Q3 Q3 20 2019 19/202 /2020 August 25, 2020
Q3-20 Highlights Q3-20 CHANGE Q3-20 VS. Q3-19 Financial drivers EBT • Continued negative impact of COVID-19 MSEK -2 071 MSEK -3 560 • Measures to reduce cost and preserve cash Capacity • Government support packages (ASK, total, mill. km) • Strengthened Swedish Krona 1 910 -86% • Impairments on aircraft assets Unit Revenue, PASK (SEK, currency adjusted) Headwinds and tailwinds 0.71 -5.8% + Revised recapitalization plan supported by major shareholders and Passenger yield noteholders committee, and approved by European Commission (SEK, currency adjusted) + Favorable FX development 1.38 +45% + Monthly operating cash burn below the range provided in Q2 CASK ex. fuel - Uncertainty with regards to travel restrictions (SEK, currency adjusted) - Low visibility into future bookings 1.62 +201% 2
Q3-20 ” Ramp- up” phase initiated during Q3, SAS largest Scandinavian operator Seat capacity to/from/within Scandinavia Currently in ”ramp -up ” phase 2nd week of July, published schedules as of 05JUL ‘000 seats Index vs LY “Travel restrictions” ”Ramp - up” New normal” Q2-Q3 FY20 Q3 FY20-FY21 F Y22 - onwards 311 41 141 22 41 23 52 30 39 31 80 73 90 89 ▪ Slow ramp-up of Lower demand and Virtually non-existent 21 traffic slower long-term 14 demand for air travel growth ▪ Uncoordinated 20 11 easing of 31 restrictions Others 117 35 Total 897 3
Q3-20 Solid ramp-up performance in Q3, despite low demand & high uncertainty Quarter ▪ Strong yield Q3 (vs LY) development, and SAS measures to stable cabin Total Revenue ensure cost-efficient factors 2.5 (-81%) (SEKbn) ramp-up: ▪ New analytics ▪ High operational dashboard Yield quality despite 1.38 (+45%) (SEK, currency adj.) temporary layoffs ▪ Ramp-up program with efficient add-on ▪ Demand “blocks” Cabin factor 51.4 (-27.6 p.p.) somewhat ahead ▪ (%) Refined planning of expectations cycle and improved driven by leisure operational agility Regularity travel in July 99.4 (+2.0 p.p.) (72h, %) Punctuality 93.9 (+15.4 p.p.) (P15, %) 4
Q3-20 Demand somewhat ahead of expectations in third quarter Q3 ramp-up Expected Q4 ramp-up Aircraft in 53 Expecting to reach 30%-40% of prior year traffic 31 capacity (ASK) by end of Q4, however 17 End of month concerns remain: ▪ Changed booking patterns leading to low 83 68 visibility into future Destinations 35 ▪ Re-imposed travel restrictions ▪ Timing of business travel recovery 705 Passengers 328 ▪ Adopting long term cost structure to lower 158 Thousand demand May June July 5
Q3-20 Progress made on adopting cost structure to lower demand SAS’ business plan % of activities completed Activities completed in Q3 Redundancies Preferred airline for ▪ Announced 5000 redundancies Scandinavia’s frequent 100% travelers ▪ ~4000 effectuated in Q3 Delayed aircraft deliveries ▪ 4x A320neo from FY22 to FY24 Hyper modern single- 100% type fleet ▪ 4x A320neo from FY23 to FY25 ▪ 2x A350 from FY21 to FY22 Supplier negotiations Fully competitive ▪ Negotiation with 200 largest suppliers 100% operating model almost concluded Productivity improvements Global leadership in ▪ Terminated local agreements 100% Sustainable aviation ▪ Outsourced line stations in GOT and MMX 6
Q3-20 The revised recapitalization plan is a major achievement ✓ Equity and funding to counter COVID-19 effects Clear timeline to ✓ Comprehensive solution involving numerous completion, subject to stakeholders ▪ Successful bond and hybrid conversion ✓ Support from Denmark, Sweden, KAW and the ▪ EGM approval noteholders committee ✓ Approval from European Commission 7
Q3-20 Overview of the Revised Recapitalization plan Bond conversion Hybrid conversion State Hybrid Notes Rights Issue Directed Issue SEK 2.25bn SEK 1.5bn SEK 6.0bn SEK 4.0bn SEK 2.0bn ▪ Option to convert ▪ Hybrid converted ▪ SEK 5bn placed ▪ Rights Issue* ▪ Directed Issue of bond at 100% of at 90% of par with Denmark 81.5% common shares* par value into value into and Sweden subscribed/ placed with New Commercial common shares* equally underwritten by Denmark and Hybrids or Denmark, Sweden common shares* Sweden and KAW ▪ Additional SEK (up to a 50% cap 1bn placed with of the aggregated Denmark nominal amount) Increased Equity: SEK 14.25bn / Increased Liquidity: SEK 12bn 8 * at SEK 1.16 per share
Q3-20 Clear timeline to completion Announcement of Revised Bond and hybrid Outcome from holders’ meeting Recapitalization plan rights issue Nov 5 Aug 17 Sep 22 (on or around) Aug 14 Sep 2 Oct 23 EU Commission Extraordinary Completion approval General Meeting 9
Q3-20 SAS determined to continue as Scandinavia’s leading airline post COVID -19 Preferred airline for Hyper modern single-type Scandinavia’s frequent fleet Revised Financial Targets 1 travelers ▪ Continued focus on Scandinavia’s ▪ Accelerated transition to single-type frequent travelers Airbus fleet Return on capital ▪ Post tax ROIC > WACC ▪ Prioritize main flows within Scandinavia Introduced next generation mid-size and to European majors aircraft ▪ ▪ CPH main long-haul hub complemented High asset utilization and effective by select direct capacity from ARN/OSL maintenance Leverage Net debt/EBITDA < 3.5x Fully competitive Global leadership in operating model Sustainable aviation Financial preparedness Cash, cash equivalents and ▪ ▪ Fit-for-purpose operating platforms fully Reduced net CO 2 -emissions by 25% credit facilities/Fixed cost > 25% established ▪ Increased usage of Sustainable ▪ Efficient organization adapted to new aviation fuels by up to 10% market environment ▪ Competitive advantage from ▪ Delivered SEK 4bn transformation plan Sustainability leadership 10 1) Revised Financial Targets approved by the Board of Directors. Targets have been adjusted to reflect IFRS16, and will be implemented from the end of the current fiscal year
FINANCIALS
Q3-20 Highlevel Summary Key Financials Comments Q3-20 Q3-19 Pct. Change Currency • COVID-19 resulting in Total Revenues 2,507 13,401 -81.3 -446 sharp decline of capacity and traffic leading to Total operating expenses revenues 81% below LY -3,949 -11,826 -66.7 269 before i.a.c • Measures to reduce costs reflected in nearly 70% lower OPEX before i.a.c. EBIT before i.a.c -1,442 1,575 <-100% -177 • Positive FX-effect offset EBIT margin, % -57.5% 11,8% -69.3 p.p. by write down of aircraft assets. EBT before i.a.c -784 1,495 <-100% 840 • Operating cash flow Items affecting comparability -1,287 -5 down, driven by weak EBT -2,071 1,490 <-100% 840 results and drop in forward bookings • Cash & Cash Equivalents Cash flow from operating activities -961 457 SEK 6.2 bn as at 31 July 12
Q3-20 Revenue Development MSEK -10,894 13,401 -446 -8,328 -726 -149 418 -1,348 2,507 Passenger revenue: -315 MSEK -8,636 Q3 FY19 Currency Capacity Cabin Yield Cargo Other traffic Other Q3 FY20 factor revenue revenue operating revenue 13
Q3-20 EBT Development MSEK -3.561 840 840 1.490 Hedge effect +154 MSEK Price effect +131 MSEK Effect on accrual -36 MSEK -3.505 249 186 -121 70 -18 21 -1.283 -2.071 Q3 FY19 Currency Estimated IFRS16 Other Personnel Technical maint Pilot strike Fuel Items affecting Q3 FY20 COVID- comparability 19 effects 14
Q3-20 Estimated COVID-19 effects MSEK -3.505 929 283 309 409 566 575 919 978 2.239 -10.712 Revenue Fuel Personnel cost Air traffic Handling costs Selling and Technical Wet lease Catering Other effects Total COVID- charges distribution maintenance 19 effects 15
Q3-20 Jet fuel & currency hedges Jet fuel USD/Mt • Policy to hedge 40-80% of expected fuel 100% % = hedge ratio 93% consumption for the next 12 months Fuel price 53% – and up to 50% for the following six headwind 642 542 12% 532 months 532 573 – Position consists of a mixture of call 509 573 options, collars and swaps 509 Fuel price 586 525 • For the next 12 months, SAS has 54% of 12% tailwind 53% the consumption hedged at an average 93% max price of USD 574/Mt. 100% • If the fuel price goes below USD 536/MT for Q4-20 Q1-21 Q2-21 Q3-21 the next 12 months, 54% of SAS’ fuel consumption would be hedged at an Sensitivity analysis, jet fuel cost Nov 2019-Oct 2020, SEK billion* average price of USD 545/MT. Exchange rate USD/SEK Currency Market price 8.0 8.5 9.0 9.5 10.0 • Policy to hedge 40-80% of expected 5.5 5.6 5.6 5.7 5.7 USD 400/tonne currency deficit/surplus for the next 12 months 5.5 5.6 5.6 5.7 5.7 USD 500/tonne – 43% of USD hedged next twelve months 5.6 5.6 5.6 5.7 5.7 USD 600/tonne – 78% of NOK hedged next twelve months 5.6 5.7 5.7 5.7 5.8 USD 700/tonne * SAS’ current hedging contracts for jet fuel at end of quarter have been taken into account 16
Q3-20 Debt Maturity Profile & Aircraft Orders Maturity profile , SEKbn (pre recapitalization) Aircraft orders, # 4.8 17 13 3.6 17 3.2 8 2.0 1.9 12 6 4 1.5 12 6 4 3 0.5 0.5 3 2 3 2 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 and perpetual bond 17
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