W.Douglas Parker, Chairman, President and CEO, US Airways

Similar documents
Second Quarter 2004 Teleconference

Press conference Full Year 2006

The SAS Group five business areas as from Q SAS Group statement of income

A challenging Quarter, but record passenger numbers. Quarter overshadowed by Q400 problems

Thank you for participating in the financial results for fiscal 2014.

SAS Group Interim Report

Air China Limited Announces 2009 Annual Results

SAS Group Q Teleconference

SAS Group 1 st interim report 2011

Continued good growth in most SAS Group markets first Quarter SAS Group EBT trend on the right track. Improved Result 1 st Quarter 2007

SAS AB:s Press Conference. Augusti 14 th 2008

SAS Group Presentation Carnegie, May 22, 2012 Sture Stölen, Head of IR

Third Quarter Presentation of Year end Report 2005 Stockholm and London, February SAS Group positive result 2005

A conversation with David Siegel, CEO, US Airways

AMR CORPORATION REPORTS SECOND QUARTER 2012 RESULTS

SAS takes forceful action in a challenging market

Second Quarter nd Quarter result improved by MSEK 526. Improved load and stable yields. Positive result and improved operating performance

Presentation of 1 st Interim Report 2006 Stockholm and London, May 4-5

QUT BlueShift Business Case Competition 2018 Business Case

THE FIRST CHOICE FOR FREQUENT TRAVELERS

SAS Group Asia Tour Financial Hearing Presentation May 14, 2012

2004/05 Full Year Results Presentation to Investors

Air China Limited Announces 2010 Annual Results

SAS Q3 2016/

The SAS Group SAS Danmark A/S SAS Norge ASA SAS Sverige AB

Press release Stockholm, 13/12/2017

SAS Group Q2 2012/13. Q2 Restructuring programme moving KPIs in the right direction

AEROFLOT ANNOUNCES FY 2017 IFRS FINANCIAL RESULTS

A MAGAZINE FOR AIRLINE EXECUTIVES 2011 Issue No. 1. T a k i n g y o u r a i r l i n e t o n e w h e i g h t s. America aviation

SAS Q1 2016/

NORWEGIAN AIR SHUTTLE ASA QUARTERLY REPORT FIRST QUARTER 2004 [This document is a translation from the original Norwegian version]

Third Quarter 2004 Analyst presentation November, 2004

Press Release. Bilfinger with dynamic start to financial year 2018

Press Release. Bilfinger 2017: Stable foundation laid for the future

SWISS posts stable first-half result

Air China Limited Announces 2010 Interim Results

H1 RESULTS 2007 Jón Karl Ólafsson, CEO

Analyst Meeting Full Year 2006

ANA HOLDINGS Financial Results for FY2014

A leading European hotel property company

Record Result. 2006/07 Full Year Results Investor Presentation. Moved on successfully following bid. Profit before tax % to $1,032 million

Finnair Q Result

ANA HOLDINGS Announces Mid-Term Corporate Strategy for FY ~Strengthening the foundations of the business and looking into the future~

2012 Result. Mika Vehviläinen CEO

SAS AB:s interim report April 29 th 2008

SAS Q2 2017/2018 TELECONFERENCE

ANA Holdings Financial Results for the Third Quarter of FY2013

ANA Holdings Financial Results for FY2013

SKYWEST, INC. ANNOUNCES THIRD QUARTER 2012 RESULTS

Interim Report 3:2000 January-September

Leaps and Bounds. A Conversation With Pham Ngoc Minh, President and Chief Executive Officer, Vietnam Airlines, Pg 18.

Forward-looking Statements

Analysts and Investors conference call. Q results. 15 May 2013

Joshua Koshy, Executive Vice President & CFO. Changing the Game

Enskilda Nordic Seminar 2006 Copenhagen 12 January President and CEO Jukka Hienonen

JAL Group Announces FY Medium Term Revival Plan

ANA HOLDINGS Financial Results for the Three Months ended June 30, 2015

Managing through disruption

THAI AIRWAYS INTERNATIONAL Pcl. Fiscal Year 2007

Media Release. Qantas Group Full Year 2017 Financial Result 1. Sydney, 25 August 2017

SAS AB Analyst meeting

A conversation with David Siegel, CEO, US Airways

The Civil Aviation Sector as a Driver for Economic Growth in Egypt

Norwegian Air Shuttle ASA

Mr. Adel Al-Banwan Deputy CEO

Finnair Q Result

UBS Transport Conference September 15 th Jean-Cyril Spinetta

Jazz Air Income Fund. presented by Allan Rowe, Senior Vice President and Chief Financial Officer

Information meeting. Jean-Cyril Spinetta Chairman and CEO

JAL Group Announces its FY Medium-Term Business Plan

Sabre Holdings Summer WILLIAM J. HANNIGAN Chairman and Chief Executive Officer

AIR CANADA REPORTS 2010 THIRD QUARTER RESULTS; Operating Income improved $259 million or 381 per cent from previous year s quarter

SPEECH BY WILLIE WALSH, CHIEF EXECUTIVE, INTERNATIONAL AIRLINES GROUP. Annual General Meeting, Thursday June 14, Check against delivery

Icelandair Group Financial Results for the first half and Q2 2007

Presentation at the annual general meeting 2017

Copa Holdings Reports Record Earnings of US$41.8 Million for 4Q06 and US$134.2 Million for Full Year 2006

TUI GROUP INVESTOR PRESENTATION

SAS Group Q Teleconference August 8, 2012

QANTAS RESULTS FOR THE YEAR ENDED 30 JUNE 2000 HIGHLIGHTS. Net profit before tax of AUD$762.8 million, up AUD$100.3 million, 15 percent on last year

QANTAS HALF YEAR 2015 FINANCIAL RESULTS 1

Compustat. Data Navigator. White Paper: Airline Industry-Specifi c

W.Douglas Parker, Chairman, President and CEO, US Airways

Scotia Capital Transportation & Aerospace Conference. June 5, 2007

OUTLINE OF JAL GROUP MEDIUM RANGE CORPORATE PLAN FOR THE YEARS 2004 THROUGH 2006

For personal use only

Ref. PE004/ May Subject: Management Discussion and Analysis for the First Quarter of 2018

ANA HOLDINGS Management Strategy Update

2010 ANNUAL GENERAL MEETING. May 4, 2010

El Al Israel Airlines announced today its financial results for the second quarter and the first half of 2017.

The business. Business opportunities throughout the value chain

Happy Jetting. A Conversation With Dave Barger, President And Chief Executive Officer, JetBlue Airways, Page 14.

ALITALIA GROUP: RESULTS FOR QUARTER THREE 2012

Icelandair Group Profits before Taxes ISK 3, 1 billion

SAS Group 1 st interim report 2011

Forward-looking Statements

ANA s Growth Strategy

EASYJET INTERIM MANAGEMENT STATEMENT FOR THE QUARTER ENDED 31 DECEMBER 2010

Finnair Group Annual Report 1 January 31 December 2006

Strengthened SAS delivers positive result in Q3

3rd Quarter Analyst Presentation

Transcription:

A MAGAZINE FOR AIRLINE EXECUTIVES 2005 Issue No. 2 T a k i n g y o u r a i r l i n e t o n e w h e i g h t s T H E T R A N S F O R M E R A conversation with W.Douglas Parker, Chairman, President and CEO, US Airways page 44 I N S I D E 33 Gulf Air s in-flight service wins top awards 36 SAS restructures to better compete 42 Jet Airways becomes an international carrier 2009 Sabre Inc. All rights reserved. wearelistening@sabre.com

BACK TO THE FUTURE SAS has restructured itself to be more flexible and compete effectively in its home markets. By Marco Contento Ascend Contributor FOR SCANDINAVIAN AIRLINES SYSTEM, WHAT S OLD IS NEW AGAIN. The airline, which formed when several local carriers joined forces after World War II, has in some ways returned to its roots by once again dividing its operations across its home region to become more flexible and better able to compete. In 2004, as SAS continued grappling with the challenges facing the industry, it divided into four separate airlines SAS Denmark, SAS Sweden, SAS Braathens and SAS International Airlines. The advantage of establishing four distinct carriers was not only to respond faster to market needs and lead the market with new initiatives rather than react but also to tailor individual initiatives to each individual airline. Although the individual airlines share departmental responsibilities in areas such as information technology, human resources and finance, each division is equipped with its own hub, fleet and crews to: Reduce complexity for each hub, Increase efficiency, Increase transparency, Allocate dedicated fleets, Optimize each hub individually rather than optimizing across the entire network. Breaking into separate airlines was part of a larger reorganization with a reshaped brand strategy. As part of the restructuring, designed to introduce clearly divided business areas driven by a focus on decentralization and transparency as well as individual responsibility for earnings, the SAS Group split into five core units: SAS Airline Businesses The four individual SAS-branded carriers with hubs in Copenhagen, Denmark; Stockholm, Sweden; and a regional hub in Oslo, Norway, which combine to form the fourthlargest airline group in Europe, carrying 24 million passengers with 200 aircraft; Subsidiary & Affiliated Airlines Independently operated carriers in which the SAS Group has an ownership stake, including Spanair, Blue 1, Widerøe, Estonian Air and airbaltic, which combined carried 8.6 million passengers last year to 73 destinations using 97 aircraft; Airline Support Businesses Companies including SAS Cargo, SAS Ground Services and SAS Technical Services, which account for 21 percent of the operating revenue of the SAS Group; Airline Related Businesses Associated organizations including SAS Flight Academy, Jetpak, European Aeronautical Group, SAS Business Opportunities and SAS Media that generated 2.9 billion SEK (US$3.8 million) in operating revenue in 2004; Hotels Rezidor SAS, tracing back to 1960 when SAS opened its first hotel in Copenhagen, which operates 190 hotels in 47 countries under five brands: Radisson, Country Inn, Cerruti, Park Inn and Regent.

Photos courtesy of Ted Fahn and SAS

We started by creating a clearer structure so that each company on its own power can develop its core activities according to the logic of its own business, said SAS Group Executive Vice President and Chief Financial Officer Gunilla Berg. You could say that we are normalizing the SAS Group s structure to resemble that of other groups. Giving companies their own responsibility for earnings is a strategy that has proved successful in other companies even within the group. Clearer responsibility for earnings is vital but requires a well-functioning and integrated management model. Such a model is now in place group wide. SAS s restructuring for the modern airline environment has some ties to its earliest days when it began as a group of separate airlines. The airline traces its roots to 1918 when a Danish air taxi company, Det Danske Luftfartselskab, was founded. In 1946, DDL united with Det Norske Luftfartselskap A/S and Svensk Interkontinetal Lufttrafik AB to form SAS. After five years of cooperation, the three airlines formed a consortium that has lasted more than 50 years. With the industry downturn in 2001, however, SAS was forced to rethink its structure and take various measures to transform the company. Not only did the airline face financial challenges, it also faced increasing competition, particularly from low-cost carriers. To understand the magnitude of competition in that region, compare Scandinavia with a similarly sized area of western Europe. Scandinavia, including Finland, has a land mass of a little less than 1.2 million square kilometers, which is comparable to the combined size of the United Kingdom, France and Germany. However, while those three countries have a combined population of more than 200 million, Scandinavia, including Finland, has slightly more than 24 million. Despite the relatively small population, travelers have a choice of more than 25 airlines offering intra-regional services, not counting other international carriers that connect the region with other markets. With most competitors offering point-to-point service, they have a significant impact on SAS s hub-and-spoke network structure. Faced with these challenges, four years ago SAS began restructuring its operations. Although the next three years proved difficult financially, its turnaround efforts laid the foundation for its improved performance this year. In 2001, the airline established SAS AB, the new holding company of SAS Group. As a result, various divisions and majority-owned subsidiaries were spun off. SAS sold 285,000 square meters of airport properties, such as warehouses and hangars, to investors as part of a program to free capital. In 2003, the airline sold its properties in Frösundavik, Sweden, as part of a sell-and-lease-back agreement. On the information technology side, SAS sold SMART, the Scandinavian Tour Operator Portal, in which it held 95 percent of the shares, to Amadeus in mid 2002. At the end of 2003, Scandinavian IT Group, which was a large division serving not only SAS but several other carriers with reservations and inventory technology, was sold to Danish CSC, which continues to manage all IT requirements of the SAS Group. The spin offs were part of the SAS Group s decision to focus on its core operations. We are releasing capital that can be used for airline operations, among other purposes, while at the same time we are letting a professional property-management company acquire the office properties, said SAS Chief Executive Officer Jörgen Lindegaard. Focusing on the core airline business led SAS to expand its ownership interests in other carriers. In 2002, SAS increased its stake in Spanair, which it launched in 1986, by an additional 25 percent, giving it 73.9 percent majority ownership. The following year, SAS increased its stake to 93.9 percent as it continued to shift its focus to its airline business by strategically investing in existing and new partners. In December 2001, SAS Group acquired Braathens, then the dominant player in the domestic Norwegian market. In mid 2002, SAS increased its ownership in Widerøe, another local Norwegian carrier, from 63.3 percent to 96.4 percent. In late 2003, the airline group acquired 49 percent minority share in Estonian Air, a Baltic carrier with predominantly local traffic that feeds into SAS s Scandinavian and longhaul networks. Since then, expansion in the Baltic states and Finland has proven important in SAS Group s positioning in the area, including its involvement in airbaltic, Latvia and Air Botnia, the wholly owned Finnish company that was renamed Blue 1 in 2004. Widerøe, Blue 1 and Braathens play a significant role in SAS s strategy by complementing its regional networks through the addition of new point-to-point routes as well as feeding the airline s European and long-haul networks. SAS also maintains an ownership interest in Spanair. While Spanair has only mar- Left: As part of the SAS Group s restructuring, it split into five operating businesses SAS Airline Businesses, Subsidiary & Affiliated Airlines, Airline Support Businesses, Airline Related Businesses, and Hotels making each group responsible for its own earnings. Right Top: Many of the key markets that SAS serves are expected to grow significantly during the next couple of decades, and SAS is positioning itself to take advantage of the increased traffic. Right Bottom: The SAS Group, which considers the Baltic Sea region its home market with 55 percent market share, also conducts airline operations activities in other regions, as well as other airlinerelated businesses and hotel operations. 38 ascend

Graphics courtesy of SAS ascend 39

Scandinavian Airlines Business Spanair Widerøe Blue 1 air Baltic Estonian Air Rezidor SAS, hotels

Left: With three members of the Star Alliance (Scandinavian Airlines, Spanair and Blue 1) and three other airlines within its group (Widerøe, airbaltic and Estonian Air), the SAS Group has an extensive network of approximately 1,445 daily departures to 146 destinations. The Group also has companies that support airline operations as well as a hotel operation. Right: The SAS Group s strong brand, which includes various travel entities such as airlines, hotels, cargo services, and ground services, enables customers to recognize the SAS Group, even when traveling on an airline that is not a primary user of the SAS master brand, such as Spanair or Blue 1. The SAS master brand signifies efficient, flexible travel solutions and attentive service. Top: Company officials hope by organizing its operations into five businesses positions the SAS group for a successful journey with a smooth landing. Bottom: SAS Group management team, back row from left: John Dueholm, Scandinavian Airlines Businesses; CEO Jörgen Lindegaard; Bernhard Rikardsen, Corporate Administration & Support; Front row from left: Gunnar Reitan, Subsidiary & Affiliated Airlines and Hotels, and Gunilla Berg, CFO. ginal impact on the Scandinavian market, it helps contribute to the airline s overall success. SAS also has a minority participation in Skyways and cooperates commercially with it on its predominantly domestic-sweden network. The airline continued its efforts to revamp its business with Turnaround 2005, a plan to return to profitability, which is expected to generate 14 billion SEK (US$1.8 billion) from 2003 to 2006. By the end of 2004, SAS had successfully implemented changes that will have an impact on earnings of 11.9 billion SEK (US$1.6 billion), bringing down unit costs by 26 percent compared to the end of 2002. Today, SAS continues to change the way it does business. The yield stabilization that started at the end of the third quarter of 2004 has continued through the first quarter of 2005, Lindegaard said. The high oil prices were compensated by fare adjustments. The emphasis now is on improving the cabin factor through capacity adjustments and a more aggressive commercial focus. Scandinavian Airlines Denmark and Scandinavian Airlines International are focusing on development of Copenhagen as a traffic hub. In Sweden, we launched Nya Inrikesflyget (a new domestic concept) at the end of March, which has been a major sales success from the start with more than 100,000 ticket reservations on our new, simplified Web site by the end of April. The other airlines in the SAS Group have developed as planned and strengthened their market positions. SAS Group s total net income improved by approximately 400 million SEK (US$53 million) in the first quarter of the year compared to the same period in 2004; the unit cost decreased an additional 7.5 percent. The new price concept in Sweden alone saw loads for SAS Sweden jump by 11.6 percent. Despite rising fuel costs, the SAS Group reported a successful second quarter when group earnings (before capital gains and non-recurring items) jumped dramatically to 579 million SEK (US$76 million). What Lies Ahead? On the cost side, SAS will continue pursuing productivity increases for its flight crews. SAS Ground Services and Technical Services are also in the focus to deliver savings. And with the intended shift to direct sales channels, distribution costs with its global distribution system partners will also be reviewed. On the product side, changes keep dominating. Following the success of its Nya Inrikesflyget concept for Sweden, which is based on one-way fares, SAS introduced the same for Europe, making it the first huge network carrier in Europe to introduce such a radical change. As a result of Turnaround 2005 and its ongoing restructuring efforts, SAS appears to be on track to return to profitability after four consecutive years of losses. a Marco Contento is a Europe-based account director for Sabre Airline Solutions. He can be contacted at marco.contento@sabre.com. ascend 41