SAS Group 2 nd interim report 2010

Transcription

1 SAS Group 2 nd interim report Press/analyst presentation, August 1, Improved result trend continued during Q2 moving in the right direction, but we are not there yet Improving market conditions Improving demand and flattening yield Business Class growing on intercontinental routes and some key European routes Record load factors reduce yield impact on RASK Q2 results, EBT before non recurring items 1, MSEK 236 Negatively affected by the ash cloud effect by MSEK 700 Adjusted for above effects, result positive by MSEK 464 Cash flow from operating activities positive by MSEK 03 Core SAS program on track, additional MSEK 200 implemented since year end Unit cost down 6.7% in first six months 2 SEK 2.3bn remaining to implement Remaining earnings effect of SEK 3.9bn Customer satisfaction improved for three consecutive months 1 In continuing operations 2 Currency adjusted for 2 Reported Q2 result weakened due to ash cloud effect Good performance vs. key competitors SAS reports positive margin when adjusted for ash cloud effect Result development (MSEK) Apr Jun Apr Jun 2009 EBT margin Q2 SAS Group Finnair Norwegian Revenues 9,979 12,223 EBT before non recurring items (continuing operations) % 1 EBT margin Income before tax in continuing operations EBT bf before non recurring and ash cloud effect 2,4% 0,3% 02 1, Adjusted for one off effects Reported 6.0% 60% 7.% 1.4% 2 9.2% 4.3% 43% MSEK 1064 (primarily MSEK 700 ash cloud effect and MSEK 36 in restructuring charges) 2 MEUR 31.1 (primarily MEUR 30 ash cloud effect) 3 MNOK 100 (ash cloud effect) 4 1

2 Three important challenges to reach long term profitability SAS greatest sale ever more than 1,000,000 low fare tickets Secure fulfilment of Core SAS strategy Competition and yield pressure Profitable growth 4 6% uncertain macro economic recovery SAS greatest sale ever, the largest low fare campaign ever in Scandinavia Yield? Customer friendly news: More low priced tickets than ever before, over 1,000,000!! Much longer travel period: October 1 st March 31 st Return to short period between sales and travel Will increase focus on SAS brand and competitive prices and improve load factor in off peak periods Continued focus of Core SAS Core SAS SEK 3.9 bn remaining result effect SEK 2.3bn savings still to implement New organisation and structure established Focus on premium concept Yield enhancing measures Value for money prices Continued focus on load factor Improved financial preparedness Rights issue completed Strong liquitidy Low capex the next years Flexible aircraft lease agreements Increased aircraft utilization 6 Stable platform created for a successful turnaround and future growth Core SAS strategy being carried out according to plan Improved corporate culture established in a more streamlined structure and efficient organization leading to reduced complexity Cost reductions must be completed totaling SEK 7.bn with remaining effect of SEK 3.9bn 2012 Financial position secured Rights issue of SEK bn completed Additional debt financing of SEK 3.2bn secured Capacity and fleet reductions fully implemented Improved basic quality and commercial offer resulting in customer satisfaction Mats Lönnqvist CFO SAS Group Cash flow is now improving but still uncertainties and cost gap to fill Not for release, publication or distribution in Australia, Canada, Japan or the United States 7 2

3 Core SAS cost savings program on track stable platform established MSEK 700 earnings impact from volcanic ash Reduced yield pressure Q2 partly offset by improved load factor Yield (currency adjusted) down 6.6% 1 Load factor improved 20pu 2.0 p.u. 1 starting to meet last years improving comparable figures RASK down.6% 1 in Q2 Due to the volcanic ash from the Eyjafjallajökull volcano in Iceland the Scandinavian airspace was closed or partly closed primarily during April 1 and April 20, which forced SAS to cancel most of its flights. Core SAS cost savings program of SEK 7.bn on track with.% unit cost 1 reduction during Q2 SEK.6 bn or 71% of the total cost savings have been implemented MSEK 0 earnings effect from program in Q2 20 out of the planned 21 aircraft taken out of service Additional 20 FTEs reduced in Q2, 3,40 out of 4,600 FTEs completed Remaining earnings effect of ~3.9bn SEK during 12 Rights issue and new financing completed SEK 7.2bn of liquid assets SEK.6bn in financial facilities SEK 12.7bn in total financial preparedness The following weeks the introduction of 3 zones allowed operations in areas with low concentration of ash, and traffic could gradually return to normal. Bookings were initially affected, but after a few weeks the levels returned to pre ash cloud expectations. SAS has calculated the negative effects on earnings to MSEK 700. Loss of revenues: MSEK 790 Reduced operational cost: MSEK 10 Passengercare: MSEK 90 The media have recognized SAS work to take care of and inform the customers, in particular the innovative use of social media. 1 For compared to the same period in Yield, RASK and unit cost is currency adjusted. 9 SAS has not received any compensation for the lost revenue or increased cost. In Sweden, liquidity mitigating steps were taken by the government, which however did not have any significant impact on SAS financial position. 10 Positive development in load factor but still pressure on yield and RASK Positive long term trend in load factor yield development still uncertain SAS Group Apr Jun Traffic (RPK) 6.3% 63% 4.1% 41% Load Factor Yield (SEK) Load factor +1. p.u p.u. 0% Yield (12 months rolling) 1,3 1,30 1,2 Yield 1 Unit revenue, RASK 1 6.6%.6%.% 3.% 70% Load Factor (12 months rolling) 1,20 1,1 1,10 Unit cost 2 6% 7% 60% January 200 January 2006 January 2007 January 200 January 2009 January 1,0 1,00 1 Adjusted for currency 2 Adjusted for currency, fuel and ash cloud effect All figures compared to same periods in

4 Positive result of MSEK 464 adjusted for ash cloud effects 71% of targeted cost saving measures are already implemented MSEK Apr Jun Apr Jun 2009 Total operating revenue 9,979 12,223 19,474 Payroll expenses Fuel Government charges Other operating expenses Total operating expenses Leasing costs, aircraft Depreciation and other EBT before non recurring items Ash cloud effect EBT before non recurring items and ash cloud effects 3,33 1,627 1,029 3,103 9, ,392 2,217 1,17 3,366 11, ,74 3,061 2,049 6,441 1, ,340 1, Additional MSEK 60 implemented during the second quarter, taking the total to SEK.6bn or 71%. The recent activities are primarily related to union agreements, administration and MRO services. Additional 20 FTE reduced during the second quarter, taking the total to 3,40 FTE or 7% of the planned reduction of 4,600 FTE. Earningseffect of MSEK0during the second quarter, compared to same period Remaining effects of SEK ~3.9bn in 2012 Unit cost, down 6% 1 in the second quarter. Core SAS cost savings Implemented program (MSEK) Potential Mar Jun Cabin crew/flight deck Ground services SAS Tech Sales, marketing & Commercial Purchasing Blue1, Widerøe, Cargo Administration Other ~1,900 ~900 ~1,00 ~700 ~400 ~600 ~1,400 ~100 ~130 ~40 ~0 ~0 ~300 ~40 ~900 ~0 ~1600 ~40 ~1000 ~600 ~300 ~00 ~100 ~0 Non recurring items 364 1, EBT (incl non recurring items) 600 1,039 1,72 13 Total ~7,00 ~4,900 ~,0 1 For compared with the same period in 2009, adjusted for currency fuel and ash cloud effect. 14 leading to a continued decrease in unit cost mainly due to lower cost for personnel but also favorable jet fuel hedges 7 % of fleet are new generation aircraft Volume, currency and method adjusted unit cost,, MSEK Unit cost 7% Aircraft in operation Scandinavian Airlines aircraft SAS Group aircraft Average age 1 New Generation Other Wetlease and phase out during Peer comparison Finnair Air France KLM Norwegian British Airways Lufthansa Average age Payroll expenses 10% Jet fuel expenses 9% Government charges % SAS has a well suited fleet with ithflexibility to cope with ithfluctuations ti in demandd Approximately 7% of the fleet is new generation with an average age below years. The mix of new generation and older aircraft with lower capital cost increase the flexibility to handle short term production peaks Average age in years for aircraft operated by. (Same figures for SAS Group is, 16, 16 years.) 2 Boeing 737NG; A319/320/321; A330/340; MD 90; CRJ900NG; Q400NG; SAAB Source Ascend Worldwide Ltd,

5 Amended fuel hedging policy Additional SEK 3.9 bn to have result effect Implementation of Core SAS costprogram Jet fuel, spot price development, USD Current hedges 3% of the consumption hedged for next 12 months Only swaps and options Hedged at levels below USD 00MT until June Δ to be implemented in / bn to further impact P&L in 2012 Amended policy to offset fuel price volatility 3.9 Hedging 40 70% of expected consumption (12 months rolling) Up to 1 months hedging allowed Yield management Cost initiatives Total long term effect Plan Actual Implemented as of June Plan Actual Results as of June (12 months rolling) 1 SEK 3.9 bn still to impact the P&L at full implementation 17 ¹ Difference between implementation value and P&L effect in 2009 due to full year effect; excluding restructuring costs 1 SAS getting aligned for profitable growth Appendices Cost program on track Improved market conditions Load factors improved Increasing demand Still uncertainties regarding yield Financial position stable Strong liquidity Stable platform established for future profitable growth Core SAS Fleet Unit revenue (yield & RASK) Unit cost & productivity Traffic Financial update Currency 19 20

6 Estimated cost effects going forward ( only) Total unit cost long term development Estimated cost effects (SEK bn)? ? 1 Estimated temporary cost base effects Estimated permanent cost base effects % % Negative effects from grounding of Q400 Negative effects from volcanic ash 0% -% -10% -1% Turnaround 200 and increasing intercontinental capacity Unit cost decrease and capacity reduction at same time during core SAS -20% SK 2009 cost base excl. fuel Currency effects Volume effects Cost program Inflation, salary & other Restruct. cost Currency effects Volume effects Cost program 2011 Inflation, salary & other Restruct. cost Cost base after impl. of Core SAS 2011 Q Q Q Q Q Q Q1 200 Q2 200 Q3 200 Q4 200 Q Q Q Q Q Q Q Q Q1 200 Q2 200 Q3 200 Q4 200 Q Q Q Q Q1 Q2 ¹ Pending fx development SAS Group fleet June 7 % of fleet are new generation aircraft Aircraft Type Airbus A330/340 Airbus A319/320/321 / Boeing 737 Classic Boeing 737 NG MD 2/7 MD 90 Boeing 717 Avro RJ Fokker 0 Q100/300/400 SAAB 2000 Bombardier CRJ200 Bombardier CRJ900 NG Owned Leased Wet leased 3 TOTAL Leased out Age On order 1 Aircraft in operation Scandinavian Airlines aircraft SAS Group aircraft Average age 1 New Generation Other Wetlease and phase out during Peer comparison Finnair Air France KLM Norwegian British Airways Lufthansa Average age Ttl Total aircraft SAS has a well suited fleet with ithflexibility to cope with ithfluctuations ti in demandd Scandinavian Widerøe Blue1 Leased out Approximately 7% of the fleet is new generation with an average age below years. The mix of new generation and older aircraft with lower capital cost increase the flexibility to handle short term production peaks. Fleet To be managed by lease returns disposals and lease out whereof: 1 AC divestment signed, 3 lease out contracts signed, 3 lease returns Average age in years for aircraft operated by. (Same figures for SAS Group is, 16, 16 years.) 2 Boeing 737NG; A319/320/321; A330/340; MD 90; CRJ900NG; Q400NG; SAAB Source Ascend Worldwide Ltd,

7 Overview of the SAS Group s fuel hedging and costs for Yield and RASK development SAS Group s jet fuel hedging portfolio Q3 Q4 Q Q Yield, currency adj Apr Jun Yield, currency adj Apr Jun Options Strike price, USD/MT Swaps Price USD/MT % 6 4% % % 73 11% % 761 % 77 0% %.% 3.0% 1.% SAS Group s jet costs in (annual average values) 6.0 SEK/USD 7.0 SEK/USD.0 SEK/USD RASK, currency adj Apr Jun Yield, currency adj Apr Jun Market price 600 USD/MT 00 USD/MT USD/MT USD/MT SEK.7 billion SEK 6.0 billion SEK 6.4 billion SEK 6.7 billion SEK 6.1 billion SEK 6. billion SEK 6.9 billion SEK 7.3 billion SEK 6. billion SEK 7.0 billion SEK 7. billion SEK 7.9 billion.6% 6% 3.% 3% 10.%.% 2 26 Yield development Yield development, currency adjusted yield vs last year 12 months rolling average, nominal yield 20,0% 1,0% 10,0%,0% 0,0% -,0% -10,0% -1,0% -20,0% -14,3% -1,6% Q Q ,3% Q ,2% Q ,6% Q ,% Q ,6% Q ,% Q ,2% 1,9% Q Q ,2% Q ,4% 16,0% Q Q1 2007,3% 2,7% 1,0% Q Q Q ,0% Q ,1% Q ,% 2,9%,6% Q3 200 Q ,2% -7,6% -6,6% -9,4% -11,4% Q Q Q Q Q1 Q2 1,4 1,3 1,2 1,

8 strongly improving load fact, but weak yield Unit cost down.% in Q2 negatively affected by closure of traffic in April by 2 p.u. Load factor Yield (SEK) Unit cost breakdown Apr Jun Apr Jun 2009 Var, % Share of total var, % 0% 70% 60% 0% 1,3 1,30 1,2 1,20 1,1 1,10 1,0 1,00 Payroll expenses Jet fuel Government user fees Selling costs Handling costs Teachnical aircraft maint. Other operating expenses 1 Total operating expenses ,4% 16,0% 2,1% 2,3%,0% 1,9% 24,1% 7,2% 2,9% 3,% 0,2% 0,0% 0,4% 1,2% 1,2% 6,% 40% 0,9 Leasing costs for aircraft Depreciation ,1% 10,% 0,6% 0,% Adjusted EBIT ,%,% Load factor Yield (12 months rolling) 1 Net of other operating revenues Large decrease in unit cost in Negatively affected by the ash cloud by approximately 2 p.u. Unit cost continues to decrease significantly Unit cost breakdown 2009 Var, % Payroll expenses Jet fuel Government user fees Selling costs Handling costs Teachnical aircraft maint. Other operating expenses 1 Total operating expenses Leasing costs for aircraft Depreciation Adjusted EBIT 1 Net of other operating revenues ,9% 9,1% 4,1% 16,9% 7,6% 19,2% 13,2% 7,% 6,7% 12,4% 6,7% Share of total var, % 4,0% 1,7% 0,4% 0,2% 0,4% 1,6% 0,7% 6,% 0,4% 0,% 6,7% 12% 7% 2% -3% -% -13% -1% -23% -1,% -11,7% -16,% -13,6% -13,9% -1,0% -9,2% -3,9% -,% -0,9% 1,4% -1,6% 7,3% 7,6%,1% 3,% 3,3%2,1% 2,9% 2,0% 11,9%,1%,1%,% -,3% -12,7% -,% -,% -7,% -9,2% 1st Q nd Q rd Q th Q st Q nd Q rd Q th Q st Q 200 2nd Q 200 3rd Q 200 4th Q 200 1st Q nd Q rd Q th Q st Q nd Q rd Q th Q st Q 200 2nd Q 200 3rd Q 200 4th Q st Q nd Q rd Q th Q st Q 2nd Q 31 32

9 Productivity Key productivity ratios improving for Block hours, 12 months rolling, 2009 Aircraft, hours/day Pilots, hours/year Cabin, hours/year Widerøe Blue Aircraft utilization (12 months rolling) Hrs/day Aircraft utilization (12 months roling),,0 7, 7,0 Cabin, pilot utilization (12 months rolling) Hrs/yr Cabin, pilot utilization (12 month roling) , 20 6,0, 470,0 Dec 2003 May 2004 Oct 2004 Mar 200 Aug 200 Jan 2006 Jun 2006 Nov 2006 Apr 2007 Sep 2007 Feb 200 Jul 200 Dec 200 May 2009 Oct 2009 Mar 420 Dec May Oct Mar Aug Jan Jun Pilots Nov Apr Sep Feb Jul Dec Cabin crew May Oct Mar Passenger volumes affected by reduced capacity and the closure of traffic in April ASK outlook Passenger and capacity development vs ,0% vs ,0% 0,0% -2,0% -4,0% Jan-Jun 10 vs 09 ASK Jan-Jun 10 vs 09 Passengers SAS Group Widerøe Blue1 2% to 4% 3% to % +% to +6% +10% to +11% -6,0% 60% -,0% -10,0% -12,0% Wideröe Blue1 SAS Group

10 North Atlantic SAS to increase capacity from October Daily departures from Copenhagen to New York, Washington DC and Chicago in the summer program Daily departures from Stockholm to New York and Chicago during the summer program Capacity cuts during the winter Traffic development SK traffic down 1.3% AEA traffic down 1.4% Load factor 9% 90% % 0% 7% 70% 6% 60% SAS AEA 37 Asian routes SAS traffic growing more than the market serving Bangkok, Beijing, Tokyo and Dubai (seasonal) from Copenhagen Traffic development in : AEA traffic up 0.9% SAS traffic up 2.7% Load factor 9% 90% % 0% 7% 70% 6% 60% SAS AEA 10 Jan 200 Feb 200 Mar 200 Apr 200 May 200 Jun 200 Jul 200 Aug 200 Sep 200 Oct 200 Nov 200 Dec 200 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 Dec 2009 Jan Feb Mar Apr May June Jan 2007 Feb 200 Mar 200 Apr 200 May 200 Jun 200 Jul 200 Aug 200 Sep 200 Oct 200 Nov 200 Dec 200 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 Dec Jan Feb Mar Apr May Jun Europe Development negatively affected by ash cloud in April, but Core SAS measures have positive effect SAS load factor in line or above the average of the AEA airlines. Traffic development : AEA traffic down 1.1% SAS traffic down.3% due to capacity cuts of unprofitable routes and closure of traffic in April due to ash cloud Load factor % SAS 0% 7% AEA 70% 6% 60% % 39 Proportion of internet check in has increased strongly 0 % 70 % 60 % 0 % 40 % 30 % 20 % 10 % 0 % 3 Jan 200 Feb 200 Mar 200 Apr 200 May 200 Jun 200 Jul 200 Aug 200 Sep 200 Oct 200 Nov 200 Dec 200 Jan 2009 Feb 2009 Mar 2009 Apr 2009 May 2009 Jun 2009 Jul 2009 Aug 2009 Sep 2009 Oct 2009 Nov 2009 Dec 2009 Jan Feb Mar Apr May Jun Kiosk Internet Kiosk+internet 40

11 Financial update Summary of the SAS Group s balance sheet MSEK 30 June 31 December June 2009 Aircraft and Spare parts Other non interest bearing assets Interest bearing assets Cash and cash equivalents Total Assets Total shareholders' equity 1 Deferred tax Other interest bearing liabilities Operating liabilities Total shareholders' equity and liabilities Including minority interests Overview of available funds June Improved financial flexibility Available funds, SEK billion June Maturity Scheduled amortization profile, SEK bn Liquid funds 7.2 Syndicated revolving credit facility of MEUR 366 paid back during Q2 and not utilized Undrawn portion of credit facilities Others Total undrawn credit facilities Total available funds Total credit facilities Drawn portion of credit facilities Undrawn portion of credit facilities Revolving Credit Facility, 366 MEUR (total SEK 3.bn) Revolving Credit Facility, 131 MUSD (total SEK 1 bn) Credit Facility, 160 MUSD (total SEK 1.2 bn) Credit Facility, 12 MUSD (total SEK 1.0 bn) Bi lateral Revolving Credit Facilities (total SEK 1.3 bn) Jun 2013 Apr 2013 Mar 2011 Jun 2013 Jun 2013 Dec N/A

12 Gearing ratios SAS Group Financial Net Q2 400% 30% 300% 20% 200% Fin Net tdebt bt/ Equity Equity / Total Assets Fin. Net Debt + 7*Op lease / Equity MSEK Interest net and others Exchange rate differences Q2 Q Difference Financial net % 100% 0% 0% dec-9 dec-00 dec-02 jun-03 dec-03 jun-04 dec-04 0-jun dec 06-jun 06-dec 07-jun 07-dec 0-jun 01-dec 09-jun 09-dec 10-jun 4 46 SAS Group Financial Net January June Development and Break Down of Financial Net Debt MSEK Interest net and others Exchange rate differences 2009 Difference Financial net MSEK Cash Other interest bearing assets Interest bearing liabilities Difference Financial net debt

13 Development of financial net debt 1993 Equity / Assets Ratio 1993 MSEK % 4% 40% 3% 30% 2% 20% 1% 10% % To be updated 0% Financial Net Debt / Equity Ratio 1993 Development of the financial net debt during 2,0 1, 1, 1,3 1,0 0, 0, 0,3 0, SEK billion Financial net debt December 2009 Investments Sales Cash flow from operating activities Currency and others Rights issue Rights issue 4.7 Financial net debt June

14 Breakdown of currency effect SAS Group, continuing operations vs Significant changes in currency exchange rates affected the result by MSEK 799 in vs 2009 Total revenues & costs currency effect Total revenues & costs Forward cover costs Working capital USD DKK NOK EUR Asian currencies All others Total 2009 Difference 2009 Difference Apr Jun , , Currency effects MSEK on SAS Group, continuing operations: vs Negative impact on revenues due to a significantly stronger SEK in March Positive impact on other operating costs mainly due to the weaker USD to SEK Weaker USD to SEK affected certain hedging arrangements negatively Weaker EUR to SEK affected net financial items, related to certain loan agreements Total revenue Total costs Forward cover costs & working capital Income before depreciation Apr Jun ,3 1, with Spanair in January 2009 Financial items Financial items 2009 Difference Income before tax Total currency effect Currency distribution in the SAS Group 2009 Revenues Other GBP 6 3 USD NOK 3 Expenses GBP Other 2 3 USD NOK EUR SEK DKK SEK EUR DKK Not for release, publication or distribution in Australia, Canada, Japan or the United States 6 14