SAS AB:s interim report April 29 th 2008

Transcription

1 SAS AB:s interim report April 29 th 28 A very challenging 1 st Quarter The airline industry under pressure Record high fuel prices Increased competition Yield pressure Increased overcapacity Profit warnings Bankruptcies Consolidation EBT bef. non rec Jan-Mar 28: -973 MSEK Profit 28 - Short term profit protection program to secure 28 result 1.1 billion result effect Capacity adjustments 11 aircraft + 1 long haul aircraft postponed 1 FTE s reduction Focus on S11 implementation 1 2 GDP Forecasts lowered Slowdown of the economic cycle visible 1 st Quarter 28 result GDP change % vs 27 Result development Sweden Norway Denmark Finland Estonia Latvia Lithuania MSEK Revenues EBT bef nonrecurring items (cont. operations) EBT-margin % % -6.8 p.u. EBT-margin (12 months rolling),7% EBT margin target 7% 3 4

2 Profit 28 a step up of program launched in Q4 Profit 8 isive cost and capacity measures Short term measures on top of Strategy 211 to get us back on course Secure performance in Billion SEK in total program Price adaptations Traffic program changes Other efficiency measures Capacity reduction of 11 aircraft as from autumn 28 + one postponed intercontinental aircraft Approx 1 FTE reduction 5 6 Continued focus on S11 strategy including long term cost program Customer offer: Punctuality and regularity are improving P8 Program to secure 28 Cultural Turnaround Focus and concentration Harmonization and development of customer offer Competitiveness Profitable growth Both punctuality and regularity have improved vs last year Punctuality is still not satisfying Target is 9% punctuality Scandinavian Airlines was one of the most punctual European airlines in 27 (AEA) Regularity Scandinavian Airlines Punctuality 1,% 9,% 98,% 85,% 96,% 8,% 94,% 92,% 75,% 9,% 7,% Jan Feb Mar Regularity 27 Regularity 28 Punctuality 27 Punctuality

3 Underlying result with negative trend MSEK Income before nonrecurring items in continuing operations Easter Q4 effects 5 5 ECA/bmi Underlying result development Reasons for result development Rapidly increased fuel prices to record levels Increased competition Gunilla Berg Increased overcapacity Yield pressure CFO 1 Scandinavian Airlines affected by yield pressure and record oil prices Mixed development for other group companies Scandinavian Airlines Results EBIT margin EBIT before nonrec. (MSEK) SAS Norge Q % p.u SAS Danmark SAS Sverige SAS International Q1 28 Q1 28 Q % -4.3 p.u. -3.3% -1.9 p.u. -8.4% +4.2 p.u st Quarter Business Area SAS Individually Branded Airlines Subsidiary Widerøe Blue1 airbaltic EBIT EBIT Margin, 12 months rolling 4.5% 5.6% -2.9% vs. last year SAS Aviation Services STS % EBIT-margins, 12 months rolling SGS % SAS Norge 4.8% SAS Cargo 4 1.7% SAS Danmark 2.6% SAS Sverige 4.5% SAS International 1.2% 11 12

4 Fuel cost SEK,4 bn higher in the 1 st Quarter - Expected to be appr SEK 1.7 bn in 28 at current market levels Distribution of Profit 28 More challenging but strategy intact Hedging 4-6% of expected consumption (12 months rolling) Yield management Cost initiatives Fuel prices at all time high Current hedges 42% of the consumption hedged for 28 Of which appr. 1 p.u. with swaps Of which appr. 22 p.u. with options Remaining with 3-ways MSEK 28 Price adaptations 4-5 s in traffic program 25 Reduction regarding overhead admin and sales 15 Other activities Total USD / Ton 8 6 Capacity reduction aircraft + Traffic program changes ASK: 6-7% vs.plan Structural measures of SEK 2.8 bn being implemented, but still behind plan 14 SEK billion in available funds Solid liquidity of MSEK % Structural cost program of SEK 2,8 bn by 29 Despite several developments (NDP e.g.) in Q1, still behind plan (as communicated in Q4) Main reasons behind plan Productivity SGS Cost GAP after this program 21 onwards 4% 44% 16% Implemented Gap vs. Plan Remaining Remaining Implemented Available credit facilities of MSEK 5 99 Financial covenants unsecured facilities (SEK 4.5 bn) linked to earnings/ leverage and liquidity Current performance provide good headroom vs covenants Interest bearing liabilities reduced by SEK 2.4 bn vs 27 3% 25% 2% 15% 1% 5% % dec-98 mar-3 jun-4 sep-5 dec-7 mar-8 Fin. Net Debt + 7*Op lease / Equity Procurement Central adm. Flight operational Sales/adm. Ground/Technical Financial net debt 1,1 SEK billion No financial covenants on gross debt 15 16

5 Limited interest bearing maturities after June 28 Sum up 1 st Quarter Maturity of SEK 4 bn in June 28 Limited maturity in 29 (5MSEK) MUSD 729 in aircraft CAPEX in B deliveries to be placed on operating leases CRJ/ Q4- strong interest from: Export Credit Agencies Commercial banks Operating lease market In progress New standby facility with aircraft as security of SEK 1 billion >216 Apr- Market Profit 28 Strategy 211 Challenging time in the industry Rapid increase of fuel prices to new records Increased overcapacity/ competition => Weaker yields 11 aircraft will be taken out Capacity reduced by 6-7% 1.1 SEK billion result effect Redundancy 1 FTE`S 2,8 SEK billion cost program Cultural turnaround Customer focus product and quality improvements Appendices 2

6 Profit 28, earning s impact in Q2-Q4 Focusing and concentration Status: Measures to continue throughout 28 Similar impact in Q2 and Q3 Largest impact in Q4 as aircraft will be grounded Fuel price development important in short term Q2 Q3 Q4 28 Profit 28 SGS STS SAS Cargo Spanair BMI Air/Baltic/Estonian Keep internal, pending cost reductions of MSEK 4 and quality targets within 18 months. If targets not reached: Outsourcing/ Seek external partner ision to outsource B737 classic heavy maintenance ision to sell cargo handling (Spirit) Bids received expecting closing 1st half 28 In process, many interested parties In process Follow up of profit 28 and potentially further short term measures Detailed follow up of implementation of P 8 established Contingent measures available if necessary Capacity can be adjusted up/down depending on how demand is developing - Flexibility in wet lease agreements Very satisfying settlement More than SEK 1 billion in financial compensation from Bombardier and Goodrich Cash and credits New aircraft order Firm order of 27 CRJ 9 NextGen (13) and Q4 NextGen (14) Option for 24 aircraft (17 CRJ9 NextGen and 7 Q4 NextGen) Milestone in SAS Group s fleet renewal Speedy delivery, starting autumn Rejuvenates regional network fleet Differentiated premium product for CPH feeder network New and upgraded Q4s for Widerøe and airbaltic 23 24

7 More streamlined group structure after sale of Flight Academy and Newco Increasing number of passengers - Focus to improve the load factor Record number of passengers since April ,% 31 72,% 3 7,% Scandinavian Airlines Norge Scandinavian Airlines Danmark Scandinavian Airlines Sverige Scandinavian Airlines International Spanair * Widerøe Blue1 airbaltic SAS Ground Services SAS Technical Services SAS Cargo ,% 66,% 64,% *) Discontinued Business Strategic affiliated company: Estonian Air 26 jan-5 may-5 sep-5 jan-6 may-6 sep-6 jan-7 may 27 sep-7 jan-8 62,% Number of passengers (12 months rolling) Passenger load factor (12 months rolling) Revenues growing the in the airline business areas areas SAS Group s seasonal pattern Revenues (SEK bn) Group Revenue distribution SAS Group Revenues (per month) 5 3,4 3,7 Jan-Mar 7 Jan-Mar 8 SAS Aviation Services 5 SAS Individually Branded Airlines Revenues (SEK bn) 15 SAS Scandinavian Airlines Revenues (SEK bn) ,6 1,8 5 9,1 9,8 Jan-Mar 7 Jan-Mar 8 Jan- Mar 7 Jan - Mar 8 jan feb mar apr maj jun jul aug sep okt nov dec 27 28

8 Weaker Quarter due to Q4 problems and lower yield MSEK, EBT before gains and nonrecurring items Strong growth in the Baltic (%) Passenger growth in 28 vs million passengers in Q1 Q2 Q3 Q airbaltic SAS SAS Norway SAS Group SAS Sweden Wideroe SAS International Denmark Blue Jet fuel prices Overview of the SAS Group s fuel hedging and expected cost 28 Average market prices on high jet fuel (2-28) SAS Group s jet fuel hedging portfolio Year USD/MT Q2 28 Q3 28 Q4 28 Q Q1 27 Q2 27 Q3 27 Q4 27 Q jan-3 maj-3 sep-3 31 jan-4 maj-4 sep-4 jan-5 maj-5 sep-5 jan-6 maj-6 sep-6 jan-7 maj-7 sep-7 jan-8 Options 14% 22% Strike price, USD/MT Swaps 8% 1% Price, USD/MT Way 16% 5% Price, USD/MT SAS Group s jet fuel costs in 28 (annual average values,)* Market price 5.5 SEK/USD 6. SEK/USD 8 USD/MT SEK 8.1 bn SEK 8.7 bn 1 USD/MT SEK 9.1 bn SEK 9.7 bn 1 2 USD/MT SEK 1. bn SEK 1.7 bn *)Spanair excluded 32 3% % 6.5 SEK/USD SEK 9.2 bn SEK 1.3 bn SEK 11.4 bn 23% 883 8% 773

9 Business areas SAS Scandinavian Airlines 33 Weak Q1 due to costs for Q4 and lower yield EBITDAR in 1st Quarter MSEK 286 SAS Scandinavian Airlines Jan-Mar 28 (MSEK) Jan-Mar 27 (MSEK) EBITDAR, SAS Scandinavian Airlines (MSEK) 2 Revenues Operating expenses EBITDAR Lease EBITDA Depreciation Income from sales/affiliated EBIT EBT EBT before nonrecurring items Q1 Q2 Q3 Q

10 Result development in SAS Scandinavian Airlines affected by Q4 incidents Lower yield and load factor, but positive development on intercontinental routes EBIT before nonrecurring items (12 months rolling) SK Results SAS Norge SAS Danmark SAS Sweden SAS International 1 2 SAS Norge Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q SAS Danmark Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q SAS Sverige Q4 25 Q1 26 Q2 26 Q3 26 Q4 26 Q1 27 Q2 27 Q3 27 Q4 27 Q1 28 SAS International Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q (MSEK) Total Revenues EBITDAR EBIT before nonrecurring items Jan-Mar SAS Norge Jan-Mar 28 Weak yield in in Q1 No No of of pass up up 4.6% Cabin factor up up 1.5 p.u. to to 66.2% Yield down 11.7% Unit cost up up 9.5% SAS Sverige Jan-Mar 28 Weak load and yield in in Q1 No No of of pass up up.9% Cabin factor down 4.1 p.u. to to 64.7% Yield down13.3% Unit cost up up 3.6% Jan-Mar Jan-Mar Jan-Mar SAS Danmark Jan-Mar 28 Yield and load factor down No No of of pass down 1.4% Cabin factor down 2.5 p.u. to to 62.6% Yield down 5.7% Unit cost down 6.1% SAS International Jan-Mar 28 Improved yield and load in in Q1 Cabin factor at at 82.9% Yield up up 5.7% Unit cost up up 4.3% SAS Business Sleeper installed Key ratios in the 1 st Quarter 28 Yield down 6% in Q1 for Scandinavian Airlines 28 vs 27 Jan-Mar 12 months rolling average SAS Group Traffic (RPK) Cabin Factor Scandinavian Airlines +6.4% -.2 p.u. 1,4 1,3 1,2 Yields (RPK) RASK Fuel Fuel adj. adj. unit unit cost cost -6.% -4.2% +7.1% 39 1,1 1 dec-3 mar-4 jun-4 sep-4 dec-4 mar-5 jun-5 sep-5 dec-5 4 mar-6 jun-6 sep-6 dec-6 mar-7 jun-7 sep-7 dec-7 mar-8

11 North Atlantic cabin factor above AEA European routes Daily departures from Copenhagen to New York, Washington DC, Chicago, Seattle San Francisco to be launched Daily departures from Stockholm to New York and Chicago Reduction of capacity in the winter season (=low demand) Traffic development in Jan-Mar 28 Load factors in negatively affected by grounding of Q4, but still in line with AEA 14 new routes out of Oslo as from summer program Traffic development Jan-Mar 28: AEA traffic up 7.7% SAS traffic up 6.9% SK traffic down 1.4% AEA traffic up 2.7% %, Cabin factor May July September November SAS May July September November AEA May July September November %, Cabin factor February April May June July August September October November ember February SAS April May June July AEA August September October November ember February April May June July August September October November ember February Strong Asian traffic during the winter season Scandinavian Airlines serving Bangkok, Beijing, Tokyo and Dubai Stockholm-Bangkok and Copenhagen-Dubai in the winter season New strategy on China successful SK passenger load factor above AEA Traffic development in Jan-Mar 28: AEA traffic up 1.3% SAS traffic up 11,% as capacity was increased during the winter season %, Cabin factor May July September November May SAS July September November AEA May July September November SAS Individually Branded Airlines 43

12 SAS Individually Branded Airlines Estonian Air s growth continues SAS Individually Branded Airlines Result Revenues Jan-Mar 28 (MSEK) Jan-Mar 27 (MSEK) The SAS Group holds 49% in Estonian Air Competitive cost position Estonian Air number of passengers up 13% in Q1 Operating expenses Two wet leased SAAB 34 in operation as from 2 nd Half 27 has enabled Estonian Air to EBITDAR introduce new destinations Lease EBITDA Number of passengers Estonian Air Depreciation Income from sales/affiliated EBIT EBT EBT before nonrecurring items Mar Jun Sep Mar Jun Sep Mar Jun Sep Mar Jun Sep Mar Jun Sep Mar 12 month rolling Monthly figures Wideröe and airbaltic weaker Blue1 in line with last year SAS Individually Branded Airlines Widerøe Blue1 airbaltic Results (MSEK) Jan-Mar Jan-Mar Jan-Mar Total Revenues EBITDAR EBIT before nonrecurring items Widerøe Jan-Mar 28 Result affected by by Q4 replacement No No of of pass down.4% Cabin factor up up p.u. p.u. to to 59.4% Yield down 7.8% airbaltic Jan-Mar 28 Strong growth, but yield down No No of of pass up up 38% Cabin factor down.7.7 p.u. p.u. to to 54.6% Yield down 9.3% Blue1 Jan-Mar 28 Result in in line with last year although Easter No No of of pass down 12.3% Cabin factor down p.u. p.u. to to 58.7% Yield up up 6.4%, Unit cost up up 3.1% (Spanair, discontinued business) SAS Aviation Services 47

13 SAS Aviation Services Breakdown SAS Aviation Services SAS Aviation Services Revenues Jan-Mar 28 (MSEK) Jan-Mar 27 (MSEK) SAS Aviation Services Revenues Jan-Mar 28 EBIT before nonrec. items Jan-Mar 28 Operating expenses SAS Ground Services EBITDA Depreciation Income from sales/affiliated SAS Technical Services SAS Cargo EBIT EBT EBT before nonrecurring items SAS Group Balance Sheet SAS Group Balance Sheet Mar 31, 28 31, 27 Liquid funds Aircraft, spare parts Other assets Assets for sale Financial update Total assets Operating liabilities Interest-bearing liabilities Deferred tax Liabilities attributalbe to assets held for sale Equity Total liabilities and equity Financial net debt

14 SAS Group has more than SEK 14 bn in available funds CAPEX Available Funds MSEK Liquid Funds Mar Mar Firm Aircraft Orders Boeing 737 Total Available Credit Facilites: Revolving Credit Facility (MEUR 366) Revolving Credit Facility (MUSD 156) Revolving Credit Facility (MSEK 25) CRJ9 Next GEn Q4 Next Gen Bi-lateral Facilities Number of Aircraft Total Available Facilities Others CAPEX (MUSD) Total Available Funds Available facilities: Utilized facilities Total facilities SAS Group CAPEX increased in mainly to replace Q4 p MSEK F 29F 21F Improved financial ratios vs 27 Key figures Mar 8 7 Mar 7 Target Equity/assets ratio (solidity) 33% 35% 32% Adjusted equity/assets ratio 23% 24% 22% >3% Adjusted gearing 15% 142% 166% <1% Financial net debt/ equity 9% 7% 23% <5% 56

15 Amortization profile of interest bearing liabilities Financial Net (MSEK) Difference Interest net and others N/A Exchange rate differences N/A Financial net N/A >216 Apr Financial Net 28 Development and Break Down of Financial Net Debt (MSEK) Q1-28 Q1-27 Difference (MSEK) Difference Interest net and others Cash Exchange rate differences Financial net Other interest bearing assets Interest bearing liabilities Financial Net debt

16 Development and Break Down of Financial Net Debt Development of Financial Net Debt 28 (MSEK) Difference Cash Other interest bearing assets Interest bearing liabilities Financial Net Debt Financial net debt 7 Cash flow from operating activities Sale of subsidiaries, net Investments onsolidation, currency & other Financial Net Debt Mar Financial Net debt Development of the Financial Net Debt, reduced by more than SEK 15bn since peak levels Development of the Equity/Asset ratio 5% 45% 4% 35% 3% 25% 2% 15% 1% 5% %

17 Financial Net Debt/Equity ratio development Gearing ratios improved 2,5 2,3 2, 1,8 1,5 1,3 1,,8,5,3, % 27% 22% 17% 12% 7% 2% -3% dec- dec- dec- dec- dec- mar- jun- sep- dec- mar- jun- sep- dec- mar- jun- sep- dec mar- jun- sep- dec- mar- jun- sep- dec- mar Fin Net Debt / Equity Equity / Total Assets Fin. Net Debt + 7*Op lease / Equity Credit position sum up APPENDICES Solid liquidity of MSEK 8 2 Available credit facilities of MSEK 5 99, same level as in ember 27 adjusted for currency Enabling SAS to pay off the Euro Medium Term Bond due in 28 Assets for sale of MSEK 6 5 Interest bearing liabilities down MSEK 291 in Q1 Amortization of MSEK 199 Yield Unit cost Fleet Financial key figures MUSD 194 in aircraft CAPEX in 28 MUSD 535 in aircraft CAPEX in mainly to replace Q4 No financial covenance on debt on the balance sheet Consolidation of balance sheet will continue coming years 67 68

18 Yield development Improved yield and load factor Yield, SAS Scandinavian Airlines MSEK Jan-Mar 28 Jan-Mar 27 Yield (öre/rpk) % Yield, SAS Individually Branded Airlines Yield, local currency Jan-Mar % 8% SAS Scandinavian Airlines 1,3 1,25 Currency adj. yield % +6.4% 7% 1,2-9.3% 6% 1,15 1,1 69 5% 4% 3-nov 4-feb 4-maj 4-aug Load factor 4-nov 5-feb 5-may 5-aug 5-nov 6-feb may-6 Yield (12 months rolling) 7 6-aug o6-nov 7-feb 7-maj 7-aug 7-nov 8-feb 1,5 1, Yield development SAS Scandinavian Airlines Break down of SAS Scandinavian Airlines Unit Cost Jan-Mar 28 2 Cost break down, volume, currency and method adjusted SAS Scandinavian Airlines Yields down 9.1% in 24 Yields down.3 in 25 Yield up 1.2% in Q1 26 Yield up 1.9% in Q2 26 Yield up 9.2% in Q3 26 Yield up 15.4% in Q4 26 Yield up 16.% in Q1 27 Yield up 8.3% in Q2 27 Yield up 2.7 in Q3 27 Cost break down Personnel Fuel Gov. Charges Selling cost Ground Services Jan-Mar Jan-Mar Var % 6,8% 29,6% 2,%,2% 1,6% Share of total var% 1,7% 4,8%,2%,%,2% -2 Q1 vs 23 Q3 Q1 vs 24 Q3 Q1 vs 25 Q3 Q1 vs 26 Q3 Q1 vs 27 Yield up 1. in Q4 27 Yield down 6% Q1 28 Technical Other operating costs TOTAL OPERATING EXPENSES ,3% 29,8% 13,3% 1,4% 3,9% 12,2% Aircraft costs ,2% -,3% ADJUSTED EBIT ,9% 11,9% 71 72

19 Unit cost significantly up in Q1 due to fuel costs and Q4 wet lease costs Productivity Block hours, 12 months rolling, Apr 7 - Mar 8 SAS Scandinavian Airlines unit cost change 12% 7% 2% -3% -8% -13% -18% -23% Unit cost down 1.9% in 24 Unit cost down 1.7% in 25 Unit cost up 5.2% in 26 Unit cost up 3,9% in 27 Unit cost up 11,9% in Q1 28 Adjusted for fuel, unit cost was up 7,1% Adjusted for Q4 and fuel unit cost was up 2.6% 12 months rolling SAS Scandinavian Airlines Widerøe Blue1 airbaltic Aircraft hours/day 8,4 6,68 8,33 9,46 Pilots hours/year Cabin hours/year st Q 23 2nd Q 23 3rd Q 23 4th Q 23 1st Q 24 2nd Q 24 3rd Q 24 4th Q 24 1st Q 25 2nd Q 25 3rd Q 25 4th Q 25 1st Q 26 2nd Q 26 3rd Q 26 4th Q 26 1st Q 27 2nd Q 27 3rd Q 27 4th Q 27 1st Q Key productivity ratios need to improve SAS Scandinavian Airlines Self Service check in above 55% Internet check closing 15% Aircraft utilization (12 months roling) Cabin, pilot utilization (12 month roling) 8,5 8 7,5 7 6,5 6 5,5 5 Apr Aug Apr Aug Apr Aug Apr Aug Apr Aug Apr Pilots Aug Apr Aug Cabin crew Apr Aug 6% 55% 5% 45% 4% 35% 3% 25% 2% Automat Automat+internet 75 76

20 Very weak USD in 28 Currency effect SAS Group, continuing operations - 28 vs MSEK Jan-Mar Total revenues Total costs Forward cover costs & working cap Income before depreciation Financial items Income before tax Breakdown of currency effect SAS Group, continuing operations - 28 vs 27 Currency distribution in the SAS Group 27 (Spanair included) Total revenues & costs Currency effect Total revenues & costs Forward cover costs USD DKK NOK EUR Asian currencies All others Total SEK 18% Revenues DKK 1% USD 7% GBP 3% Other 7% DKK 12% Expenses USD 31% GBP 1% Other 2% Working capital Financial items Difference Difference Difference NOK 26% EUR 29% SEK 15% NOK 18% EUR 21% Total currency effect

21 SAS Group fleet 28 SAS share Development of the SAS Group s Market Capitalization Weak start in 28 for airline shares SAS Group market capitalization and trades shares Marknadsvärde, Market capitalization, MSEK MSEK 35 3 Omsättning Traded shares, antal day aktier , 1, SAS Market Capitalization vs European Peers (SEK) (ember 31, 27-31, 28) , , 7, 6, 74,3 66, jan-5 maj-5 sep-5 jan-6 maj-6 sep-6 jan-7 jun-7 okt-7 jan-8 5, dec-7 jan-8 feb-8 Traded shares Market capitalization Peers SAS 83 84

22 Strong increase in number of traded shares in 28 Number of traded shares Number of traded shares, SAS Group Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov