SAS Group Presentation Carnegie, May 22, 2012 Sture Stölen, Head of IR 1
This is the SAS Group 128 destinations 27,2 million passengers 28 new routes to be launched 2012 1,085 daily flights Revenues 2011, MSEK 41,412 128 destinationer 2
The SAS Group s business structure (reporting segments as from Q1 2011) SAS Group Scandinavian Airlines Widerøe Including Blue1 SAS Cargo Ground Handling Technical Maintenance 3
Q1 A weak quarter as expected due to challenging market conditions Challenging market situation Uncertain business cycle development Continued competitive market Slightly reduced yield pressure Continued high fuel prices Continued good revenue growth Passenger growth +323 000 RASK improved by 1,7% Accelerated 4Excellence, SEK 5 billion under implementation EBT before non-recurring items MSEK -1,049 Cash flow from operating activities MSEK 1,215 Strong cash flow generation and good cash position at SEK 3,7 billion 4 4
Drivers and Performance - development Q1 2012 Customer Performance Passenger growth Customer satisfaction Operational Performance Punctuality Unit cost (CASK) Financial Drivers Fuel price RASK and Yield Financial Performance Cash flow Financial Preparedness Underlying unit cost down 1.6% SAS Result (EBT) 5 5
Continued high jet fuel prices USD/ton excl hedge USD/ton incl hedge 1200 1100 1000 Fuel prices (excl hedging) increased approx. 5,7% during Q1 2012 900 800 700 600 +5,7% 6 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11
Continued good passenger growth and stable customer satisfaction SAS Group number of passengers, million Customer Satisfaction 72 72 Target 2012 73 Q1 2011 Q1 2012 6,4 +323 000 (+5,3%) Q1 2011 Q1 2012 6,1 7
Positive trend in underlying route result driven by commercial activities SEK Example Denmark Europe Route Result Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar New fleet - A320/B737NG Improved product offering SMART PASS Complimentary Coffee/Tea Successful market campaigns New & retained corporate agreements New Eurobonus Partners and Code Share Partners New routes 27 short haul destinations Shanghai 8
Q1 a seasonally weak quarter for the industry EBIT-margin, Jan-Mar 2012 - -5 EUR -76 EUR -597 EUR -98 EUR -381-10 -15-20 -25-30 Norwegian Air France/KLM SAS Group Lufthansa 9
Yield curve flattens and stabilized RASK Scandinavian Airlines +0,6% Yield Q1 2012: -2,3%* RASK +6,6% Q1 2012: +1,7%* -1,3% +1,7%* -2,8% -2,3%* -2,4% -2,1% Q1 Q2 Q3-4,0% Q4 Q1 *Including Blue1 Q1 Q2 Q3-6,7% Q4 Q1 *Including Blue1 SEK, Nominal Yield (rolling 12 months), Scandinavian Airlines 1,30 1,25 1,23 1,20 Q1 2010 1,15 1,11 1,10 Q1 2011 1,07 1,05 Q1 2012 1,00 0,95 10-jan 10-apr 10-jul 10-oct 11-jan 11-apr 11-jul 11-oct 12-jan SEK, Nominal RASK (12 months), Scandinavian Airlines 0,95 0,90 0,87 0,85 0,85 Q1 2010 0,84 Q1 2011 Q1 2012 0,80 0,75 10-jan 10-apr 10-jul 10-oct 11-jan 11-apr 11-jul 11-oct 12-jan
Continuous improvement in unit cost efficiency paramount for our success CASK -3 5% annually = COST -1.5 2.5% annually ASK & PRODUCTIVITY - 1.5 2.5% annually Key drivers Harmonized product offering Significant reduction in administration Centralization in International Sales Reduced IT and purchasing costs Key drivers Improved aircraft utilization More seats per aircraft Lean productivity improvements 11
Union negotiations and admin cost reduction on track Negotiations with all of SAS unions secures EBT effects of SEK 1 billion in 2012-2013 Agreements signed with majority of unions affecting Salaries Early retirement Pensions Productivity Since February 2012 administration cost reduction of 300 FTE in process In end March 2012, 50% is in final completion 12
Gearing ratios impacted by Spanair write down 400% 350% 300% 250% Fin Net Debt / Equity Equity / Total Assets Fin. Net Debt + 7*Op lease / Equity 200% 150% 100% 50% 0% dec-98 dec-00 dec-02 jun-03 dec-03 jun-04 dec-04 05-jun dec 06-jun 06-dec 07-jun 07-dec 08-jun 01-dec 09-jun 09-dec 10-jun 10-dec 11-jun dec-11 13
but continued strong financial preparedness Financial preparedness Q1, SEK billion 8.6 4.9 3.7 Q1 2012 Credit facilities Cash SEK 8.6 billion in total financial preparedness SEK 4.9 billion credit facilities SEK 3.7 billion cash Good financial preparedness Further improved by property transaction 14
Sale of offices and airside properties release MSEK 450 in capital Q2 6 properties sold to Swedavia Part of strategy to reduce capital employed and focus on core business Total value of MSEK 1,775 sold Release capital and cash MSEK 450 Capital gain MSEK 350 to be booked in Q2 15
Good financial position and limited CAPEX in 2012 CAPEX (Aircraft and other), SEK billion Debt maturities 2012, SEK billion 2.0 2.1 2011 New secured financing 0.50 capacity 2012 1.0 0.45 Completed asset sales 1.15 Other capital market financing/asset sales or cash 2011 2012 SEK 0.4 billion of investments in Q1 SEK 0.1 billion aircraft/ SEK 0.1 billion engines/ SEK 0.2 billion IT and other Further asset sales in 2012 Aircraft and other of approximately SEK 0.5 billion Remaining 2012 To be handled through; New secured financing capacity released from maturities other capital market & asset sales 16
Approximately SEK 2 billion per year in amortization until 2016 Scheduled amortization profile, SEK billion 17
We have ambitious targets Our target is to achieve sustainable profitability SAS is to be number 1 The Nordic region s most valued airline by reaching new heights in customer satisfaction Unit cost shall be reduced by 3-5% annually Our employee satisfaction is to be in the Top Five in the entire Nordic transportation sector We are to reduce our overall emissions by 20% to secure a sufficient return on investment 18
4Excellence is starting to provide effects SEK 1,5 bn Revenue activities Improved route result vs 2011 New airport design being rolled out Eurobonus members continues to grow SEK 3,5 bn Cost activities New distribution platform implemented SEK 1 billion union agreements secured and 300 FTE admin reduction on track Sale of properties completed 19
The new SAS look and feel
New design being rolled out this is Malmö Airport before 21
Malmö Airport after 22
2012 Outlook Increased challenges ahead The global economic climate is unpredictable Continued capacity increase in the market Continued Yield pressure Uncertainty regarding fuel prices Accelerated 4Excellence SEK 5 billion in total measures of which SEK 2 billion in 2012 2012 a challenging year Earnings effects from 4Excellence to come in the second half of 2012 SAS passenger growth expected 5-7% Capacity up 5% Due to uncertainties no earnings forecast will be provided for the full year 2012 23
Thank you! 24