsor the Tug-of-War team in Jingmei

• Environment • GREEN comes FIRST

78


Exit Strategy

• Initial Public Offering (IPO) • Timeframe: 5-7 years from start of operations

• Public Float: 25-50% of FIRST common stock

• Stock Listing on Taiwan Stock Exchange with cross-listings on: • Hong Kong Stock Exchange

• Singapore Exchange

79


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