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SAS reports on the COVID-19 impacted results of the second quarter

Scandinavian Airlines-SAS issued this financial report on the second quarter:

Q2 2021 – A QUARTER DOMINATED BY THE ONGOING PANDEMIC

FEBRUARY 2021–APRIL 2021

Revenue: MSEK 1,932 (5,264)
Income before tax (EBT): MSEK -2,361 (-3,722)
Income before tax and items affecting comparability: MSEK -2,361 (-3,714)
Net income for the period: MSEK -2,433 (-3,470)
Earnings per common share: SEK -0.35 (-9.15)

SIGNIFICANT EVENTS DURING THE QUARTER

The Board of SAS appointed Anko van der Werff as President and CEO. The Board concurrently appointed Karl Sandlund, Chief Commercial Officer at SAS, as acting President and CEO.
SAS secured financing for the majority of its aircraft deliveries until the second quarter of 2022.

SIGNIFICANT EVENTS AFTER THE QUARTER

SAS has ensured that there is support from the main owners, the Governments of Denmark and Sweden, to gain access to a credit facility amounting to SEK 3.0 billion.

NOVEMBER 2020–APRIL 2021

Revenue: MSEK 4,214 (14,971)
Income before tax (EBT): MSEK-4,297 (-4,809)
Income before tax and items affecting comparability: MSEK -4,309 (-4,792)
Net income for the period: MSEK -4,483 (-4,331)
Earnings per common share: SEK -0.64 (-11.49)

COMMENTS BY THE CEO

New coronavirus cases remained high during the quarter, resulting in strict travel restrictions and low demand for flights. Focus for the quarter has been on lowering SAS’ costs, preserving liquidity and further strengthening SAS’ future competitiveness. The increase in vaccination rates provides some hope for the relaxation of restrictions, and an increase in demand ahead of the important summer season.

CONTINUED NEGATIVE IMPACT FROM THE PANDEMIC

Even if the number of people vaccinated is growing globally, high numbers of new cases and strict travel restrictions continue to impact society and slow recovery for the airline industry. Demand remained low during the second quarter and the number of passengers fell 2.4 million year-on-year, and was down 140,000 on the previous quarter.

SAS is continuing to successfully adapt production to the prevailing circumstances, which is reflected with an unchanged load factor compared with the previous quarter. As a direct consequence of fewer passengers, revenue fell SEK 3.3 billion (-63%) year-on-year and SEK 350 million (-15%) compared with our first quarter.

Weak demand makes it necessary to continue to adapt operations and reduce costs to offset the substantial loss of revenue. This has resulted in costs being SEK 4.6 billion (down: -54%) lower year-on-year and almost SEK 0.5 billion (down: -11%) lower than in the previous quarter. Despite the loss for the quarter amounting to SEK 2.4 billion, SAS posted an improved EBIT for the first time since the pandemic’s outbreak, both year-on-year and compared with the previous quarter.

Another prioritized area is to secure liquidity for when demand once again normalizes. Through active efforts to improve operational cash flow in parallel with SAS securing a number of major financing transactions, cash at the end of the quarter amounted to SEK 4.4 billion. Down only SEK 300 million compared with the end of the first quarter. Moreover, SAS has secured financing for the majority of its aircraft deliveries until the second quarter of 2022.

PENT-UP DEMAND AHEAD OF THE IMPORTANT SUMMER SEASON

Infection, delayed vaccinations and continued stringent travel restrictions have led to a slower than hoped for recovery. However, SAS is ready to welcome our customers back on board as travel restrictions ease ahead of the important summer season. For the summer, SAS is opening 180 direct routes and also increasing capacity on domestic routes within the Scandinavian countries. After the quarter ended, we also announced an extended partnership with Airtours over the next four years, starting in the summer of 2021 and corresponding to a value of approximately SEK 800 million.

To reduce uncertainty when booking flights, SAS is offering more flexible ticket rules and generous rebooking alternatives. We are also now launching SAS Travel Ready Center, a digital tool, to make it easier for passengers to access information about current travel restrictions concerning their destinations and to upload necessary travel documents.

Together with an increased belief in relaxed restrictions and a number of positively received campaigns, these activities have increased forward bookings for the summer and autumn, albeit from lower levels compared with what is typical for this time of the year.

Customers’ booking patterns have also changed during the pandemic. Many customers are now increasingly choosing to book their tickets much closer to their travel dates, which makes it difficult to predict demand during the summer. The most crucial factor for an airline industry recovery is the relaxation of travel restrictions. Since the rates of infection and vaccinations are decisive in this regard, SAS is carefully following vaccination trends across the world.

The prevailing uncertainty means that access to liquidity is essential for all airlines. SAS has therefore ensured that there is support from the major shareholders, the Governments of Denmark and Sweden, to gain access to a credit line facility amounting to SEK 3.0 billion. The aim of credit line facility is to create a liquidity buffer as a complement to other ongoing activities at SAS to reduce costs and strengthen liquidity.

ADAPTATION TO CHANGED MARKET CONDITIONS

SAS expects significantly changed market conditions following the pandemic, with a greater number of leisure travelers and even more intense competition.

Retaining our position as market leader in Scandinavia following the pandemic will require SAS to continue to adapt operations to future market conditions. During the pandemic, SAS has streamlined all aspects of its operations, reduced the number of employees, entered into new collective agreements to increase productivity and reached agreements concerning frozen salary levels. These necessary measures have had a substantial impact and reduced personnel expenses almost 35% year-on-year. Moreover, we have negotiated agreements with suppliers, which has resulted in deferred payments, lower costs and a higher variable component in relation to fixed costs.

However, there will be even greater requirements for efficiency and seasonally adapting operations moving forward. Access to flexible and suitable production is required to be able to offer a complete network and a timetable adapted to Scandinavian requirements for business, leisure and regional destinations. Accordingly, SAS is continuing to develop its operational model that has proved successful in the past few years.

SAS has signed a new collective bargaining agreement for pilots and cabin crew with the Danish union FPU which is a part of FH (The Danish Confederation of Trade Unions). The new agreement means that SAS can establish a complementary base in Copenhagen. With the agreement, SAS improves the flexibility and seasonal adaptations required to maintain its leading position in Scandinavia. As a first step, SAS intends to create new workplaces in Denmark instead of reopening the base in Malaga that closed earlier as a direct result of the pandemic. The new Danish operation will be established using our European operating license, which guarantees a quick and cost-efficient start of operations.

SAS remains committed to its ambitious sustainability target of reducing carbon emissions 25% already by 2025 compared with the base year 2005. In the short term, an accelerated phase-out of older aircrafts means that the share of new, fuel-efficient aircraft in the fleet is rapidly increasing. This is also having a direct impact on our emissions reporting, where carbon emissions per available seat kilometer decreased more than 10% year-on-year. During the quarter, we also secured a minimum of 20% of our planned need of sustainable aviation fuel until 2025.

To conclude, on behalf of the Board of Directors and all the employees at SAS, myself included, I would like to thank Rickard Gustafson, who held the position as President and CEO of SAS with a great level of commitment for a decade. Rickard applied a good leadership culture in his leadership of the company through the necessary change process applicable for SAS and the airline industry as a whole. We wish him every success with his new assignment. At the same time, I would like to wish Anko van der Werff a warm welcome as SAS’ new CEO in July.

I would also like to thank all of my colleagues at SAS for their commitment and endeavors as well as our customers for all their support. As Scandinavia’s leading airline, we look forward to being able to welcome our passengers back on board.

Karl Sandlund

Acting President and CEO, Stockholm, May 27, 2021

Top Copyright Photo: Scandinavian Airlines-SAS Airbus A350-941 SE-RSB (msn 378) IAD (Brian McDonough). Image: 949631.

SAS aircraft slide show:

Singapore Airlines sells and leases back 11 aircraft

Singapore Airlines Airbus A350-941 9V-SMD (msn 037) ZRH (Rolf Wallner). Image: 952962.

Singapore Airlines (SIA) has completed sale-and-leaseback transactions for 11 aircraft, comprising seven Airbus A350-900s and four Boeing 787-10s, raising approximately S$2.0 billion in total.

The transactions were arranged by four different parties, as follows:

Lease Arranger	Aircraft
Aergo Capital Limited	1 Airbus A350-900 1 Boeing 787-10
Altavair	4 Airbus A350-900s
EastMerchant / Crianza Aviation	1 Airbus A350-900 2 Boeing 787-10s
Muzinich and Co. Limited	1 Airbus A350-900 1 Boeing 787-10
Total	11

SIA has successfully raised approximately S$15.4 billion in fresh liquidity since 1 April 2020, including these sale-and-leaseback transactions. The amount also includes S$8.8 billion from SIA’s successful rights issue, S$2.1 billion from secured financing, S$2.0 billion via the issuance of convertible bonds and notes, as well as more than S$500 million through new committed lines of credit and a short-term unsecured loan.

SIA continues to have access to more than S$2.1 billion in committed credit lines, along with the option to raise up to S$6.2 billion in additional mandatory convertible bonds before the Annual General Meeting in July 2021.

During this period of high uncertainty, as the airline industry continues to navigate the unprecedented challenges caused by the Covid-19 pandemic, the SIA Group will continue to explore additional means to raise liquidity as necessary.

Mr Goh Choon Phong, Singapore Airlines Chief Executive Officer, said: “The additional liquidity from these sale-and-leaseback transactions reinforces our ability to navigate the impact of the Covid-19 pandemic from a position of strength. We will continue to respond nimbly to the evolving marketing conditions, and be ready to capture all possible growth opportunities as we recover from this crisis.”

Top Copyright Photo: Singapore Airlines Airbus A350-941 9V-SMD (msn 037) ZRH (Rolf Wallner). Image: 952962.

Singapore Airlines aircraft slide show:

Lufthansa orders five Airbus A350-900s and five Boeing 787-9 Dreamliners

Lufthansa Group is accelerating the modernization of its fleet. New, highly cost and fuel-efficient aircraft are replacing older types on short, medium and long-haul routes. As a result, the Executive Board of Deutsche Lufthansa AG decided to buy ten long-haul aircraft: five Airbus A350-900s and five Boeing 787-9 Dreamliners. The Supervisory Board approved the purchase today. These aircraft will be operated by Lufthansa Airlines and strengthen the 5-star premium offer of the Group’s core brand.

As part of the long-standing fleet renewal program, a total of 175 new aircraft will be delivered to Lufthansa Group airlines this decade.

Carsten Spohr, Chairman of the Executive Board and CEO of Deutsche Lufthansa AG, said:
“Even in these challenging times, we are continuing to invest in a more modern, more efficient and a lower emission Lufthansa Group fleet. At the same time, we are pushing ahead with the modernization of our long-haul fleet even faster than planned prior to the coronavirus pandemic due to anticyclical opportunities. The new aircraft are the most modern of their kind. We want to further expand our global leadership role, among other things, with cutting-edge premium products and a state-of-the-art fleet – especially because we have a responsibility to the environment.”

Boeing 787-9 Dreamliner

The first Boeing 787-9 Dreamliner is scheduled to fly for Lufthansa as early as next winter, with others to follow in the first half of 2022. Today’s decision brings the total number of firm orders for Boeing 787-9s and Boeing 777-9s to 45 aircraft.

Due to the dramatic impact of the coronavirus pandemic on global aviation, aircraft that had been ordered by some airlines could not be delivered in the past twelve months. Lufthansa held talks with Boeing and found a way to buy five 787-9 that were already manufactured. At the same time, the Group reached an agreement with Boeing on a restructured delivery plan.

Airbus A350-900
The five newly ordered Airbus A350-900s will be delivered in 2027 and 2028. This brings the total number of firm orders for the A350-900 to 45 aircraft. The Lufthansa Group also agreed with Airbus on a restructuring of planned deliveries.

In addition to renewing its long-haul fleet, Lufthansa is also focusing on the latest technology, maximum efficiency and the highest level of customer comfort on short-haul routes. In the current year alone, Lufthansa will take delivery of a new, fuel-efficient Airbus A320 family aircraft for short- and medium-haul routes on average every month. Delivery of a further 107 Airbus A320 Family aircraft is planned until 2027.

With the Airbus A350-900, the Boeing 777-9 and the Boeing 787-9, the Lufthansa Group will operate the most fuel-efficient long-haul aircraft in terms of kerosene consumption per passenger and 100 kilometers flown. On average, the new aircraft will only consume approximately 2.5 liters of kerosene per passenger and 100 kilometers flown. This is about 30 percent less than many current as well as previously operated long-haul aircraft models and will have an equally positive impact on the Group’s carbon footprint

The investment in new aircraft is in line with the framework agreement between the Economic Stabilization Fund of the Federal Republic of Germany (WSF) and Deutsche Lufthansa AG. The investments are also in line with the Group’s policy of limiting annual capital expenditures to the level of depreciation and amortization and strictly focusing on increasing company value

Current plans call for an initial fleet reduction, while at the same time extensively modernizing it in the future. The Boeing 787-9 and Airbus A350-900 will essentially replace the four-engine A340 long-haul aircraft as part of this process. Plans call for reducing the number of four-engine aircraft in the Lufthansa Group long-haul fleet to less than 15 percent by the middle of this decade; before the crisis, the share was around 50 percent. The aircraft purchases are accelerating the reduction of fleet complexity for more efficiency. The new, fuel-efficient aircraft will reduce operating costs by around 15 percent compared with the models they replace.

Top Copyright Photo: Lufthansa Airbus A350-941 D-AIXN (msn 292) IAD (Brian McDonough). Image: 946359.

Lufthansa aircraft slide show:

Finnair pilots sign a new 3.5 year collective labor agreement

Finnish Air Line Pilots’ Association and Service Sector Employers Palta have signed an agreement on a new, 3.5-year collective labour agreement for Finnair pilots.

The new CLA is in force until 30 September 2024 and it encompasses several important structural changes that support Finnair’s competitiveness in the fiercely competitive post-pandemic market. These include moving from a service year-based salary structure to a vacancy-based salary structure, and measures enabling balancing the seasonality of air traffic more effectively.

“With the new collective labor agreement our pilots demonstrate their willingness to contribute constructively to Finnair’s rebuild phase in the middle of the largest crisis in the history of aviation”, says Johanna Karppi, Senior Vice President, Human Resources, Finnair. “I am happy that we have together been able to agree on solutions that support Finnair’s competitiveness while ensuring Finnair is a good employer for Finnish pilots also in the future. The long agreement period brings us predictability and supports the long-term efforts in building Finnair’s future.”

In other news, Finnair started to fly with SAF from Helsinki Airport in April as a Sustainable Aviation Fuel based solution to reduce business travel emissions with Neste Global.

Top Copyright Photo: Finnair Airbus A350-941 OH-LWN (msn 273) LHR (Andi Hiltl). Image: 947736.

Finnair aircraft slide show:

Ethiopian becomes the first African airline to trial the IATA Travel Pass

Ethiopian Airlines Group has become the first African airline to conduct trial of IATA Travel Pass, a digital travel mobile app to enhance efficiency in testing or vaccine verifications.

As travel restarts, travelers need accurate COVID-19-related information like testing and vaccine requirements which vary among countries. The IATA Travel Pass initiative helps verify the authenticity of test information presented by travelers which is essential for ensuring the safety of passengers while complying with entry requirements of countries.

Lideta Airport, which was the former main air hub for Ethiopian until its closure in 1960 following the growth & expansion of the Airline, Led to the opening of a new Bole International Airport. (1/2) pic.twitter.com/GKctd6ZFKU

— Ethiopian Airlines (@flyethiopian) April 15, 2021

The trial will be conducted on flights out of Addis Ababa to Washington DC and Toronto as well as on flights out of London and Toronto to Addis Ababa, effective 25 April 2021. Ethiopian has gone digital in all of its operations to avoid physical contact and combat the spread of the pandemic and now, embarks on this initiative which will allow passengers to relish unparalleled flight experience.

The Travel Pass will help create a digital passport, receive test and vaccination certificates and verify that they are sufficient for their route, and share testing or vaccination certificates with airlines and authorities to facilitate travel. The digital travel app will also avoid fraudulent documentation and make air travel more convenient.

Top Copyright Photo: Ethiopian Airlines Airbus A350-941 ET-AWP (msn 375) YYZ (TMK Photography). Imager: 949621.

Ethiopian Airlines aircraft slide show:

World2Fly’s first Airbus A350-900 takes to the skies

World2Fly (Palma de Mallorca and Madrid), the new Spanish leisure airline, saw its first Airbus A350-900 with the test registration of F-WZHI, perform its first flight (below) over France on April 23. The pictured F-WZHI will become EC-NOI on delivery.

Above Photo: Airbus.

World2Fly is owned by the Spanish hotel chain Iberostar.

World2Fly intends to be taking off in the spring 2021 to destinations such as Punta Cana – Dominican Republic, Cancún – Mexico and La Habana – Cuba.

Top Copyright Photo: World2Fly Airbus A350-941 F-WZHI (EC-NOI) (msn 448) TLS (Eurospot). Image: 953537.

Video:

Finnair to accept COVID-19 vaccination certificate as an alternative to negative test result or an immunity certificate when travelling to Finland

Finnair will start accepting a COVID-19 vaccination certificate from the first vaccination dose as an alternative to a negative test result or a certificate of a previous COVID-19 infection, on Finnair flights to Finland from May 11, 2021. In line with the recommendation by the Finnish Institute of Health and Welfare, Finnair has since late January required that all passengers travelling to Finland – excluding transfer passengers – present either a negative test certificate or an immunity/recovery certificate as a prerequisite for boarding.

In addition, as of May 11, there is no requirement for children under the age of 16 to present a health certificate, but Finnair recommends children between 12 and 15 years of age arrive with proof of a negative test result. This is to speed up the arrival procedure at Helsinki Airport, where passengers with a negative test result are exempt from testing on arrival.

“Vaccines have proven their power in fighting the pandemic, and vaccination certificates will play a key role in the upcoming EU Digital Green Certificate to ensure the health and safety of travellers,” says Kimmo Ketola, Medical Director at Finnair. “The likelihood of a vaccinated person being infected and transmitting COVID-19 is very small.”

Finnair will accept vaccination certificates for all COVID-19 vaccines approved by the World Health Organization or the European Medical Agency. The vaccine needs to be administered at least 21 days before the travel date. The certificate needs to include the customer’s name, date of birth, the name of the vaccine producer, the time and place the vaccine was administered, as well as the issuer of the certificate.

As an alternative to the vaccination certificate, customers can present proof of a negative COVID-19 test result or a certificate of a previous COVID-19 infection. Travelers can find more information on the required certificates on Finnair’s Travel updates page.

Many countries have their own requirements for pre-departure testing or vaccination certificates, so travelers are advised to refer to their local authority’s website prior to departure, to ensure smooth entry.

Finnair closely follows the development of health and safety measures in travel, and regularly updates its own procedures when necessary. Finnair flights have comprehensive health and safety measures in place, including a requirement to wear a mask during the flight. Measures are also in place when boarding and disembarking the aircraft, as well as during the flight.

Top Copyright Photo: Finnair Airbus A350-941 OH-LWB (msn 019) (Oneworld) LHR (Rolf Wallner). Image: 948295.

Finnair aircraft slide show:

Delta Air Lines reports a first quarter pre-tax loss of $2.9 billion

Delta Air Lines issued this financial report for the first quarter of 2021:

Delta Air Lines reported its financial results for the first quarter 2021 and provided its outlook for the second quarter 2021. Highlights of the first quarter 2021 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.

“A year after the onset of the pandemic, travelers are gaining confidence and beginning to reclaim their lives. Delta is accelerating into the recovery with our brand stronger and more trusted than ever before,” said Ed Bastian, Delta’s chief executive officer. “Thanks to the incredible efforts of our people, we achieved positive daily cash generation in the month of March, a remarkable accomplishment considering our middle seat block and the low level of demand for business and international travel. If recovery trends hold, we expect positive cash generation for the June quarter and see a path to return to profitability in the September quarter as the demand recovery progresses.”

First Quarter Financial Results

Adjusted pre-tax loss of $2.9 billion excludes $1.2 billion of benefit related to the first payroll support program extension (PSP2), which is partially offset among other items by the debt extinguishment charges incurred when prepaying our $1.5 billion slots, gates and routes term loan
Adjusted operating revenue of $3.6 billion declined 65 percent on 55 percent lower sellable capacity (see Note A) versus March quarter 2019
Total operating expense, which includes the $1.2 billion benefit related to PSP2, decreased $3.9 billion over the March quarter 2019. Adjusted for the benefit related to PSP2 and third-party refinery sales, total operating expense decreased $3.1 billion or 33 percent in the March quarter compared to March quarter 2019, driven by capacity- and revenue-related expense reductions, lower salaries and related costs and strong cost management across the business
During the March quarter, cash burn (see Note B) averaged $11 million per day and turned positive in the month of March with cash generation of $4 million per day
At the end of the March quarter, the company had $16.6 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit facilities. The company had total debt and finance lease obligations of $29.0 billion with adjusted net debt of $19.1 billion, which was higher than prior guidance as a result of aircraft financing decisions

Read the full report.

Top Copyright Photo: Delta Air Lines Airbus A350-941 N506DN (msn 175) AMS (Ton Jochems). Image: 950895.

Delta Air Lines aircraft slide show (Airbus):

Iberia to add the Maldives for a total of 112 destinations this summer

Iberia has made this announcement:

Iberia is awaiting authorization to fly twice a week to the Maldive islands in July and August.

In July the Spanish airline is also resuming flights to Boston, Chicago and Los Angeles in the US, in addition to Miami and New York.

Flight to Cali, Guayaquil, and San Juan (Puerto Rico) raises total Latin American destinations to 18 cities.

Additional summer destinations in Europe include Bergen, Budapest, Corfu, Catania, Dubrovnik, Olbia, Oslo, Split, and Zagreb, plus the “sun and sand” destinations served by Iberia Express –Heraklion, Mikonos, Santorini, Bari, Palermo, Cagliari, and Zadar. And Malta, and a new route to Cephalonia.

Flights to North Africa by Iberia Regional/Air Nostrum will include Casablanca, Marrakesh, and Tangier in Morocco, as well as Algeria staring in June.

In Spain, the Canary and Balearic Islands will be the main focus of Iberia Express, while Iberia Regional/Air Nostrum will offer direct flights from the Balearic Islands to Nice, Geneva, and Zurich.
Followers of Iberia on the social media can vote to choose other new destinations for Iberia, and may win free flights for two to Ljubljana en Slovenia; Bastia in Corsica; Rhodes, Thessaloniki, and Zante in Greece; Fez in Morocco; or the Azores islands in Portugal.

In the third quarter of 2021, Iberia, Iberia Express, and Iberia Regional/Air Nostrum will fly to a total of 112 destinations, 24 of them long-haul, and 88 short- or medium-haul.

Top Copyright Photo: Iberia Airbus A350-941 EC-NCX (msn 302) BSL (Paul Bannwarth). Image: 951973.

Iberia aircraft slide show:

Hong Kong Airlines to increase service between Hong Kong and Shanghai in May

Hong Kong Airlines has made this announcement:

To cater for the needs of passengers, flight frequency in May between Hong Kong and Shanghai Pudong will be increased. Meanwhile, services between Hong Kong, Beijing, Manila and Taipei are also available for booking.

Services until May 31, 2021

From	To	Frequency
From	To	April	May
Hong Kong (HKG)	Beijing (PEK)	Saturday
	Shanghai Pudong (PVG)	Thursday and Friday	Thursday, Friday, Saturday and Sunday
	Manila (MNL)	Saturday and Sunday	Thursday, Friday and Saturday
	Taipei (TPE)	Thursday and Saturday	Friday and Sunday