Weak full year result but according to plan Teleconference Fiscal year st Quarter weak according to plan nd Quarter passenger load factors and yields better than expected 3 rd and 4 th Quarter pressure on yields Short term measures completed Structural improvement measures under implementation Additional structural measures to position group airlines to be introduced The SAS Group five business areas as from Q4 SAS Group statement of income MSEK 00 Change Revenue 64 944 5 433 +6% EBITDAR 7 94 3 68 +30% EBT -450-40 +60% EBT excl. cap gains -95-8 +66% 4 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec
The SAS Group seasonality pattern January, February, July and December seasonally weak months Easter has a negative earnings effect by appr. 00-300 MSEK. Acquisition of Spanair has reduced seasonality slightly In weak market the SAS Group has taken market shares vs. AEA 5-30% 88% 90 % 60% 70% 0 % 60% 5-30% Winter Summer Winter North Atlantic 00 SK +9% 0% 999 000 00 AEA -8% -% (RPK) 5-30% RPK Europe 00 Asia 00 SK +3% -5% SK +8% +4% jan feb mar apr maj jun jul aug sep okt nov dec AEA 0% -5% (RPK) AEA 0% -7% (RPK) 5 6 European routes Continued fall in Business Class Europe 0% 5% 0% -5% 0% 5% -0% -5% -0% -5% -30% -35% January Marsh May July September November January March May0 0-jul Business Class (RPK vs Last year) Europe 0-sep 0-nov Business class share (Pax) Europe Business Class share 40% 30% 0% 0% 995 996 997 998 999 000 00 Business class share Europe: 6% in 00 % in Yield development for Scandinavian Airlines the major challenge for group profitability Pressure on yield accelerated in 4th Quarter Europe (yield) change vs. last year 0% 5% 0% -5% -0% Europe per. Mov. Avg. (Europe) -5% Jan Feb Mar Apr May Jun jul Aug Sep Oct Nov Dec 7 8 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec
Turnaround - Short term measures fully completed - Structural measures under implementation Short term measures All activities implemented Result effect of 3 400 MSEK in Short term measures will give full effect in 003. Structural measures under implementation % of total activities are completed corresponding to 43% of the total effect in 003 Implementation so far ahead of plan Improved balance between supply and demand Total traffic decreased by 3,% vs. 00 Total capacity reduced by 8,5% vs. 00 Group passenger load factors at record levels passenger load factors Scandinavian Airlines + 3,5 p.u. 68,% Spanair +0,9 p.u. 6,0% Braathens + 7,0 p.u. 57,8% Widerøe +,3 p.u. 5,4% Air Botnia +5,6 p.u. 49,5% 9 0 Gunilla Berg CFO Group pretax profit (EBT) affected by one offs MSEK Pretax profit (ex. Cap gains & one offs) -736 One offs Swedish Aviation Authority +570 Cimber Air -9 Expo Investment -57 Restructuring costs -537 TOTAL one offs -5 Pre-tax (ex. gains) -95 Pre-tax (incl gains & one offs) -450 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec 3
Summary turnaround Gross full year effect Annual Short term measures Reductions in traffic system 500 500 Revenue enhancement 00 * Cost reductions 400 700 Other business areas than SK 300 00 Total Approx. 6 400 3 400 * *) = Revenue enhancements of 00 comprising a supplementary charge of USD 4/passenger/flight/and a general price increase of 5% are neutralized to a considerable extent by a negative passenger mix and higher insurance costs. The net result effect is therefore almost zero. Structural measures Total Approx. 6 400 0 TOTAL ALL MEASURES Approx. 800 3 400 Group operating cash flow significantly improved MSEK January December 00 Cash flow from operations + 88-87 Change in working capital +30 +467 Net financing from operations + 38-350 Investments, advance payments - 9 654-0 850 Acquisition/sale of subsidiaries (net) +468-86 Sales of fixed assets, etc. +5 3 +8 38 Financing deficit/surplus - 76-3 644 Changes in external financing, net +785 +6 37 3 4 MSEK SAS Group entering CAPEX holiday as from 003 3000 000 9000 7000 5000 3000 000-000 SAS Group CAPEX 995-006 995 996 997 998 999 000 5 00 003e 004e 005e 006e SAS Group improved operating performance 00/ EBITDAR EBITDAR MSEK million 3 500 3 000 500 000 500 000 500 0-500 Q Q Q3 Q4 00 6 EBITDAR in was 7 94 (3 68) MSEK EBITDAR Scandin Airl. 3 35 Braathens 694 Spanair 984 MSEK Widerøe 453 MSEK Air Botnia 45 MSEK Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec 4
-% -4% Unit operating cost trend reversed Index last year (currency adjusted) SAS Airline old definition 0% 8% 6% 4% % 0% st Q 00 nd Q 00 3rd Q 00 4th Q 00 st Q nd Q 3rd Q 4th Q Units costs are down in spite of weaker volumes (ASK) (-4%) Short term measures give effect Structural measrues will impact 003 going forward Short term measures offset by pressure on revenues increased, insurance & pensions and inflationary effects Change vs. 00 MSEK EBT bef gains + 400 Whereof revenues Volume increase 500 Price increase 900 Class/routemix -3 500 Total - 00 Whereof costs Short term measures + 700 Fuel & gover charges +900 Maintenance +400 Inflationary components - 00 Insurance/pensions - 000 Others incl curreny effects + 600 Total + 500 7 8 Operating income - business area EBIT Business area 00 Change Scandinavian Airlines -68-049 +98 Subsidiary & aff. Airlines +484 +49 +435 Airlines Support Businesses +86 n/a n/a Airline Related Businesses +34 +57-3 Hotels +0 +30-8 Group eliminations -56-6 EBIT +68-69 n.m Jørgen Lindegaard CEO SAS Airline, EBT (ex gains) - 84-599 + 45 9 0 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec 5
Business Area Scandinavian Airlines January December 00 Passenger revenue 33 06 34 08 Other revenue 4 47 7 058 Operating revenue 37 63 4 66 EBITDAR 3 35 80 EBIT -68-049 SAS World Sales, SAS Technical Services and Scandinavian Ground Services moved to Airline Support Businesses. New P & L accounts reflects as from now the real costs and not only external costs Improvement programs on track, but challenges are still ahead Weak economic development and pressure on yield but significantly improved operating results Contingency plan in case of Iraq war Implementation of plan as soon as conflicts start or when an escalation affect demand significantly Base case 0-5% capacity reduction Plan can be escalated in additional steps if market conditions weakens further Short lead times for reinstalling of capacity to capture revenues ASK 0,0% -5,0% -0,0% -5,0% -0,0% -5,0% -30,0% Case Case Case 3 3 4 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec 6
Significant better earnings in Subsidiary & Affiliated Airlines vs 00 Jan-Dec in MSEK Revenues 6 54*,5% 7 370 6,% 603 0,8% 05 4,5% EBITDAR 984* 6,7% 694 69% 453 % 45 90% EBT -55* 65,6% 806 n.m 8 4% 83 n.m Spanair s unit costs in line with low cost airlines, but full service product Spanair ready to join Star Cost reductions Alliance as from April 003 Improved mix Shift from low yield to high yield markets Key Operating data: Total Aicraft utiliz 9, hrs/ day Cabin Crew 860 hrs/year Capacity reductions Unit cost in line with low costs carriers * = Spanair accumelated figures for the period March-December 5 6 Braathens Strong performance Air Botnia significantly improved result January December 00 Passenger revenue 6 039 5 79 8% fall in the Norwegian domestic market vs. 00 Cabin factor in on scheduled traffic up 7,0 p.u. To 57,8% CFROI 3% January December 00 Passenger revenue 0 974 Turnaround well under way New nonstop route Helsinki-Brussel introduced as from Q4 Other revenue 3 46 Other revenue 3 0 Operating revenue 7 370 6 937 EBITDAR 694 630 EBT 806-375 Operating revenue 05 974 EBITDAR 45 9 EBT 83-33 7 8 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec 7
Rezidor SAS Hospitality expanding with new brands Market position Three new brands added: Regent Country Inn Park Inn 3 8 4 0 9 6 3 6 5 Number of hotels 5 4 00 80 60 40 0 00 80 60 40 0 0 '94 '95 '96 '97 '98 '99 '00 '0 '0 Franchised Managed Leased Owned 9 30 REZIDOR SAS Hospitality negatively affected by weaker markets in MSEK Jan-Dec Jan-Dec 00 Change Revenues 3 570 3 50 +,7% Operating result 86 74-3,% Summary & Outlook 003 Adjusted EBITDA 0 65-7,0% Pre tax profit 85 08-59,% Including gains 3 3 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec 8
Sum up 4th Quarter The Board of Directors Yields and revenues under pressure Significant improved EBITDAR Unit cost show downward trend Market position unchanged Forceful measures in process Short term measures completed Structural under implementation 003-005 Assessment for full year 003: Economic environment challenging Continued pressure on yield expected Turnaround according to plan effects in 003 Greater unceartainty regarding geopolitical situation 33 34 Why do we believe we will succeed? Thank you for your attention! Most ambitious Turnaround introduced Additional structural measures in process Group portfolio of airlines => new possibilities This presentation can be downloaded at the SAS Group s homepage www.sasgroup.net Increased transparency who delivers? Industry restructuring 35 36 Tel. +46 (0) 8 797 45 Fax: +46 (0)8 797 50 e-mail: investor.relations@sas.se --- Homepage: www.sasgroup.net -- Results Jan -Dec 9