SAS Q4 2015/

Transcription

1 SAS Q4 2015/

2 EBT in line with forecast Q4 in summary Progress in Q4 FX adjusted passenger revenue up by 1% Other traffic revenue up 25% Q4 MSEK 577 EBT Change vs. LY MSEK -290 Cost program delivered SEK 0.2bn Traffic, RPK in millions Passengers up 300,000 and record load factor 9, % but market has become more challenging Yield declined 9% in Q4 vs. LY Norwegian aviation tax of SEK 0.2bn Negative currency effects of SEK 0.4bn Negative non-recurring items of SEK 0.4bn Unit cost, SEK % PASK, SEK % Further actions for long-term competitiveness 2

3 Staying true to our vision of making life easier for Scandinavia s frequent travelers SAS strategy can be summarized as: Focus on Scandinavia s frequent travelers investments in customer offering and loyalty program Flexible production platform to fit the needs of our frequent travelers SAS Star Alliance 118 destinations 1,300 destinations 813 daily departures 18,450 daily departures 3

4 Improved customer offering Long haul operation expanded from 12 to 16 aircraft New cabin interior on all aircraft New destinations and more frequencies Short & medium haul enhancements >60 seasonal routes within Europe Upgrade of cabin interior initiated SAS Go Light and SAS Plus Saver Improvements on the ground Investments in SAS lounges New Service Point centers Investments in digital platform New mobile and web platform being rolled out High speed WiFi to be introduced in ,000 EuroBonus members in 3 rd most downloaded airline app in Europe +900,000 passengers in +9% increased traveling by EB Silver/Gold customers in +22% more passengers on SAS long haul flights in 4

5 Increased flexibility in the production model 50% more passengers on SAS s wet lease aircraft in 14 line stations outsourced in Norway in +6% increased aircraft utilization in Improvement of SAS (SK) operation 2 aircraft types improved aircraft utilization 1 st Airbus A320neo delivered 12 more aircraft to be delivered during FY17 Increased wet lease operation Focus on fewer strategic suppliers and closer partnerships 8 CRJ900 phased into traffic 4 additional CRJ900 to be delivered in FY17 80% of passengers with bags used selfservice options in Scandinavia in 37 more routes served with wet lease operation Streamlining of Ground handling and technical maintenance Outsourcing of line stations in Norway Digitalization of ground handling Introduction of lean processes at OSL/CPH Focus on reduced unscheduled down time (UDT) 5

6 in line with our guidance Guidance Capacity up 10% Outcome Capacity up 10% Expansion of long-haul operation and upgrade of product Launch of Boston, Los Angeles and Miami and more frequencies on existing routes Lower yield and intensified competition Yield down 7.7% Lower unit cost Investments in digitalization Unit cost (FX adjusted) ex. jet fuel down 4.1% New web site is currently being rolled out further improvements underway Positive EBT before nonrecurring items EBT before nonrecurring of MSEK 939 6

7 SAS has a unique position in an attractive market Strong customer offering Superior network most departures and direct flights from Scandinavia Competitive product features, e.g. lounge, fast track, self service, SAS app Leading loyalty program >4.7 million EuroBonus members (and growing) Flexible production platform 2-tier production platform allows for flexible and efficient operations Ongoing digitalization and automation throughout the travel chain Increased flexibility in cost structure through outsourcing Significant future potential Take part in growing leisure market in Europe Address unserved long-haul destinations with direct capacity Capitalize on SAS Brand and EuroBonus to realize further potential, e.g. SAS Dreams 7

8 but further actions needed for long-term competiveness Yield pressure Intensive competition and increasing market capacity particularly on European routes Taxes & charges New aviation tax introduced in Norway Sweden is also considering a new aviation tax 8 Remaining legacy Cost gap vs. newly established competitors not fully addressed need to address remaining legacy Currency & jet fuel Exposure towards unfavorable currency and jet fuel price development Capital need Maturing loans and financing needs for aircraft

9 Improved competitiveness - road map for FY17 and beyond SEK 1.3bn Completed Fleet streamlining and production improvements Simplified agreement for pilots Enhancements of admin & sales 300 FTE reduction Outsourcing and efficiency enhancements of ground Properties and rental costs SEK 1.5bn Initiated activities Increased ambition by SEK 0.7bn Targeted areas - Operations, charges & fuel - Ground Handling - Technical Maintenance - Administration & Commercial 1 2 Value TBD Under development a)reduce admin b)optimize customer cost c) Establish long-term competitive operating platform FY15 - FY17 FY19 FY18 9

10 1 Initiated activities of SEK 1.5bn in FY17- FY19 Earnings impact FY17 FY19 Operations, charges, fuel Ground Handling Improve planning and productivity Completion of two tier production model Improved inflight logistics Digitalization and automation Increased productivity from collective agreements Centralization of Passenger Control Centre MSEK 600 MSEK 100 Technical maintenance Lean process implementation at CPH/ARN Improved planning from new IT system MSEK 300 Admin & Commercial Close down and consolidation of legacy IT systems Transition to cloud solutions Distribution channels shift MSEK

11 KPIs KPIs 2a Improve transparency and reduce overhead costs Management & supporting functions Product, Customer, Brand, Digitalization and Governing functions Group EBIT; Admin cost/revenue; Brand & Customer KPIs Supporting functions: HR, IT, Financial Services Cost/Service SK Tech Ground Handling Cargo Wet lease Cost/ Block hour Cost/ Airborne hour Cost/ Landing Cost of Sales Cost/ Block hour Operational performance based on safety and quality Air transport services Airline supporting services (operational character) External companies 11

12 2b SAS has improved its commercial position, but there is a need to optimize commercial cost Trends affecting SAS customer proposition Growing number of leisure travelers Price sensitive and value services differently than business travelers Converging service offering LCCs introduce additional features Full service carriers unbundle their product offering Differentiation of SAS through further digitalization, IRR and improvements of EuroBonus Transformation of SAS commercial cost (illustrative) 1 2 Direct Indirect Today Future SAS will further optimize its customer offering 1 Reduce 2 indirect cost Re-allocate cost to prioritized areas 12

13 2c Need to further transform operational platform to secure competitiveness European traffic is subject to intense competition High LCC density Price sensitive leisure segment is growing rapidly SAS is the only airline operating with Scandinavian based crew within Europe significantly higher labor cost SAS needs to explore new alternatives for European traffic production unit outside Scandinavia to be evaluated LONDON 26 avg. labor cost/h UK 43 avg. labor cost/h 1) SCANDINAVIA 6.5 million pax/year ~90 daily departures 5 operating airlines 25 avg. labor cost/h EU Note: Source: 1) Simple average for Denmark, Sweden and Norway Labour costs in the EU, Eurostat, April 2016 (Labour costs per hour in, whole economy, including non-wage costs such as employers' social contributions) 13

14 SAS beyond 2020 Expanded Intercont with more aircraft Flexible and cost-efficient Operations through internal/external resources Sharp Commercial offering with focus on prioritized areas Strong Short-haul with new point-topoint destinations Transparent and efficient Governance structure Broader Business scope EuroBonus, Digital and Lifestyle Shareholder value creation

15 15 FINANCIALS

16 Breakdown of the income statement Income statement Aug-Oct 16 Aug-Oct 15 Change vs LY Currency Total operating revenue 11,135 10, Payroll expenditure -2,154-2, Jet fuel -1,959-1, Government charges -1,128-1, Other operating expenditure -3,859-3, Total operating expenses* -9,100-8, EBITDAR before non-recurring items 2,035 2, EBITDAR-margin* 18.3% 23.2% -4.9 p.u. Leasing costs, aircraft Depreciation Share of income in affiliated companies EBIT before non-recurring items 1,044 1, EBIT-margin* 9.4% 13.3% -3.9 p.u. Financial items EBT before non-recurring items 941 1, Non-recurring items EBT * = Before non-recurring items 16

17 Non-recurring items in Q4 Non-reuccring items MSEK Impairments -11 Restructure costs -31 Capital gain, aircraft 57 Facilities 31 Aircraft 26 Other non-recurring items -379 Provision indirect tax -219 Phase out and write down CRJ Other -49 Total non-recurring items

18 Revenue analysis Total Revenue Q4 MSEK Estimated based on average yield in Q4 FY ,135 10, ,969 Total revenue Q4 FY15 Currency Total revenue Q4 FY15 Scheduled capacity change Total load factor Yield Other traffic revenue Other operating revenue Total revenue Q4 +9.4% +1.0 p.u. -9.0% 18

19 Operating expenses analysis Total Operating Expenses Q4 MSEK -8, , ,455 Total operating expenses, Q4 FY15 Currency Operating expenses Q4 FY14 Fuel ex currency, volume Volume Cost efficiency program Inflation Other Operating expenses Q4 19

20 Breakdown of payroll expenses Payroll expenses significantly reduced New pension and remuneration agreements in November 2012 Outsourcing significant parts of operation and administration Increased productivity in all areas Opportunities going forward Digitalization and automation of operation on the ground and administration and where possible also for flying personal Payroll expenses excl. restructuring costs (MSEK) Pilots Crew Tech Ground Admin 11,502 2,979 (26%) 2,087 (18%) 2,069 (18%) FY12-21% 9,071 2,489 (27%) 1,199 (10%) 1,647 (18%) 3,168 (28%) 943 (10%) 2,700 (30%) Avg. number of FTEs 13,649 Pilots 1,340 (10%) Crew Tech Ground Admin 2,599 (19%) 1,500 (11%) 5,621 (41%) 2,589 (19%) FY12-22% 1,292 (14%) 10,710 1,300 (12%) 2,574 (24%) 1,110 (10%) 4,210 (39%) 1,516 (14%) 20

21 Jet fuel costs up MSEK 195 in Q4 Fuel cost Q4 MSEK -1, , ,959 Q4 FY15 Currency Curr. adj. Q4 FY15 Volume Price Hedging & time value Other Q4 21

22 Jet fuel and currencies Jet fuel Hedge position as at 31 October % of expected jet fuel consumption hedged in FY17 Currency Policy to hedge 40-80% of expected currency deficit/surplus next 12 months Negative currency effect of SEK 1.7bn in Stronger USD Weak NOK Working capital revaluation Jet fuel cost sensitivity FY17, SEK bn* Average spot price 8.0 SEK/USD 9.0 SEK/USD 10.0 SEK/USD USD 400/MT USD 600/MT Currency hedges* 53% of USD hedged in FY17 66% of NOK hedged in FY17 * Based on hedge position as at 31 October 2016 Max jet fuel price Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 $ /MT 59% 48% 52% 21% 22

23 Stable liquidity but lower equity ratio Financial preparedness 40% 37% 40% 39% 41% Financial preparedness at 41% Cash position at SEK 8.4bn Unutilized credit facilities of SEK 3.5bn Q4 FY15 Q1 Equity ratio Q2 Q3 Q4 SEK 6.0bn in equity Revaluation of pensions due to lower discount rates affected equity negatively in by SEK 1.6bn 21% 16% 15% 17% 19% Q4 FY15 Q1 Q2 Q3 Q4 23

24 Financing costs and capex Focus on reducing high financing costs Review capital structure Alternative financing possibilities Optimize financing of aircraft 8 more aircraft on balance sheet vs. LY Interest expenses on financial liabilities, SEK bn Capex disciplin Non-aircraft investments at SEK ~ 0.5bn/yr Increased aircraft investments in FY15- Pre-delivery payments and buy-back of operating leased aircraft Net investments in FY17 at SEK ~1 bn Purchase of operating leased aircraft Pre-delivery payments of aircraft 4 CRJ900 deliveries in FY17 on wet lease basis Deferred delivery of Airbus A350 FY13 Net capital expenditure, SEK bn FY13 FY14 Aircraft, spare parts Non-aircraft FY FY FY

25 Outlook FY17 and upcoming highlights High market uncertainty Volatile currency and jet fuel prices Geo-political uncertainty Introduction of aviation taxes Assumptions for FY17 SAS to increase ASK by 6-8% Lower PASK and unit cost Efficiency program to deliver SEK 0.7bn Higher jet fuel costs Implement structural actions Digitalization: -New website - EB platform Outlook FY17 SAS expects to post a positive EBT before non recurring items Higher jet fuel costs and weaker earnings in Q1 12 Airbus A320neo to be delivered in FY17 25

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