Q4 Q4 20 2018 18/201 /2019 5 December 2019
Q4-19 Highlights Q4/19 CHANGE VS. Q4-18 Q4-19 Financial drivers EBT * • Continued strong development of unit revenue and passenger yield MSEK 1 226 MSEK +404 • Domestic and European performance stronger than anticipated Capacity • Maintained operational quality resulting in reduced cost for traffic disturbances (ASK, total, mill. km) • Improved underlying CASK (adjusted for currency effects) 14 610 +1.6% • Issued MSEK 1,500 hybrid bond to strengthen equity position Unit Revenue, PASK (SEK, currency adjusted) 0.77 +2.7% Headwinds and tailwinds Passenger yield + Reduced market capacity supporting positive yield and unit revenue trend (SEK, currency adjusted) - Soft economic indicators 1.01 +3.1% - Weak Swedish and Norwegian krona - Large European order book of new aircraft CASK* ex. fuel (SEK, currency adjusted) 0.56 -3.1% * Before items affecting comparability 2
Q4-19 SAS’ focus in FY19 has resulted in a strong momentum in Q4 Focus areas FY19 Strong momentum in fourth quarter Q4-19 Q4-18 Change Improved customer 1 offering EBT* 1 226 821 +404 (MSEK) Passengers Accelerated 8.5 8.3 +0.2 2 (million) sustainability efforts Customer 72 70 +2 satisfaction (CSI) Improved operational 3 performance Regularity 98.9 98.3 +0.6 (72h, %) * Before items affecting comparability 3
Q4-19 Improved customer offering 1 Quarter Full year Q4 highlights Q4 (vs LY) NOV-OCT (vs LY) ▪ Improvements in customer offering Passengers 8.5 (+2.3%) 29.8 (-1.1%) • 5 new destinations and 14 new (million) direct routes in summer 2020 • New EuroBonus-features Yield 1.01 (+3.1%) 0.99 (+3.2%) • Improvements in digital channels (SEK, currency adj.) ▪ Four-year contract with the Norwegian armed forces PASK 0.77 (+2.7%) 0.73 (+2.5%) (SEK, currency adj.) ▪ Scandinavian Olympic and Paralympics partnership Customer 72 (+2) 72 (+2) ▪ Launch of new livery satisfaction 4
Q4-19 Accelerated sustainability efforts 2 Progress (as of October 31 st ) Q4 highlights 2030 targets Fleet renewal * ▪ 1 A320neo phased-in 34% (% completed) ▪ Store removed ▪ Sustainable “cube” 25% reduction of CO 2 -emissions -2.5% CO 2 emissions (R12 reduction) Biofuel integrated into booking flow CO 2 /ASK -1.7% (R12 reduction) Best in class noise and SAS’ emissions performance at Sustainable Heathrow domestic 455mt aviation fuels flights 100% (biofuel) (R12 sourced) biofuel SAS chairing one of 13 powered CO 2 - climate partnerships in compensation 40% Denmark (% in quarter) * Percent of fleet orders delivered incl. A320neo, A321LR, A330E, A350XWB 5
Q4-19 Improved operational performance 3 Full year Q4 highlights Q4 NOV-OCT ▪ MSEK 230 realized in efficiency CASK incl. fuel* 0.75 (-1.7%) 0.79 (+4.4%) improvements (SEK, currency adj.) ▪ Improved operational performance despite fewer aircraft reserves Efficiency Program 0.2 (on target) 0.9 (on target) (SEKbn) ▪ New organizational structure to increase accountability and drive additional efficiency Regularity 98.9 (+0.6 p.p.) 97.5 (-0.5 p.p.) (%) ▪ New digital tools deployed in ground handling Punctuality 82.5 (+1.7 p.p.) 80.3 (+2.6 p.p.) (%) * Before items affecting comparability 6
Q4-19 Despite strong fourth quarter, SAS delivers a result below previous year Financial Targets FY19 Strategic initiatives EBT bef. items affecting comparability MSEK 2 136 Effects from single type fleet ROIC + Reduced market >12% capacity - Weak SEK & NOK Accelerated pace in - Higher jet fuel cost digitalization and lean ✓ Financial - Pilot strike preparedness >25% Improved asset and crew utilization 786 through enhanced planning Adj. net debt / EBITDAR <3x Further enhanced operating model FY18 FY19 7
Q4-19 SAS estimate gross efficiency potential of SEK 1.5-2.0bn to FY23 and beyond Initiative Description Progress ▪ Single type airbus fleet across bases ▪ CPH ✓ ▪ Increased operational stability while reducing training cost, ▪ ARN in FY20 Single type fleet spare aircraft and maintenance cost ▪ OSL in FY23 ▪ Initially higher training volumes during phase-in ▪ MSEK 120 reservation made for ▪ Increased level of self-service and automation in all admin cost reduction Digitalization areas of business ▪ Full effect of Airline Service and lean ▪ Continued lean transformation in Airline Services and digitalization in FY23 administration ▪ Integrated planning of aircraft and personnel through new ▪ MSEK 75 cost reduction in digital tools and ways-of-working Enhanced FY20 planning ▪ Increased productivity and operational robustness through ▪ Fully implemented in FY23 better allocation of buffers ▪ Continued enhancement of operating model to increase Further productivity and flexibility enhanced ▪ Need to identify future replacement for 120-150 seat ▪ Evaluating options operating model aircraft while securing single type operations in all platforms 8
Q4-19 SAS is evaluating replacement in mid-size segment SAS’ fleet Future fleet as of 31 st October delivered & firm orders ▪ Currently, no aircraft order placed to bridge future gap in fleet plan 33 33 ATR and CRJ ▪ Approximately 20% of destinations in SAS network is optimal to serve with an aircraft size in-between A320neo and CRJ 125 ▪ From a profitability perspective, a 120-150 seat aircraft is preferred to serve this segment 100 58 737-family ▪ This would also allow SAS to right-size thinner flows to further reduce CO 2 -emissions per departure by 10-15% A320NEO 80 ▪ A320-family 23 However, three important requirements must be fulfilled: ▪ Securing single type fleet benefits A320neo 28 ▪ Duty agreements appropriate for mid-size A321LR 3 operation ▪ 17 Proven aircraft technology available 16 A330/A340 A330/A350 9
Q4-19 Further conceptual operating model Current operating model Future conceptual operating model SAS Wetlease SAS Mid-size 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 mid-size ATR & CRJ mixed fleet flying aircraft 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 10
FINANCIALS
Q4-19 Highlevel Summary – Q4 & Fiscal Year 2019 CAPACITY REVENUE (MSEK) Q4-19 FY19 Q4-19 FY19 1.9% 1.1% 13,463 46,736 ASK 1 vs. LY +785 +2,018 TRAFFIC Q4-19 FY19 EBT (MSEK) 4 1.4% 1.8% RPK 1 vs. LY Q4-19 FY19 1,226 786 PASK 2 Q4-19 FY19 +404 -1,350 2.7% 2.5% vs. LY CASH FLOW FROM OPERATIONS (MSEK) CASK EXCL. FUEL 3 Q4-19 FY19 Q4-19 FY19 1,199 3,318 3.1% 2.1% +354 -1,241 vs. LY 12 Note: 1) Sheduled. 2) Currency adjusted. 3) Excluding items affecting comparability non-recurring items, currency adjusted. 4) EBT before items affecting comparability
Q4-19 Revenue Development – Q4/19 MSEK +785 13,463 80 -75 57 313 -46 186 270 Passenger revenue MSEK +452 12,678 Q4 FY18 Currency Capacity Passenger Passenger Cargo Other traffic Operating Q4 FY19 change C/F yield revenue revenue revenue 13
Q4-19 Development in Operating Expenses – Q4/19 MSEK -197 -10,505 -263 Hedge effect -427 MSEK Volume effect +18 MSEK -10,702 Price effect +332 MSEK 236 -146 -122 121 -23 Q4 FY18 Currency Personnel Fuel Wet lease cost Technical aircraft Other expenses Q4 FY19 maintenance 14
Q4-19 Revenue Development – FY19 MSEK +2,018 46,736 248 323 -202 1,113 -387 -258 1,180 Passenger revenue MSEK +468 44,718 FY18 Currency Capacity Passenger Passenger Cargo Other traffic Other FY19 change C/F yield revenue revenue operating revenue 15
Q4-19 Development in Operating Expenses – FY19 MSEK -2,752 Hedge effect -1,557 MSEK -37,424 Volume effect +220 MSEK Price effect +485 MSEK -1,486 -1,002 -362 239 -101 -40,176 -40 Q4 FY18 Currency Fuel Personnel Wet lease cost Other expenses Technical aircraft Q4 FY19 maintenance 16
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