Skip to main contentSkip to navigationSkip to search
Logotype

SAS Group Interim report November 2012 - July 2013

September 4, 2013 08:00

Strengthened SAS delivers positive resultMay–July 2013

· Revenue: MSEK 11,593 (11,638)
· Traffic: up 5.6%
· Passenger revenue adjusted for currency: up 5.3%
· Income before tax and nonrecurring items: MSEK 973 (497)
· EBIT margin: 11.6% (9.0%)
· Income before tax: MSEK 1,120 (726)
· Net income for the period: MSEK 844 (534)
· Earnings per share: SEK 2.57 (1.62)
· Cash flow from operating activities: MSEK -276 (-187)

November 2012–July 2013

· Revenue: MSEK 31,123 (31,007)
· Traffic: up 3.8%
· Passenger revenue adjusted for currency: up 5.3%
· Income before tax and nonrecurring items: MSEK 229 (-788)
· EBIT margin: 2.2% (-1.3%)
· Income before tax: MSEK -9 (-2,694)
· Net income for the period: MSEK -174 (-2,436)
· Earnings per share: SEK -0.53 (-7.40)
· Cash flow from operating activities: MSEK 518 (299)

“It is gratifying that our robust and sweeping restructuring program is having the anticipated effect and SAS exits the third quarter strongly with a positive income before tax of MSEK 1,120.

We have made substantial progress in the implementation of our plan to improve our financial position. When the sale of Widerøe is concluded in September, we will have completed the sale of assets corresponding to about SEK 2.7 billion.

In parallel, during the quarter, we were able to increase traffic through a significant improvement in productivity. During the summer, 32 new routes were opened, which contributed to increased passenger revenue at the same time as operating expenses decreased. We have signed a letter of intent with Airbus regarding the renewal of the SAS Group’s long-haul fleet, which bolsters our long-term competitiveness.

Competition in European air traffic remains very intense. Consequently, our focus is on completing the entirely necessary transition to a lower and more flexible cost structure, in parallel with our continued aggressive investment in our customer offering. Our forecast of achieving positive earnings for the full-year remains firmly in place,” says Rickard Gustafson, SAS President and CEO.

Comments by the CEO

May–July 2013

· Income before tax amounted to MSEK 1,120 (726)
–       Income before tax and nonrecurring items increased by MSEK 476 to MSEK 973
· Traffic increased 5.6%
· The unit cost, excluding jet fuel, fell 5.8%
· Higher productivity with increased aircraft utilization and 32 new routes
· Yield declined 0.6% as a consequence of this summer’s expansion
· The competition authorities approved the sale of Widerøe, which is expected to be completed in September
· The SAS Group’s long-term liquidity was strengthened through the sale and leaseback of six Boeing 737s for MSEK 500 and a debt issue of MEUR 35
· Letter of intent with Airbus for the renewal of the long-haul fleet with deliveries starting in 2015
· SAS Go and SAS Plus introduced in Scandinavia and Europe

It is gratifying that SAS exits the third quarter further strengthened with a positive income before tax of MSEK 1,120. After adjustments for nonrecurring items, the improvement in earnings was MSEK 476, a doubling compared with last year. The third quarter is seasonally strong, but above all this quarter provides confirmation that our established strategy is having an impact and that we have made substantial progress. With greater financial stability and a more competitive cost structure, we have created scope for aggressive initiatives and investment in our customer offering.

Competition in European air traffic remains very intense. However, demand in the Scandinavian market increased approximately 6% in the third quarter, which is more than in substantial parts of Europe.

One of the SAS Group’s strategic objectives is to create the requisite operative preconditions, in terms of both costs and flexibility, to be able to offer competitive prices. During the quarter, SAS expanded through a significant increase in productivity. Unit cost decreased 5.8% and aircraft utilization increased by slightly more than 30 minutes per day year-on-year. Accordingly, during the summer of 2013, we were able to bolster our offering and opened 32 new routes, which contributed to an increase in passenger revenue of 5.3%, at the same time as operating expenses decreased on a year-on-year basis.

SAS caters to those who travel often and those who see a value in easier and more time-efficient travel. We offer more destinations and more departures than any other Nordic airline, which is the strength of our business model. More routes and departures in combination with competitive pricing means that a larger proportion of our loyal customers now choose to fly with SAS for leisure travel. In June-July, 46% more EuroBonus customers flew with SAS compared with the year-earlier period. In addition, at the beginning of June, our new service concept SAS Go and SAS Plus were introduced, whereby simplicity, good value, and respect for our customers form the basis of an entirely new method of meeting the competition.

In June, we signed a letter of intent with Airbus regarding the renewal of the SAS Group’s long-haul fleet, which further bolsters our long-term competitiveness. From 2015 onwards, SAS will upgrade its fleet with four new A330 Enhanced aircraft and, from 2018, SAS will phase in eight Airbus A350s. Furthermore, SAS will implement an upgrade of the passenger cabins in seven existing aircraft by 2015. In addition to a substantially enhanced customer offering, the new long-haul aircraft will improve jet-fuel efficiency by slightly more than 30% compared with the existing A340s.

A prerequisite for the continued development of our operations is that we create a long-term financial preparedness in line with our plan. At the end of July, we carried out the sale and leaseback of aircraft to a value of MSEK 500. We issued debt of MEUR 35 under the EMTN program and, in addition, are evaluating the prerequisites for further bond loans. In June, the competition authorities approved the sale of Widerøe, for which the practical sale arrangements are expected to be in place by the end of September. Widerøe is the single most important sale for SAS and, when it has been completed, SAS will have a financial preparedness that comfortably exceeds the target of 20% of our fixed costs. At which point, we will have completed the sale of assets corresponding to about SEK 2.7 billion. Including the bond issue in July, liquidity will thereby be strengthened by about SEK 3 billion. The above, together with the latest upgrade of the SAS Group’s credit rating by Standard & Poors comprise acknowledgments that we are on the right path. In the autumn, we will continue the work with outsourcing Ground Handling, which comprises a crucial long-term measure to exchange fixed costs for variable costs and, thereby, further increase operational flexibility.

The third quarter strengthened SAS financially and further improvement of the financial position is expected in the last quarter. Provided that no significant unforeseen event occurs in our business environment, the SAS Group will achieve an EBIT margin in excess of 3% and positive income before tax, EBT, for the full year 2012/2013.

I would like to send my heartfelt thanks to all our staff who, not least during the summer, have continued to work hard despite the extensive restructuring efforts. Looking forward, our strategic priority is to continue to deliver on our vigorous change program, in parallel with aggressive investment in our customer offering as well as enhanced quality and service. This comprises a prerequisite for long-term profitable growth.

Stockholm, September 4, 2013

Rickard Gustafson
President and CEO
SAS discloses this information pursuant to the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. The information was provided for publication on September 4, at 8:00 a.m.

The full report
/mbpublicbinaryproxy/Main/290/9460572/155850.pdf

Latest news

We at SAS use cookies to optimize our websites for your needs. By using this website you consent to our cookies policy. If you want to find out more or disable cookies, please click here