Q1 2019/2020 February 26, 2020
Q1-20 Key Highlights CHANGE VS. Q1-19 Q1-20 Financial drivers EBT * • Positive development of unit revenue driven by higher cabin factor MSEK -1 078 MSEK -354 • Maintained operational quality Capacity • Negative currency effects (ASK, total, mill. km) • Implementation of IFRS 16 11 258 +0.9% • Increased aircraft and training cost due to phase-in of A320neo and A350XWB Unit Revenue, PASK (SEK, currency adjusted) 0.68 +0.7% Headwinds and tailwinds Passenger yield + Reduced market capacity (SEK, currency adjusted) - Corona virus (COVID-19) outbreak 0.99 -0.5% - Soft economic indicators - Weak Swedish and Norwegian krona CASK* ex. fuel (SEK, currency adjusted) - Large European order book of new aircraft 0.66 -0.1% * Before items affecting comparability 2
Q1-20 Results in line with guidance, with flat underlying performance Underlying performance has been flat … …driven by Guidance Q1-20 EBT*, MSEK Strong commercial 1 development SAS expects an increased loss in the first quarter Continued focus on of fiscal year 2 sustainability -724 2020 compared 223 to last year -947 130 -948 Improved operational 3 efficiency and -1 078 performance Q1-19 Currency Q1-19 Q1-20 IFRS 16 Q1-20 currency excl. IFRS 16 adjusted Q1-19 Q1-20 * Before items affecting comparability 3
Q1-20 Strong commercial development 1 Q1-20 Q1-19 Q1-20 highlights Nov-Jan Nov-Jan ▪ Inaugural passenger flight with Passengers 6.3 6.2 (+1.5%) A350, improved design and (million) customer experience Yield ▪ 0.99 1.00 (-0.5%) Renewed agreement with Apollo (SEK, currency adj.) ▪ Preferred choice on larger routes Cabin Factor 68.5% 67.6% (+0.8 p.p.) by Norwegian Sykehusinnkjøp HF ▪ New route to Haneda with PASK 0.68 0.68 (+0.7%) Improved access to downtown (SEK, currency adj.) and better connectivity Customer ▪ Gained market share in a 74 71 (+3) satisfaction challenging market 4
Q1-20 As a result, SAS has gained market share in a challenging market 1 SAS’ passengers SAS’ market share Market passengers Millions, to/from/within Scandinavia Millions % Q1-19 22.5 6.2 27.4% -3.8% +1.5% +1.6pp 29.0% Q1-20 21.6 6.3 SOURCE: Swedavia, Avinor, Copenhagen Airports and transportation authorities 5
Q1-20 Accelerated sustainability efforts 2 Progress (as of January 31 st ) Q1-20 highlights 2030 targets Fleet renewal * 44% (% completed) 8 x A320neo phased-in 25% reduction of CO 2 -emissions -2.8% CO 2 emissions (R12 reduction) 1 x A350 phased-in CO 2 /ASK -2.6% (R12 reduction) Sustainable Cube packaging – more than 50 SAS’ Sustainable tonnes plastic eliminated domestic 548mt aviation fuels flights 100% (R12 sourced) biofuel Fuel efficiency program in powered CO 2 - SAS Ireland 46% compensation (% in quarter) * Percent of fleet orders delivered incl. A320neo, A321LR, A330E, A350XWB 6
Q1-20 Improved operational efficiency and performance 3 Q1-20 Q1-19 Q1-20 highlights Nov-Jan Nov-Jan ▪ MSEK 180 realized in efficiency CASK incl. fuel* 0.84 0.85 (-0.5%) improvements (SEK, currency adj.) ▪ Improved operational performance – average number of delay minutes Efficiency Program 0.2 0.2 On target down by 34% (SEKbn) ▪ 88.2% punctuality performance in regional platform Regularity 98.7 98.7 (+0.0 p.p.) (%) ▪ Phase-out of ATR from FlyBe and phase-in ATR from Regional Jet Punctuality 84.2 80.0 (+4.2 p.p.) (%) * Before items affecting comparability 7
Q1-20 Recap of future conceptual operating model Current model Future conceptual model SAS Wetlease SAS Midsize Wetlease SAIL SAIL Scandinavia partners Scandinavia platform partners Mixed fleet Single-type Complementary Single-type fleet Single-type Single-type fleet Complementary Boeing & Airbus A320neo fleet ATR & CRJ SH & LH with A320neo fleet of midsize aircraft ATR & CRJ mixed fleet flying Backbone in Highly Extended Backbone in Highly Right sizing and Extended SAS’ network SAS’ network competitive reach, more competitive fuel efficiency of reach, more routes and new frequencies and routes and new thinner flows frequencies and leisure markets right-sizing off- leisure markets from Scandi- right-sizing off- peak navian bases peak 8
Q1-20 Future midsize platform: CBA pre-requisite now in place Pre-requisites Progress ▪ New CBAs for both pilots and cabin crew signed for Securing future mid-size operations single type based in Scandinavia fleet benefits CBA ▪ New agreement ensures: appropriate - Scandinavian bases for midsize - Scandinavian terms operation Proven - Scandinavian jobs aircraft technology ▪ Agreement is only valid as available and when new entity is operational 9
FINANCIALS Q1-20
Q1-20 Summary Results Key Metrics * Key Financials (MSEK) Comments Pct. PASSENGERS 1 Q1-20 Q1-19 Change Currency • Revenue improvement 1.4% Total Revenues 9,707 9,405 3.2 127 driven by passenger growth and ancillary CAPACITY (ASK 1 ) Total opex before i.a.c. -10,465 -10,014 -4.5 -341 revenues • Unfavorable FX drives 0.8% OPEX-development EBIT before i.a.c. -758 -609 -24.5% -214 • Increase in OPEX leading EBIT margin, % -7.8% -6,5% -1.3 p.p. TRAFFIC (RPK 1 ) to decline in EBIT 2.0% • EBT negatively impacted EBT before i.a.c. -1,078 -724 -48.9 -254 by IFRS 16 Items affecting comparability -9 148 PASK 2 • Improved operating cash EBT -1,087 -576 -88.7 -254 0.7% flow driven by increased bookings and IFRS 16 reclassification Cash flow from operating activities 555 -682 CASK EXCL. FUEL 3 -0.1% Note: * Y-o-Y change, 1. Scheduled, 2. Currency adjusted, 3. Excluding items affecting comparability, currency adjusted 11
Q1-20 Revenue Development MSEK +302 9,707 87 -39 88 -76 57 58 Passenger revenue: 127 9,405 MSEK +107 Q1 FY19 Currency Capacity Cabin Yield Cargo Other traffic Other Q1 FY20 factor revenue revenue operating revenue 12
Q1-20 Development in Earnings before taxes and i.a.c. MSEK -354 Leasing costs +938 MSEK Depreciation RoU -869 MSEK -724 Financial Net IFRS 16 -168 MSEK -254* -99 Hedge effect -121 MSEK Volume effect +47 MSEK -1,078 Price effect +98 MSEK -158 175 FX & IFRS16 -79 effects: 150 -73 -353 MSEK -40 24 Q1 FY19 Currency IFRS16 Personnel Depreciation Sales and Other Fuel Technical Revenues Q1 FY20 distribution aircraft costs maintenance 13 * whereof Exchange rate lease liabilities -31 MSEK
Q1-20 Jet Fuel & Currency Hedges Jet fuel USD/Mt • Policy to hedge 40-80% of expected fuel % = hedge ratio 96% consumption for the next 12 months and up to 50% 78% for the following six months Fuel price 56% • Position consists of a mixture of call options, collars headwind 659 650 23% and swaps 10% 10% 625 573 573 • For the forthcoming 12 months, SAS has 65% of 585 the fuel consumption hedged at an average 585 573 573 588 maximum price of USD 642/Mt. Fuel price 596 23% 10% 10% 613 • If the fuel price goes below USD 585/MT for the tailwind forthcoming 12 months, 63% of SAS’ fuel 56% consumption would be hedged at an average price 78% 87% of USD 599/MT Q2-20 Q3-20 Q4-20 Q1-21 Q2-21 Q3-21 • Beyond the next 12 months 10% of the fuel consumption is hedged at a price of USD 573/Mt. Sensitivity analysis, jet fuel cost Nov 2019-Oct 2020, SEK billion* for both second and third quarter of FY21. Exchange rate USD/SEK Currency Market price 10.5 8.5 9.0 9.5 10.0 • Policy to hedge 40-80% of expected currency deficit/surplus for the next 12 months 7.9 8.3 8.6 9.0 USD 500/tonne 9.3 – 43% of USD hedged next twelve months 8.2 8.5 8.9 9.2 USD 600/tonne 9.6 – 60% of NOK hedged next twelve months 8.7 9.1 9.5 9.8 USD 700/tonne 10.2 8.9 9.3 9.7 10.1 USD 800/tonne 10.5 * SAS’ current hedging contracts for jet fuel at end of quarter have been taken into account 14
Q1-20 Debt Maturity Profile & Aircraft Orders Maturity profile, SEKbn Aircraft orders, # 20 3.0 Already delivered in FY20 2.6 A320neo: 8 A350: 1 13 1.9 10 9 3 1.0 4 12 0.6 0.6 6 3 4 0.3 0.3 1 1 1 FY20 FY21 FY22 FY23 FY24 FY25 FY26 >FY26 FY20 FY21 FY22 FY23 FY24 Secured loans Unsecured loans Airbus A350 Airbus A320neo Airbus A321LR Excluding hybrid, perpetual bond and IFRS 16 debt 15
Q1-20 Development in Cash & Cash Equivalents SEKbn -0.6 4.6 -6.9 7.2 -1.4 1.5 6.6 1.6 Cash Q1-19 Cash flow from Aircraft and other Sale of aircraft Hybrid bond issue External financing Cash Q1-20 operations investments and affiliated 0.8 SEKbn in principal repayments on lease liabilities reclassified from operations to financing activities under IFRS 16 16
Q1-20 Financial Targets RETURN ON INVESTED FINANCIAL PREPAREDNESS ADJUSTED NET DEBT CAPITAL (ROIC) /EBITDAR >12% >25% <3x 9% 39% 8% 4.1x 33% 7% 32% 32% 7% 3.8x 3.7x 3.4x Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Note: Not adjusted for IFRS 16 17
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