ANNUAL ANN AL GENE GENERAL RAL MEE MEETING TING RICKARD RICKA RD GUST GUSTAFSON, PRESI AFSON, PRESIDENT DENT & CEO & CEO Mar arch 13 h 13, , 20 2019 19
1 FY18 IN RETROSPECTIVE 2 INDUSTRY DYNAMICS 3 WAY FORWARD 2
FY18 in numbers 8.3 30 AIRLINE SEK BILLION MILLION PASSENGERS INFRASTRUCTURE CONTRIBUTION 222 GROUND 1.6 HANDLING THOUSAND DEPARTURES HANDLED SEK BILLION TRAVEL RELATED 125 TAXES AND CARGO DUTIES MILLION KG OF FREIGHT 157 TECHNICAL AIRCRAFT IN SERVICE 5.6 EUROBONUS MILLION MEMBERS 3
Our vision is to make life easier for Scandinavia’s frequent travelers WIN SCANDINAVIA’S FREQUENT TRAVELERS + CREATE AN EFFICIENT AND SUSTAINABLE OPERATING MODEL + SECURE THE RIGHT CAPABILITIES = SUSTAINABLE & PROFITABLE BUSINESS 4
Win Scandinavia’s Frequent Travelers FY18 HIGHLIGHTS 29 NEW ROUTES AND 6 NEW DESTINATIONS HIGH SPEED WIFI INSTALLED ON 39 AIRCRAFT UPGRADED ONGROUND FACILITIES IN CPH NEW EUROBONUS FEATURES PERSONALIZED COMMUNICATION IMPROVED CORPORATE PROGRAM 5
Create an efficient and sustainable FY18 HIGHLIGHTS operating model 9 AIRBUS A320NEO INTRODUCED INTO SERVICE ORDER PLACED FOR 50 ADDITIONAL AIRBUS A320NEO MSEK 723 REALIZED SAVINGS FROM THE EFFICIENCY PROGRAM FURTHER ENHANCED OPERATING MODEL 6
SAS’ enhanced operating model FY18 PASSENGERS MILLIONS STRATEGIC RATIONALE • Backbone in SAS’ network 24 SAS SCANDINAVIA • Key for maintaining strong Scandinavian footprint SAS’ OPERATING MODEL • Ensuring a “level playing field” with carriers operating on 1 strategic destinations from Europe to Scandinavia SAS IRELAND SAS IRELAND • Maintaining presence on highly competitive routes and take part in new leisure markets • Extended reach in network and more frequencies 5 REGIONAL PLATFORMS • Right-sizing of aircraft in off-peak 7
Secure the Right Capabilities FY18 HIGHLIGHTS ESTABLISHED LEADERSHIP PROGRAMS INVESTED IN EMPLOYEE ENGAGEMENT CONTINUED ROLL-OUT OF MOBILITY & CLOUD BASED WORK TOOLS IMPROVED SCHEDULE PREDICTABILITY, EMPLOYEE INFLUENCE AND WORKLOAD MANAGEMENT 8
As a result of a consistent strategy, SAS met all financial targets in FY18… EBT, 10-year overview MSEK FY18 TARGET 1 725 2 041 1 648 1 417 1 431 FINANCIAL 42% 25% PREPAREDNESS FINANCIAL NET DEBT / 2.7x <3x EBITDA -918 -1 245 -1 629 ROIC 14% 12% -3 069 -3 423 09 10 11 12 13 14 15 16 17 18 9
…and received recognition for our efforts BEST “BEST MOBILE SITE EUROPEAN AMONG NORDIC AIRLINE” AIRLINES ACCORDING TO AND GOOGLE SURVEY “BEST SWEDISH “THE ARRIVALS” DOMESTIC ” CAMPAIGN IN GRAND TRAVEL REACHED 40+ MILLION AWARDS IMPRESSIONS AWARDED “BEST PREMIUM ECONOMY” BY GLOBAL TRAVELERS SAS CARGO RATED AMONG THE RANKED #1 MOST IN THE ATTRACTIVE WORLD EMPLOYERS IN NORWAY 10
1 FY18 IN RETROSPECTIVE 2 INDUSTRY DYNAMICS 3 WAY FORWARD 11
Record number of aircraft on order to European airlines – competition expected to further increase Number of aircraft on firm order 264 180 147 135 133 125 52 These 7 airline groups alone have >1,000 aircraft on order 12
European aviation market is highly fragmented, with low profit pools TOP 5 AIRLINE GROUP’S SHARE OF MARKET CAPACITY, 2017 86% 49% Expected market profit per passenger ~140 ~65 SEK, 2018 SOURCE: DnB 13
Industry seasonality is increasing and airlines must become more flexible Market demand, million passengers (to/from/within Scandinavia) 225 200 175 150 125 0 Jul Jul Jul Jul Jul Jul Jul Jul 2011 2012 2013 2014 2015 2016 2017 2018 14
Aviation industry stakeholders demand more sustainable aviation – airlines must adapt accordingly UNITED NATIONS AIRLINE INDUSTRY SCANDINAVIA • • Increased sustainability A cap on net aviation awareness among CO 2 emissions from Scandinavian 2020 (carbon-neutral Travelers growth) • • Also focus from A reduction in net corporate customers aviation CO 2 to reduce environmental emissions of 50% by footprint 2050, relative to 2005 levels 15
Industry dynamics combined with macro trends are putting pressure on European airlines INDUSTRY DYNAMICS MACRO TRENDS Increased Volatile jet fuel prices competition Fragmented market Unfavorable FX-rates Uncertain geopolitical Increased seasonality environment Sustainability High competition for awareness talent 16
1 FY18 IN RETROSPECTIVE 2 INDUSTRY DYNAMICS 3 WAY FORWARD 17
SAS’ strategy remains firm, but is underpinned by a number of strategic initiatives to strengthen SAS’ position as Scandinavia’s nr 1 airline SELECTED KEY ACTIVITIES 1 DIGITALIZATION 2 SUSTAINABILITY 3 FLEET TRANSITION 4 EMPLOYEE ENGAGEMENT 18
Digitalization support all areas of SAS’ strategy 1 COMPLETED IN PROGRESS FUTURE IMPROVED CUSTOMER NDC FULL SELF- SERVICE REBOOKING SERVICE PLATFORM CAPABILITIES TURI CHATBOT PERSONALIZED PREDICTIVE HIGH- MAINTENANCE COMMUNICATION SPEED WIFI AI-BASED PLATFORM AUTOMATION OF SCHEDULING ADMINISTRATIVE TASKS NEW EUROBONUS FEATURES CATERING OPTIMIZATION TABLETS FOR GROUND, TECH & INTELLIGENT PLANNING WETLEASE PARTNERS FUEL OPTIMIZATION SYSTEM NEW ANALYTICS SYSTEM PLATFORM DIGITAL MANUALS & BAGGAGE TRACKING FLIGHT LOGS SYSTEM MOBILE & CLOUD-BASED WORKING TOOLS TABLETS FOR CREW AND LOADING SUPERVISORS 19
2 SAS will continue to reduce emissions NEW AIRCRAFT 2030- TARGETS WASTE REDUCTION • 25% lower CO 2 emissions vs. 2005 SUSTAINABLE PRODUCT DEVELOPMENT base line in absolute numbers • Biofuel equivalent to all BIOFUEL domestic production CARBON OFFSETTING 20
SAS’ transition to one -type Airbus fleet will create operational synergies 3 and benefits for our customers A320neo A330 / A350 XWB A321LR • • • 180 seats 262/300 seats with three- 157 seats with three-class class cabin cabin • Core of the Scandinavian • • and European network Backbone of long-haul Test and unlock new network business opportunities Delivered as per 13 th March 2019 30% 47% 0% 21
3 We look forward to introducing the A321LR to our fleet CONTINUED TRANSITION TO ONE- FULL LONG-HAUL TYPE AIRBUS FLEET SERVICE CONCEPT NEW INTERCONT DESTINATIONS AND INCREASED P-2-P FREQUENCY IMPROVED SUSTAINABILITY PERFORMANCE REDUCED TRIP COST AND INCREASED SEASONAL ADAPTATIONS 22
4 Aligning employee and investor interests INDUSTRY DYNAMICS CAPITAL INTENSIVE BUSINESS STOCK + BASED INCENTIVE PROGRAM LABOR INTENSIVE SERVICE BUSINESS 23
Reflections “To move from the old to the new is the only tradition worth preserving” 24
TRAVELERS ARE THE FUTURE 25
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