Q2 Q2 20 2018 18/201 /2019 28.05.2019
Q2-19 Highlights Q2/19 CHANGE VS. Q2-18 Q2-19 Financial drivers EBT • Approximately 4 000 cancelled flights and over 370,000 passengers affected due to MSEK -1,216 MSEK -728 pilot strike in April and May Capacity • Estimated earnings effect of some 650 MSEK, whereof 430 MSEK reflected in Q2 (ASK, mill. km) • Continued headwind from jet fuel prices and currency movements 11,220 -5.1% • Underlying result comparable to last year if adjusted for strike, increased fuel costs and unfavorable FX-rates Unit Revenue, PASK 1 (SEK) 0.69 +3.4% Opportunities and challenges Passenger yield 1 + Reduced capacity growth in Scandinavia (SEK) + Continued positive underlying trend in yield and unit revenue 0.98 +4.3% - Weak Swedish krona and increasing fuel prices CASK 2 - Climate concerns shifting travel towards other modes of transportation (SEK) 0.67 +9.8% 2 1) Currency adjusted 2) Excluding jet fuel, currency-adjusted
Q2-19 The pilot strike resulted in an estimated earnings loss of 650 MSEK STRIKE EFFECTS FINANCIAL IMPACT QUARTERLY EFFECTS Revenue loss -220 ~-745 MSEK > 370 000 PAX effected -430 ~ 4 000 cancelled flights Net decrease in costs ~+95MSEK Q2 2019 Q3 2019
Q2-19 Significant efforts across the organization to support affected customers CONFLICT RELATED INITIATIVES RESULTS Before ▪ New disruption module to increase efficiency in rebooking ▪ Boosted digital self service capabilities 214K 300K ▪ Mobilized and trained 400 administrative colleagues to man disruption center MESSAGES SMS WITH SENT ON ITINARARY During SOCIAL MEDIA UPDATES ▪ 1,100 additional employees mobilized at airports ▪ >300 tablets distributed among airport “floor walkers” ▪ 24/7 customer service to answer questions and rebook passengers 26 60 % ▪ >500,000 messages sent to customers MINUTES OF AFFECTED After AVERAGE PASSENGERS REPLY TIME ON ▪ Maintained staffing to manage back log of customer REBOOKED SOCIAL MEDIA queries ▪ Regularity quickly restored to levels preceding the strike
Q2-19 Positive underlying development offset by strike and macro environment UNDERLYING DEVELOPMENT ADJUSTED EBT* DEVELOPMENT, MSEK 81.1% 90 Punctuality (+3.3 p.p.) 536 -155 -309 430 Ticket revenue per ~1,250 SEK passenger (+2 %) -1,211 73 Customer satisfaction (+2 p.p.) Q2 Strike Fuel FX Adj. Q2 Q2 FY18 FY19 FY19 *Before items affecting comparability
Q2-19 Looking ahead, focus on strategy execution and transformation effects to mitigate negative effects from macro environment CHALLENGES EFFICIENT AND FLEXIBLE OPERATING MODEL YoY Change ▪ Efficiency program delivered MSEK 400 year to date Volatile jet fuel prices ▪ Increased resilience and flexibility +9% (SEK/MT) ▪ Fleet renewal ▪ Digitalization Unfavorable FX-rates -13% SUSTAINABILITY (SEK/USD) ▪ Collaboration for large-scale biofuel production in Sweden together with Swedavia and RISE ▪ Joint research partnership with Airbus for next Decreased demand generation electrified aircraft -5% (PAX Swedish ▪ Over 3.4 million trips CO 2 compensated domestic flights)
Q2-19 FIN FINANCIA ANCIALS LS
Q2-19 Summary Results MSEK, except per cent Q2/19 Q2/18 Change % Currency Key Financials Comments Total operating revenue 10,187 9,918 +2.7 +352 • Pilot strike affecting all key financial metrics Total operating expenses* -10,008 -8,965 +11.6 -343 negatively EBITDAR* 179 952 -81.2 9 • 5 per cent lower capacity yielding lower EBITDAR margin, % 1.8% 9,6% -7.8 p.p. revenues and weak EBT development EBT* -1,211 -309 <100 -90 • Jet fuel as well as continued depreciation of Items affecting comparability -5 -179 -97.2 SEK vs. USD adding additional pressure on EBT -1,216 -488 --- -90 earnings • Positive trend in unit revenue (PASK) Key Metrics continues ASK 11,220 11,817 -5.1 RPK 7,897 8,393 -5.9 Cabin Factor 70.4% 71.0% -0.6 p.p. PASK** 0.69 0.67 +3.4 CASK excl Fuel** 0.67 0.61 +9.8 * Before items affecting comparability **Currency adjusted 8
Q2-19 Revenue Development MSEK +270 10.187 15 94 -46 352 -394 321 9.917 -71 Q2 FY18 Currency Capacity Load factor Passenger Cargo revenue Other traffic Other Q2 FY19 change yield revenue operating revenue 9
Q2-19 Development in Operating Expenses* MSEK -1,044 Hedge effect -430 MSEK Volume effect +104 MSEK -8,964 -343 -347 -228 -81 -53 -27 56 -21 -10,008 Q2 FY18 Currency Fuel Other Personnel Sale and Wifi on board Wet-lease Government Q2 FY19 (e.g. traffic distribution charges disturbances) *before non-recurring items 10
Q2-19 Status - Efficiency Programme Efficiency Programme (SEKbn) Main contributing initiatives, MSEK 3.0 Q1 Q2 FY20 0.6 Charges 20 15 • Renegotiated charges at CPH FY19 0.9 Fuel 1.9 15 15 • Improved fuel efficiency 0.4 Sales & Marketing FY18 0.7 0.7 10 10 • Brand and marketing efficiency Planning FY17 0.8 0.8 • Improved crew sourcing 10 20 PLAN RESULTS 11
Q2-19 Jet fuel and currency hedges Jet fuel USD/Mt • Policy to hedge 40-80% of expected fuel % = hedge ratio 100% consumption for the next 12 months and up 68% to 50% for the following six months Fuel price 53% 53% headwind 720 • Position consists of a mixture of call 687 options, collars and swaps 670 680 • In Q3-19, SAS has 100% of the fuel 620 632 consumption hedged at a maximum price of Fuel price 678 703 720 USD/Mt. tailwind 44% 53% • If fuel price goes below 703 USD/Mt. 27% 68% 73% of SAS’ consumption would benefit from a Q3-19 Q4-19 Q1-20 Q2-20 lower fuel price • No hedging beyond Q2-20 Sensitivity analysis, jet fuel cost May 2018-Oct 2019 Currency Exchange rate USD/SEK • Policy to hedge 40-80% of expected Market price 10.5 8.5 9.0 9.5 10.0 currency deficit/surplus for the next 12 8.6 8.9 9.2 9.4 USD 500/tonne 9.7 months 8.8 9.1 9.4 9.7 USD 600/tonne 9.9 – 40% of USD hedged next twelve months 9.1 9.4 9.6 9.9 USD 700/tonne 10.2 – 66% of NOK hedged next twelve months 9.2 9.5 9.8 10.1 USD 800/tonne 10.4 12
Q2-19 Debt Maturity Profile and Aircraft Orders Maturity profile, SEKbn Aircraft orders, # 2.8 19 18 4 15 1.7 1.2 13 7 7 1 0.8 0.8 4 0.5 0.4 6 2 2 0.1 2 1 FY19 FY20 FY21 FY22 FY23 FY24 FY25 >FY25 FY19 FY20 FY21 FY22 FY23 FY24 Secured loans Unsecured loans Airbus A330/A350 Airbus A320neo Airbus A321LR 13
Q2-19 Development in Cash & Cash Equivalents SEKbn -0.5 3.7 -5.6 7.4 -0.1 6.9 -1.1 0.9 1.7 Cash 30 Apr-18 Cash flow from Aircraft and Sale of aircraft Dividend on Preference External Cash 30 Apr-19 operations other preference share financing investments share redemption 14
Financial Targets RETURN ON INVESTED FINANCIAL PREPAREDNESS ADJUSTED NET DEBT CAPITAL (ROIC) /EBITDAR >12% >25% <3x 42% 14% 13% 36% 3.4x 12% 33% 32% 3.0x 2.7x 2.7x 9% Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 15
Q2-19 Outlook PREVIOUS ASSUMPTIONS FY19 UPDATES • 2-3% scheduled • FY19 Scheduled capacity capacity growth (ASK) growth (ASK) reduced to -1 % • Volatile, but increasing • 8% increase in jet fuel prices in jet fuel prices quarter Challenging to reach a positive result before tax • Unfavorable FX development, • 5% depreciation of SEK vs. and items affecting in particular SEK/USD USD in quarter comparability in fiscal year 2019 • Efficiency measures of SEK • Nearly SEK 0.4 bn delivered 0.9 bn to date • Gross investments expected • Unchanged to be around SEK 7 billion • Negative earnings impact of - • No unexpected events 650 MSEK FY19 due to strike Note: The outlook is based on no additional unexpected events occurring 16
Summary and Key Takeaways Disappointing results in second quarter 430 MSEK hit on earnings due to pilot union strike in Q2 Positive underlying trends offset by negative macro environment Increased pace of transformation necessary Previous outlook challenging to meet
Q2-19 Income Statement Q2 Income statement, MSEK Feb-Apr 19 Feb-Apr 18 Change vs LY Currency Total operating revenue 10,187 9,916 +271 +352 Payroll expenditure -2,415 -2,279 -136 Jet fuel -2,181 -1,645 -536 Government charges -961 -972 +11 Other operating expenditure -4,451 -4,068 -383 Total operating expenses* -10,008 -8,964 -1,044 -343 EBITDAR before items affecting 179 952 -773 +9 comparability EBITDAR-margin* 1.8% 9.6% -7.8 p.p. Leasing costs, aircraft -846 -765 -81 Depreciation -455 -374 -81 Share of income in affiliated companies -3 -8 +5 EBIT before items affecting comparability -1,125 -195 -930 -79 EBIT-margin* -11.0% -2.0% -9.0 p.p. Financial items -86 -114 +28 EBT before items affecting comparability -1,211 -309 -902 -90 Items affecting comparability -5 -179 +174 EBT -1,216 -488 -728 -90 *before items affecting comparability 19
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