SAS takes forceful action in a challenging market

Transcription

1 SAS Q2 2013/14 1 1

2 SAS takes forceful action in a challenging market Q2 EBT MSEK -1,078 Disappointing result in a challenging market most European carriers struggle During the last year, capacity has outgrown demand by ~50% PASK down -8.9% in Q2 vs LY* Load factor up 1.4% in Q2 vs LY, April up 8.6% vs LY Restructuring program continues to deliver SK unit cost down 5.3%** Additional measures to be launched immediately Cost saving initiatives, whereof SEK ~1 bn already in FY2015 New top line growth initiatives, e.g. intercont expansion, EuroBonus partnerships * Currency adjusted ** Currency adjusted, excluding fuel and amended pension terms of MSEK 450 in Feb-Apr

3 Market capacity outgrows demand creating significant yield pressure Number of available seats and passengers, to from and within Scandinavia millions R12 Q R12 Q ,8 +5,2 7.8 mn new seats in the market but only 5.2 mn more passengers Seat growth has exceeded passenger growth by ~50% Strong yield pressure Seats Passengers Source: Innovata schedule data (seats); Transportation authorities (passengers) 3

4 Price pressure is impacting most European carriers Yield development vs. last year Reported EBT, Jan-Mar 2014 % 5% EBT Trend 0% MNOK % SAS MEUR -307 MEUR % Norwegian MEUR -667 Q1- Q2- Q3- Q Q

5 SAS continues to strengthen its customer proposition Opened 11 new destinations and increased frequencies on a number of critical business flows Launched enhanced EuroBonus incl. new Diamond tier level Several new EuroBonus partnerships New domestic lounge at OSL opened Low-price calendar and vacation planner back on SAS website New fast tracks in Stavanger and Trondheim 5

6 As a result, load factors have increased and our market share has improved SAS load factors 80% FY 2013/14 SAS passenger market share %onshorthaulroutes haul routes 51 FY 2013/ % FY 2012/ FY 2012/ % Dec Jan Feb Mar Apr Dec Jan Feb Mar Apr Source: Innovata schedule data; Airport statistics; TRAST 6

7 Our restructuring program continues to deliver Punctuality improving Scandinavian Airlines SAS most punctual international airline in April* Increased aircraft utilization A/C utilization vs. LY, (short haul)* 83.6% 90.6% +4.6% +3.7% Q2 FY13 Q2 FY14 Q2 FY13 Q2 FY14 * According to Flightstats * 12 months rolling Unit cost decreasing SK, FX & Fuel adjusted unit cost vs. LY* Cabin crew productivity growth up Scandinavian Airlines vs. LY * -3.6% -5.3% +3.5% +7.4% Q2 FY13 Q2 FY14 * Excluding MSEK 450 in non-recurring items in Q2 FY13 * 12 months rolling Q2 FY13 Q2 FY14 7

8 SAS takes forceful actions SAS Group revenue MSEK Strategic priorities 9,933 8,472 1 Establish an efficient operating platform Q2 13 SAS Group EBIT MSEK -109 Q2 14 Q2 results clearly indicate we need to do more... 2 Additional cost saving initiatives of SEK ~1 bn already in FY2015 Win the battle for Scandinavia s frequent travelers Expand intercont capacity with 3 additional wide body aircraft Invest in our future Complete fleet and cabin renewal -661 Q2 13 Q2 14 8

9 1. Additional measures to be launched immediately Further reduction of ~300 white collar FTE Address all components of sales and distribution, e.g. credit card fees, centralized marketing, etc. Establish new supply chain function to reduce external spend Improve Tech shop floor management and implement LEAN to improve line productivity Increase self service bag drop and boarding, improve resource utilization in Ground Expected savings of SEK ~1 bn in 2015 Additional savings by 2017 to be quantified during autumn Increase crew productivity optimizing base structure in Norway, etc. 9

10 2. We further develop and strengthen our network Focus on point to point routes with high demand from Scandinavia s Scandinavia s frequent travelers Examples of new nonstop routes, outes, Use two-tier production model to: Right-size routes Add new thin point-to-point destinations Increase flexibility Further increase utilization to capture offpeak leisure growth Add new intercont nonstop destinations from ARN/OSL by expanding fleet with 3 long haul aircraft during Open Stavanger-Houston nonstop route 10

11 2. Digital Transformation to facilitate growth, efficiency improvements and customer satisfaction Key initiatives Digital Sales Distributed platform available on all devices One click to purchase Rule based personalization and CRM targeted, personalized offers Enable up-sell and increased ancillary revenue Smooth travel Proactive irregularity handling Automation and self service options for e.g. customer service, EuroBonus points registration, baggage and boarding etc. Recognition Know the customer in all touch points Automated call centre solution Partner touch points & Content Digital services and content provided by partners new revenue opportunities for SAS 11

12 3. Invest in our future Aircraft orders Cabin upgrade Digitalization 12 wide bodies on order, first delivery in narrow bodies on order, first delivery in 2016 Total investment USD~3 bn New seats and interior upgrade Fully flat business seats on intercont with Hästens bedding First aircraft with refreshed cabintoarri arrive eearly 2015 Investment MSEK ~500 Digital Transformation a third key investment area in coming gyears MSEK ~500 to be allocated 12

13 GÖRAN JANSSON CFO 13

14 Top line pressure in Q2 cost initiatives continue to deliver (MSEK) Total operating revenue Payroll expenses Fuel Government charges 8,472 2,466 1, Other operating expenses 2,903 Changed pensions agreements Total operating expenses* 8,294 EBITDAR before non recurring items 178 Leasing costs, aircraft 500 Depreciation 338 Share of income in affiliated companies 1 EBIT before non recurring items 659 Financial items 417 EBT before non recurring items 1,076 Non recurring items 2 EBT Share of Feb Apr 14 revenue Feb Apr % 23.4% 11.1% 34.3% 97.9% 2.1% 5.9% 4.0% 0.0% 78% 7.8% 4.9% 12.7% 8,939 2,654 2, , , Share of revenue 29.7% 22.9% 10.5% 31.0% 5.0% 89.0% 11.0% 4.3% 4.2% 0.0% 24% 2.4% 2.5% 0.1% Change (pts) , % % 8.6 * = before non recurring items and excluding Wideröe 14

15 Traffic revenues impacted by tough market conditions Total Traffic Revenues Q2, SAS Group (MSEK) Total traffic revenues excl Wideröe Feb-Apr 2013 Currency Traffic revenues Feb-Apr 2013 Capacity Load factor Yield growth +4.2% +1.4 p.u % Other traffic revenues Total traffic revenues Feb-Apr

16 4XNG contributed MSEK 320 in Q2 Total Operating Expenses Q2, SAS Group (MSEK) Total operating expenses Feb-Apr 2013 One-off pension effect Currency Operating expenses Feb-Apr 2013 Fuel excl volume & FX Volume 4XNG Other Operating expenses Feb-Apr

17 4XNG restructuring program on track Decreased unit cost SK unit cost excl fuel, index vs. LY R12 FTE reduction according to plan ,078 12, % Q2 FY13 Q2 FY14 Oct 2012 Jul 2013 Apr 2014 Unit cost reduced by approximately 9% since 2012 Unit cost tdown 5.3% 3%in Q2FY14 Sale of Wideröe Centralization of administration Outsourcing 17

18 Recapitalization plan completed during Q2 EMTN private placement bond Domestic private placement bond Refinance bonds that matures in 2014 MEUR 35 Refinance bonds that matures in 2014 MSEK 1,500 Preference share issue Strengthen shareholders equity and financial preparedness Provide capital for the modernization of the aircraft fleet MSEK ~3,500 Convertible issue New bilateral facility Refinancing of the existing convertible bond that matures in April 2015 MSEK ~ 1,600 Further strengthen the financial preparedness MEUR 150 As a consequence of the above financial measures and the short remaining maturity SAS has cancelled the RCF MSEK 1,800 The credit facility is unutilized RCF cancellation g y 18

19 Additional measures with SEK ~1 bn in earnings impact in FY2015 SAS earnings impact SEK bn Additional significant initiatives in the billion range to be specified in autumn ,5 1,2 1,3 ~1,0 ~1,0 Additional 0,3 3,0 4XNG FY13 FY14 FY15 Total 19

20 Summary Disappointing Q2 result SAS takes forceful actions No 1 punctuality among international airlines in April Unit cost down by 5.3% in Q2 Strong customer confidence 300,000 additional passengers Launch of further cost saving initiatives of SEK ~1 bn already in FY2015 Wide body fleet cabin refresh program on track Expansion of intercont network Outlook FY 2013/14: Continued yield pressure expected Positive EBT in FY14 (incl. pension effects) Restructuring provision (not yet defined) will negatively impact EBT 20

21 Thank you! 21