SAS made this announcement:
I am pleased to conclude a busy summer quarter. Almost 7 million passengers traveled with SAS during the third quarter, the highest quarterly passenger figure since before the pandemic. For the first time since 2019, we also posted a quarterly profit. This is an important milestone. We still have a lot of work ahead of us with our transformation to secure long-term competitiveness, but I consider this a clear sign that we are on the right track and that our efforts are paying off. We continue our ramp-up and will increase capacity this winter, compared to the same period last year. We also noted strong ticket sales throughout the third quarter, indicating a healthy underlying demand for travel despite a more uncertain economic outlook in society as a whole.
During the quarter, air traffic control capacity issues caused considerable problems for airlines, airports and, not the least, our passengers. We know that many passengers traveling through Copenhagen Airport during the summer have been impacted and our employees have been working hard to support those affected.
We are making progress in our Chapter 11 process in the US and in reaching our overall targets in the SAS FORWARD plan. During the quarter, we started a competitive and broad equity solicitation process to secure capital that will help drive our airline forward and facilitate our emergence from the Chapter 11 process. There has been substantial interest from potential investors to participate in the process, where potential investors can place bids to take a lead position or be paired with other investors in acquiring equity interests of the reorganized company.
MAY 2023–JULY 2023
- Revenue: MSEK 13,173 (8,580)
- Income before tax, EBT: MSEK 457 (-1,991)
- Income before tax and items affecting comparability: MSEK 464 (-2,081)
- Net income for the period: MSEK 461 (-1,848)
- Earnings per common share: SEK 0.06 (-0.25)
NOVEMBER 2022–JULY 2023
- Revenue: MSEK 30,024 (21,173)
- Income before tax (EBT): MSEK -3,406 (-6,145)
- Income before tax and items affecting comparability: MSEK -3,548 (-6,315)
- Net income for the period: MSEK -3,773 (-5,810)
- Earnings per common share: SEK -0.52 (-0.80)
SIGNIFICANT EVENTS DURING THE QUARTER
- On May 10, the General Court of the Court of Justice of the European Union announced its ruling regarding the recapitalization of SAS in 2020.
- On May 15, SAS received court approval for the company’s equity solicitation procedure.
- Skellefteå municipality joined the SAS Corporate Sustainability Program – buying sustainable aviation fuel for all its business travel in 2023 and 2024.
- SAS currently aims to complete court approval of its court-supervised process in the US around year-end, to be followed by any regulatory approvals and procedures required in 2024. SAS currently expects that there will be only modest recovery for general unsecured creditors and little or no recovery for subordinated unsecured creditors upon emergence from the Chapter 11 process, and that there will be no or very little value for existing shareholders in SAS AB at the end of the company’s restructuring proceedings.
- The third quarter interim report includes financial projections on page 10.
SAS noted a continued positive trend for passenger demand through the third quarter. The total number of passengers increased 36.8 percent, compared to the same period last year which was impacted by the pilot strike. Year-on-year, our RPK increased 42.5 percent, while capacity increased 35.9 percent. Our flown load factor of 81.5 percent was up 3.7 percentage points on the same period last year.
The increase in passenger demand and production led to a 54 percent increase in our total operating revenue year-on-year, landing at SEK 13,173 million for the quarter. Earnings before tax ended at SEK 457 million, representing an improvement of SEK 2,448 million, compared to same period last year which was impacted by the strike. The improved EBT reflects both stronger operational performance and a financial effect related to currency revaluations of lease liabilities.
Cost reductions across the business remain in focus to secure our cost competitiveness. Total operating expenses for the quarter ended at SEK 11,596 million.
The cash balance at the end of the quarter was SEK 6,463 million. Cash flow from operating activities during the quarter amounted to an inflow of SEK 1,542 million.
UPDATE ON SAS’ TRANSFORMATION PLAN
We launched our comprehensive business transformation plan SAS FORWARD in conjunction with the publication of the first quarter report for FY2022, in the end of February 2022. The aim of the plan is to secure long-term competitiveness for SAS in the global aviation industry. On July 5, 2022, to accelerate the implementation of SAS FORWARD, we announced that we had voluntarily filed for Chapter 11 in the US, a well-established and flexible legal framework for restructuring businesses with operations in multiple jurisdictions. Through this process, we aim to reach agreements with key stakeholders, restructure the company’s debt obligations, reconfigure our aircraft fleet and emerge with a significant capital injection.
The procedures governing the equity solicitation process were approved by the US court on May 15 and we are now running a competitive and broad solicitation process to secure capital that will help drive our airline forward and facilitate our emergence from the Chapter 11 process. There has been substantial interest from potential investors to participate in the process, where potential investors can place bids to take a lead position or be paired with other investors in acquiring equity interests of the reorganized company. Simultaneously, we continue to engage with our different stakeholders and work toward building consensus for a reorganization plan. We currently aim to complete court approval of our court-supervised process in the US around year-end, to be followed by any regulatory approvals and procedures required in 2024.
NEW ROUTES AND DESTINATIONS
As part of SAS’ strategy to strengthen our offering for Scandinavian travelers, we have increased our capacity for the autumn and winter season. In May, we announced two new direct intercontinental routes. We are bringing back a direct route from Copenhagen to Bangkok, starting this autumn, and we are also returning to Africa for the first time in decades, through weekly flights to Agadir, Morocco, starting in November. SAS will fly to Agadir both from Copenhagen and from Stockholm during the winter season until the end of March 2024, offering a convenient timetable with daytime departure and arrival.
STAR ALLIANCE NAMED WORLD’S BEST AIRLINE ALLIANCE
In June, Star Alliance won the title of World’s Best Airline Alliance at the prestigious Skytrax World Airline Awards once again. The Alliance’s famed Los Angeles lounge also won the World’s Best Airline Alliance Lounge Award for the seventh consecutive year. The Skytrax World Airline Awards are decided through impartial international customer voting. This year, over 20 million eligible entries were counted in a survey that ran from September 2022 to March 2023, representing passengers with over 100 nationalities. The survey was also provided in six major international languages. We are very proud to be part of the Alliance, and winning the award again constitutes true proof of quality for SAS and for the entire Star Alliance network.
STEPS TOWARDS FOSSIL-FREE AVIATION
SAS aims to decarbonize aviation and progress on this ambitious plan can only be achieved through collaboration. By involving our customers and teaming up with them, we can reduce CO2 emissions and enable increased large-scale production of sustainable aviation fuels.
In June, Skellefteå Municipality became the first municipality in Sweden to join SAS’ Corporate Sustainability Program. The partnership entails that Skellefteå will purchase sustainable aviation fuel for all its business travel flights for its employees during 2023 and 2024. We hope that our new partnership will inspire other companies and municipalities to reduce their air travel emissions while contributing to driving the transition toward sustainable aviation.
In June, we opened seat reservations for our first-ever commercial electric flight in Sweden, Norway, and Denmark. SAS has been one of the pioneers in the airline industry since 1946, being for instance the first commercial airline operator to fly over the North Pole to significantly shorten flight time between continents. A groundbreaking activity for which SAS received the Columbus Prize. We are proud to invite our passengers to the next major milestone in the future of aviation, and it is a natural continuation of that pioneering spirit and a significant step forward on our journey towards more sustainable aviation. We do this to manifest our strong belief in the development of electric aviation as a viable option to low- and zero-emission aviation.
We are approaching the winter season and I am pleased by the positive trend in our ticket sales throughout the third quarter. We continue our ramp-up and will increase capacity this winter, compared to the same period last year.
We continue to make steady progress with SAS FORWARD and our Chapter 11 process in the US. We are progressing with our equity solicitation process and we are engaging with our different stakeholders to build consensus for a plan of reorganization.
I want to thank my colleagues at SAS for their hard work to ensure that we take the best possible care of our customers, and to ensure that they get the quality service they expect from us. I am grateful for all your efforts!
As always, we look forward to welcoming our customers on board our aircraft.
Anko van der Werff
President and CEO
Stockholm, September 1, 2023