Tag Archives: Scandinavian Airlines-SAS

CDB Aviation and SAS expand relationship with new transaction for four Airbus aircraft

SAS took delivery of a new Airbus A350-900 on lease from CDB Aviation on Friday, March 26, 2021 in Toulouse, France. (Photo: Business Wire)

CDB Aviation, a wholly owned Irish subsidiary of China Development Bank Financial Leasing Co., Limited, announced a new sale and leaseback transaction for a fleet of four Airbus aircraft with its existing customer, Scandinavia’s flagship airline, SAS.

The agreement incorporates three Airbus A320neo and one A350-900 aircraft, which are leased to SAS on a long-term basis. The carrier already took delivery of the A350 on Friday, March 26, 2021. The remaining three A320neos are expected to be delivered during the spring of 2022.

SAS reports a further 20% decline in passengers in February

Scandinavian Airlines issued this traffic statement for February:

SAS Traffic figures – February 2021

Continued strict travel restrictions in February led to a further reduction of the traffic program and fewer passengers.

Through February, 225,000 passengers flew with SAS, a decrease of 20% compared with January this year and down some 89% year-on-year. SAS continued to adapt capacity (ASK) to lower demand and, compared with January, ASK declined 16%, which was almost 81% lower than last year.

“The travel restrictions continue to put pressure on demand, which has resulted in further adjustment of offered destinations and departures in February. Strong demand for cargo services has enabled SAS to maintain parts of its intercontinental production, though this has resulted in a low overall passenger load factor of 26%. However, the load factor for our Scandinavian and European operations has stabilized at around 40% and even increased 4 percentage points for the month compared with January,” says Rickard Gustafson, CEO of SAS.

SAS scheduled traffic Feb21 Change1 Nov20- Feb21 Change1
ASK (Mill.) 673 -79.7% 3 421 -75.7%
RPK (Mill.) 173 -91.9% 978 -89.7%
Passenger load factor 25.8% -39.3 p u 28.6% -39.1 p u
No. of passengers (000) 225 -88.7% 1 223 -84.9%
Geographical development, schedule Feb21           vs.          Feb20 Nov20- Feb21    vs.   Nov19-Feb20
RPK ASK RPK ASK
Intercontinental -97.6% -72.7% -96.6% -78.9%
Europe/Intrascandinavia -95.2% -91.4% -91.8% -85.2%
Domestic -77.1% -65.2% -71.2% -47.7%
SAS charter traffic Feb21 Change1 Nov20- Feb21 Change1
ASK (Mill.) 6 -97.0% 26 -96.2%
RPK (Mill.) 2 -98.7% 10 -98.4%
Load factor 38.5% -52.9 p u 38.2% -53.9 p u
No. of passengers (000) 1 -99.1% 3 -98.7%
SAS total traffic (scheduled and charter) Feb21 Change1 Nov20- Feb21 Change1
ASK (Mill.) 678 -80.6% 3 447 -76.6%
RPK (Mill.) 176 -92.4% 988 -90.3%
Load factor 25.9% -40.6 p u 28,7% -40.1 p u
No. of passengers (000) 225 -89.0% 1 226 -85.3%

1 Change compared to same period last year. p u = percentage units

Preliminary yield and PASK Feb21 Nominal change FX adjusted change
Yield, SEK 1.37 36.7% 44.5%
PASK, SEK 0.35 -46.0% -43.0%
Feb21
Punctuality (arrival 15 min) 78.1%
Regularity 99.5%
Change in total COemissions, rolling 12 months -79.3
Change in COemissions per available seat kilometer -8.8%
Carbon offsetting of passenger related emissions 44%

Definitions:

RPK – Revenue passenger kilometers
ASK – Available seat kilometers
Load factor – RPK/ASK
Yield – Passenger revenues/RPK (scheduled)
PASK – Passenger revenues/ASK (scheduled)
Change in COemissions per available seat kilometers – SAS passenger related carbon emissions divided with total available seat kilometers (incl. non-revenue and EuroBonus), rolling 12 months
Carbon offsetting of passenger related emissions – Share of SAS passenger related carbon emissions compensated by SAS (EuroBonus members, youth tickets and SAS’ staff travel)

From fiscal year 2020 we report change in CO2 emissions in total and per Available Seat Kilometers (ASK) to align with our overall goal to reduce our total CO2 emissions by 25% by 2025, compared to 2005.

SAS aircraft photo gallery:

SAS aircraft slide show:

 

SAS reports an on-going negative impact of COVID-19 for the last quarter

Scandinavian Airlines-SAS issued this quarterly report:

CONTINUOUS NEGATIVE IMPACT FROM THE ONGOING PANDEMIC

NOVEMBER 2020–JANUARY 2021

  • Revenue: MSEK 2,282 (9,707)
  • Income before tax (EBT): MSEK -1,936 (-1,087)
  • Income before tax and items affecting comparability: MSEK -1,948 (-1,078)
  • Net income for the period: MSEK -2,050 (-861)
  • Earnings per common share SEK -0.28 (-2.33)

SIGNIFICANT EVENTS DURING THE QUARTER

  • Rickard Gustafson announced his decision to leave SAS after ten years. He will leave the company by July 1, 2021.
  • SAS and Apollo have extended their charter partnership in the form of a three-year contract valued at SEK 3.4 billion.
  • SAS contracted and utilized a new NOK 1.5 billion credit facility with a three-year tenor that is guaranteed in full by the Norwegian Export Credit Guarantee Agency.

COMMENTS BY THE CEO

The pandemic continues to have a severe negative impact on the whole aviation industry. An increase in number of cases has led to more stringent travel restrictions, with a consequent reduction in demand during the quarter and stalled recovery for the entire travel industry. However, the development of vaccines and vaccination programs provide hope that restrictions will ease and that we will see an increase in travel toward summer 2021.

QUARTERLY EARNINGS NEGATIVELY IMPACTED BY THE PANDEMIC

The quarter was marked by increased cases and growing concern for new mutations of the coronavirus, resulting in even more stringent travel restrictions across the world. In general, restrictions are currently more stringent than they were in spring 2020.

The prevailing circumstances mean that SAS is continually forced to adapt capacity and departures to meet weak and volatile demand. Capacity for the quarter declined 75% year-on-year and 29% compared with the previous quarter. Passenger numbers were down 5.3 million year-on-year and down 900,000 compared to the previous quarter.

The negative traffic trend has resulted in revenue of only SEK 2.3 billion, a year-on-year decline of SEK 7.4 billion. At the same time, SAS has succeeded in offsetting the majority of the revenue loss by reducing costs, which are almost 60% lower year-on-year. However, the cost savings have not fully compensated for the loss of revenue, and earnings for the quarter amounted to SEK -1.9 billion, which is down SEK 0.8 billion compared with last year.

SAS’ ability to manage liquidity is crucial for the company’s ability to safely navigate the ongoing pandemic, and liquidity amounted to SEK 4.7 billion at the end of the quarter. As planned, SAS has pulled together to ensure that customers are reimbursed for canceled travel, which amounted to SEK 2.1 billion during the quarter. Moreover, we have also had one-time disbursements amounting to around SEK 0.7 billion pertaining to postponed payments from 2020 and restructuring initiatives. To strenghten liquidity SAS utilized a credit facility of NOK 1.5 billion, which is entirely guaranteed by the Norwegian Export Credit Guarantee Agency (GIEK), during our seasonally weakest period.

ADAPTED CUSTOMER OFFERING BASED ON PREVAILING CIRCUMSTANCES

We have noted a pent-up need to travel moving forward, and as vaccinations gain global momentum, it should be possible to ease the current travel restrictions thus making it possible to travel again. Pending this, SAS is preparing to reopen 180 direct routes for the summer, mainly within Scandinavia and Europe, provided that the prevailing travel restrictions will allow people to travel.

To reduce uncertainty about booking, SAS has introduced even more flexible ticket rules and rebooking alternatives. As always, no restrictions apply for rebooking or cancelling our Plus tickets. In addition, our other international tickets can now also be rebooked free of charge up to three days prior to departure. If travelers prefer to cancel they can choose to receive a SAS Travel Voucher which is valid as payment on all SAS destinations. For domestic journeys in Sweden, Norway and Denmark, a SAS Go Flex ticket is now available, which allows rebooking up to one hour before departure at no additional cost. For customers who choose to pay for their tickets with EuroBonus points, free cancellation applies up to 24 hours before departure as usual. Moreover, SAS is now in-phase with refunding customers for canceled journeys, which means that the company is once again meeting the seven-day refund requirement period for canceled flights, which provides our customers with an extra element of security. Following the implementation of these initiatives, we have also conducted a number of well-received campaigns with increased bookings mainly for the summer and autumn, albeit from low levels compared to the norm for this time of year.

Air freight has filled an important function during the pandemic and has also developed to an increasingly important supplement to lost passenger revenue, particularly in terms of SAS’ intercontinental flights. Many corporate customers are also in great need of securing important logistics flows for their operations in which SAS actively participates. For example, SAS Cargo established air bridges during the quarter within Europe and to South America for components for two major industrial companies.

In January, SAS signed an agreement with Apollo to extend their existing partnership for three years, with the possibility of extension by an additional two years. The agreement concerns charter traffic from Denmark, Norway and Sweden to destinations within Europe, corresponding to a value of approximately SEK 3.4 billion in the first three years.

CONTINUED WORK WITH RESTRUCTURING OPERATIONS

SAS has implemented a number of measures during the quarter to dimension operations to the prevailing demand and to position the company for the expected market conditions following the pandemic.

Continual adjustment and adaptation of the traffic program has reduced SAS’ variable costs by over 70%. The major redundancy process corresponding to approximately 5,000 positions was completed, while SAS continues to use temporary lay-offs throughout Scandinavia. These unfortunate, but necessary measures have had a substantial impact and reduced personnel expenses almost 45% year-on-year.

To further strengthen SAS’ ability to adapt seasonally and increase productivity and long-term competitiveness, talks are continuing with all labor unions within the SAS Group. New agreements have been signed for some of our Norwegian personnel during the quarter, and agreements have also been made concerning frozen salary levels for several employee groups.

Additionally, SAS has renegotiated a large number of supplier agreements, resulting in postponed payments of almost SEK 700 million in 2021, further strengthening SAS’ financial preparedness.

As previously announced, SAS has postponed deliveries of new aircraft from Airbus and accelerated the phase-out of older and less fuel-efficient aircraft, thereby strengthening our short- and long-term liquidity. In the last three months, we have phased out or sold five Boeing 737 aircraft and simultaneously taken delivery of three new Airbus A320neo aircraft.

The accelerated transition to new, fuel-efficient aircraft also means that we are reducing our emissions and advancing toward our environmental goals. Over the last twelve months, total carbon emissions have declined 74%. The majority of this decline is related to reduced traffic, but also the use of new, more fuel-efficient aircraft, which has contributed 2.1 percentage points. Moreover, we recently expanded our future delivery undertaking with Gevo, to secure a minimum of 20% of our planned consumption of sustainable aviation fuel in 2025.

LOOKING AHEAD

A high vaccination rate is the most decisive factor for the authorities’ willingness to ease travel restrictions and thus allow for the recovery of the airline industry. As such, SAS is monitoring global vaccination developments closely in order to be ready to quickly increase capacity when conditions permit. However, demand is most likely to remain highly limited in the foreseeable future, but we expect demand to reach more normalized levels in 2022.

The passenger mix will have an increased share of leisure travelers in the future, which places even greater requirements on flexibility and seasonal adaptations to our operations. Through its customer offering, fleet renewal, sustainability work and operational model, SAS is well-positioned for the market that will be formed following the pandemic. Thanks to our operational model and the associated production units within this model that SAS has developed in the last few years, SAS has a strong competitive position for the future. The model enables SAS to offer a complete network and a timetable adapted to Scandinavian requirements for business, leisure, and regional destinations through access to flexible production resources fit for purpose.

I would like to express my gratitude once more to all of my colleagues at SAS for their commitment and hard work during this difficult time. I would also like to thank our customers for the confidence they show in us as Scandinavia’s leading airline. We are all looking forward to soon having the pleasure of welcoming our travelers on board!

Rickard Gustafson,

President and CEO, Stockholm, February 25, 2021

SAS and CFM sign engine purchase and services agreement

Scandinavian Airlines-SAS has made this announcement:

SAS has selected CFM International LEAP-1A engines to power its new fleet of 35 A320neo family aircraft ordered in 2018. This agreement also includes eight spare engines. In addition, SAS has signed with CFM a Rate-Per-Flight-Hour (RPFH) support agreement to cover its new fleet of LEAP-1A engines, including spares, as well as 15 additional LEAP-1A-powered A320neo on lease.

This new agreement is part of SAS’ fleet upgrade program that aims to improve efficiency and sustainability performances. SAS has been at the forefront of introducing technologies that reduce the impact of aviation on the environment, as well as choosing efficient engines to power its fleet.

Flying into Tromso:

“The new LEAP engines and long-term services agreement are an integral part of SAS´ strategic fleet upgrade and will continue to greatly improve our efficiency in our operations. Our goal is to be industry leaders in sustainable aviation, and we are to reduce emissions with 25 per cent by 2025, in comparison to 2005. This will mainly be enabled by using state of the art technologies allowing for lower fuel consumption and an increase in use of sustainable aviation fuels”  says Magnus Örnberg, Executive Vice President and CFO, SAS.

“We are delighted to expand our long-term relationship with SAS, an airline we share the core values with. Over four decades, CFM has been working on developing leading-edge technologies that help our airlines customers make their operations cost-efficient and sustainable. We take SAS’ trust as a great responsibility to keep supporting their operations with the best CFM standards in terms of reliability” says Gaël Meheust, President and CEO of CFM International.

SAS was a launch customer for CFM’s advanced LEAP-1A engine that it selected in 2011 to power the first batch of 30 A320neo. SAS currently operates 44 A320neo aircraft and 1 A321neo LR powered by the fuel-efficient LEAP engine and plans to introduce two additional A321neo LR.In total SAS orders for purchased and leased aircraft placed in 2011 and 2018 will enable SAS to increase the fleet of A320neo to 80.

A319:

CFM International’s advanced LEAP-1A engine continues to set a new industry standard for fuel efficiency and asset utilization, logging more than seven million engine flight hours in commercial operations. The fleet is demonstrating a 15 percent better fuel consumption and CO2 reductions as well as a significant improvement in noise emissions compared to the best CFM56 engines.

SAS aircraft photo gallery:

SAS aircraft slide show:

Where SAS will fly to in spring and summer

Scandinavian Airlines-SAS has made this announcement:

SAS opens 180 direct routes from Scandinavia to Europe in its spring and summer traffic programs, assuming travel restrictions have eased. In addition to reopening several routes, new destinations such as Stockholm-Barcelona, Oslo-Pharo and Copenhagen-Larnaca are also launched.

Demand for air travel is increasing a little further down the line, especially to warmer destinations. SAS will therefore introduce more departures to several destinations around the Mediterranean. Even with the current tight travel restrictions due to COVID-19, there is hope that these will ease as vaccination rates increase and spread of infection in society goes down.

SAS will increase capacity on all domestic routes accordingly, as well as within the Nordic and to major cities in Northern Europe, to meet an increase in demand for leisure as well as business travel.

SAS opens 180 direct routes from Scandinavia to Europe in its spring and summer traffic programs.

We continuously update our traffic program so that you can explore the world again. Demand for air travel is increasing a little further down the line, especially to warmer destinations. SAS are therefore introducing more departures to several destinations around the Mediterranean. Below you can find all the destinations we fly to in the upcoming months. Please be aware that travel and entry restrictions may apply for some destinations.

My airport
Copenhagen 
New York 
London 
Tallinn 
Dublin 
Amsterdam 
Paris 
Brussels 
Frankfurt 
Oslo 
Stockholm 
Hamburg 

SAS reports less passengers in January as a direct consequence of increased travel restrictions

Scandinavian Airlines-SAS issued this traffic report for January 2021:

During January, 280,000 passengers flew with SAS, a decrease of 28% compared to December, when demand was higher during the holidays. Compared to January last year, the number of passengers decreased by some 85%. Compared to December, SAS’ capacity decreased by 15%, which corresponds to a decrease of almost 78% compared to last year. The load factor was 30%, a decrease of about 3 percentage points compared to December and 37 percentage points in comparison to last year.

“During January, new travel restrictions have been introduced at short notice in Scandinavia and the rest of the EU. This means that as of February 1, all SAS’ international destinations have either requirement for quarantine, requirements for a negative PCR test or a general entry ban for non-residents. Reintroduced and extended travel restrictions have significantly reduced the demand for air travel and has forced SAS to adapt both the offered destinations and departures to the prevailing conditions. The increased restrictions mean that we estimate that demand, and thus our capacity, will remain at low levels for the rest of the winter season” says Rickard Gustafson, CEO SAS.

SAS scheduled traffic Jan21 Change1 Nov20- Jan21 Change1
ASK (Mill.) 801 -77.1% 2 748 -74.5%
RPK (Mill.) 240 -89.5% 804 -89.1%
Passenger load factor 29.9% -35.7 p u 29.3% -39.2 p u
No. of passengers (000) 280 -85.2% 998 -83.7%
Geographical development, schedule Jan21           vs.          Jan20 Nov20- Jan21    vs.   Nov19-Jan20
RPK ASK RPK ASK
Intercontinental -96.4% -81.2% -96.4% -80.5%
Europe/Intrascandinavia -90.4% -83.9% -90.7% -83.2%
Domestic -72.6% -53.2% -69.1% -41.6%
SAS charter traffic Jan21 Change1 Nov20- Jan21 Change1
ASK (Mill.) 7 -95.8% 21 -95.9%
RPK (Mill.) 3 -98.2% 8 -98.3%
Load factor 38.9% -53.8 p u 38.1% -54.3 p u
No. of passengers (000) 1 -98.7% 2 -98.5%
SAS total traffic (scheduled and charter) Jan21 Change1 Nov20- Jan21 Change1
ASK (Mill.) 808 -77.9% 2 769 -75.4%
RPK (Mill.) 242 -90.1% 812 -89.6%
Load factor 30.0% -36.9 p u 29.3% -40.2 p u
No. of passengers (000) 281 -85.5% 1,001 -84.0%

1 Change compared to same period last year. p u = percentage units

Preliminary yield and PASK Jan21 Nominal change FX adjusted change
Yield, SEK 1.20 22.6% 29.8%
PASK, SEK 0.36 -44.1% -40.9%
Jan21
Punctuality (arrival 15 min) 72.8%
Regularity 98.4%
Change in total COemissions, rolling 12 months -73.8%
Change in COemissions per available seat kilometer -7.5%
Carbon offsetting of passenger related emissions 43%

Definitions:

RPK – Revenue passenger kilometers
ASK – Available seat kilometers
Load factor – RPK/ASK
Yield – Passenger revenues/RPK (scheduled)
PASK – Passenger revenues/ASK (scheduled)
Change in COemissions per available seat kilometers – SAS passenger related carbon emissions divided with total available seat kilometers (incl. non-revenue and EuroBonus), rolling 12 months
Carbon offsetting of passenger related emissions – Share of SAS passenger related carbon emissions compensated by SAS (EuroBonus members, youth tickets and SAS’ staff travel)

From fiscal year 2020 we report change in CO2 emissions in total and per Available Seat Kilometers (ASK) to align with our overall goal to reduce our total CO2 emissions by 25% by 2025, compared to 2005.

SAS and Apollo extend partnership in record contract

Scandinavian Airlines-SAS made this announcement:

SAS and Apollo are expanding their partnership regarding charter flights in a contract which covers three summer and three winter seasons through to 2024, with an option for an extension of a further two years to 2026. The partnership with Apollo represents SAS’ largest contract with a charter operator and is worth around SEK 3.4 billion over the first three years.

The contract means SAS remains the main partner for Apollo’s charter flights from Scandinavia for the duration of the contract. SAS will fly Apollo customers to and from 24 locations across Sweden, Denmark and Norway to 51 destinations around Europe. Apollo will also become SAS’ largest partner on the charter side.

Many of the charter flights will be flown using the brand-new Airbus A320 aircraft, with SAS’ new design both inside the cabins and outside. In recent years, SAS has renewed its fleet and replaced older aircraft with newer designs with more fuel-efficient engines, thereby also cutting its carbon dioxide emissions.

“Here at Apollo, we see a bright future and we’re convinced that travel will start to pick up again soon. It therefore feels like a very positive step forward to have signed a contract with SAS which will secure our partnership for the coming years. SAS’ focus on sustainable travel, reliable deliveries and many weekend departures means that Apollo can safely focus on doing what we do best: creating the very best holiday experiences for our customers,” says Leif Vase Larsen, CEO Northern Europe at DER Touristik Nordic AB.

SAS reports increased passenger numbers compared to November driven by holiday travel

SAS made this announcement:

Almost 400,000 passengers flew with SAS during December, an increase of 18% compared to last month, but a decline by 80% year over year. At the same time SAS reduced its capacity by 6% compared to November, which corresponds to a reduction of 74% compared to last year. The load factor came in at 33%, an increase of some 8 percentage units (p.u.) compared to the previous month, but down 38 p.u. compared to last year. The increase in passengers and load factor compared to November is mainly driven by an increased demand for domestic travel during the holiday season.

“The overall demand continues to be heavily impacted by continued restrictions, with holiday travel significantly below normal levels in December. SAS continues to adapt its capacity according to the demand, that is expected to stay at low levels throughout the winter season. However, we’re encouraged by the recent vaccine developments and initiated COVID-19 vaccination programs, providing a foundation for a future normalization of our industry” says Rickard Gustafson, CEO SAS.

In other news, the President and CEO of SAS, Rickard Gustafson, has decided to leave SAS after 10 years. He will leave the company, at the latest, on July 1, 2021.

Chairman Carsten Dilling comments:

“I’m both disappointed and sorry that Rickard wants to move on from his important role in SAS. At the same time on behalf of the Board of SAS, I want to thank Rickard for his fantastic performance during his ten years as President and CEO. Under Rickard’s management SAS has made a remarkable turnaround, from loss to several years of profitable performance. Recently he has led the company with safe hands in the first part of the toughest crisis in the company’s 75 year history, the pandemic.

Most of all, Rickard will be remembered for his excellent leadership in SAS’s sustainability initiatives, which was the starting point for a new sustainability era in the whole aviation industry.”

President and CEO Rickard Gustafson comments:

“After ten intense and stimulating years, the time has come for me to pass on the baton to the next CEO of SAS during the first half of 2021, as I have accepted an opportunity to join one of Sweden’s largest industrial groups. SAS has a strong position in the Scandinavian market and is well positioned to lead the aviation industry toward a more sustainable future once the pandemic is under control. I would like to express my sincere gratitude to all esteemed colleagues, customers and other stakeholders in SAS for their engagement, loyalty and support over the years. SAS is a fantastic organization with extraordinary people that will ensure that SAS remains an important and integrated part of the Scandinavian infrastructure”.

“SAS is still in a critical – but stable position – and the board has of course immediately started the process to appoint a new President and CEO of SAS”, Dilling concludes.

SAS scheduled traffic Dec20 Change1 Nov20-Dec20 Change1
ASK (Mill.) 946 -72.4% 1 947 -73.2%
RPK (Mill.) 313 -87.0% 565 -88.9%
Passenger load factor 33.1% -37.1 p u 29.0% -40.8 p u
No. of passengers (000) 388 -79.7% 718 -83.0%
Geographical development, schedule Dec20            vs.          Dec19 Nov20-Dec20   vs. Nov19-Dec19
RPK ASK RPK ASK
Intercontinental -95.7% -79.6% -96.4% -80.2%
Europe/Intrascandinavia -88.9% -80.7% -90.9% -82.9%
Domestic -61.6% -35.7% -67.4% -35.9%
SAS charter traffic Dec20 Change1 Nov20-Dec20 Change1
ASK (Mill.) 6 -96.6% 14 -95.9%
RPK (Mill.) 2 -98.7% 5 -98.3%
Load factor 35.2% -55.7 p u 37.7% -54.6 p u
No. of passengers (000) 1 -98.9% 1 -98.3%
SAS total traffic (scheduled and charter) Dec20 Change1 Nov20-Dec20 Change1
ASK (Mill.) 951 -73.5% 1 961 -74.2%
RPK (Mill.) 315 -87.7% 570 -89.4%
Load factor 33.1% -38.0 p u 29.1% -41.7 p u
No. of passengers (000) 389 -80.2% 720 -83.3%

1 Change compared to same period last year. p u = percentage units

Preliminary yield and PASK Dec20 Nominal change FX adjusted change
Yield, SEK 1.26 32.9% 39.6%
PASK, SEK 0.42 -37.4% -34.2%
Dec20
Punctuality (arrival 15 min) 82.0%
Regularity 97.4%
Change in total COemissions, rolling 12 months -68.3%
Change in COemissions per available seat kilometer -6.5%
Carbon offsetting of passenger related emissions 44%

Definitions:

RPK – Revenue passenger kilometers
ASK – Available seat kilometers
Load factor – RPK/ASK
Yield – Passenger revenues/RPK (scheduled)
PASK – Passenger revenues/ASK (scheduled)
Change in COemissions per available seat kilometers – SAS passenger related carbon emissions divided with total available seat kilometers (incl. non-revenue and EuroBonus), rolling 12 months
Carbon offsetting of passenger related emissions – Share of SAS passenger related carbon emissions compensated by SAS (EuroBonus members, youth tickets and SAS’ staff travel)

From fiscal year 2020 we report change in CO2 emissions in total and per Available Seat Kilometers (ASK) to align with our overall goal to reduce our total CO2 emissions by 25% by 2025, compared to 2005.

SAS reports reinforced travel restrictions has led to reduced demand and capacity in November

Scandinavian Airlines-SAS has issued this traffic report:

In the month of November 331,000 passengers flew with SAS, a decline by 86% year over year and 45% compared to the previous month. At the same time SAS reduced its capacity by 75% compared to last year and by 20% compared to October.

The load factor came in at 25.3%, down some 45 percentage points (p.p) compared to last year and 13 p.p. compared to October. The decline in number of passengers and load factor was driven by the accelerated number of reported COVID-19 cases across Europe, resulting in renewed travel restrictions followed by a significant drop in demand, also for domestic travel.

In addition, we have noted an increased number of no-show passengers in November, impacting the load factor negatively versus the previous month. Furthermore, as we have gradually reduced our European and Scandinavian capacity, intercontinental traffic sustained by cargo revenues, have a larger proportional share of the reported load factor, and thus impacting comparison with the previous month negatively.

“The sharp increase in the number COVID-19 cases, reintroduced travel restrictions and recommendations for social distancing, instantly impacted overall demand and willingness to travel. Even though SAS quickly responded by reducing offered capacity, unavoidable lead time from implemented crew rosters and adherence to local furlough schemes, unfortunately created some unbalance between capacity and demand during the month. However, entering into December, we have made further adjustments to adapt our capacity with available demand for Scandinavian connectivity” says Rickard Gustafson, CEO SAS.

SAS scheduled traffic Nov20 Change1
ASK (Mill.) 1 001 -73.9%
RPK (Mill.) 252 -90.6%
Passenger load factor 25.1% -44.3 p u
No. of passengers (000) 330 -85.7%
Geographical development, schedule Nov20            vs.         Nov19
RPK ASK
Intercontinental -97.1% -80.8%
Europe/Intrascandinavia -92.6% -84.9%
Domestic -72.3% -36.0%
SAS charter traffic Nov20 Change1
ASK (Mill.) 8 -95.3%
RPK (Mill.) 3 -98.0%
Load factor 39.3% -54.1 p u
No. of passengers (000) 1 -97.7%
SAS total traffic (scheduled and charter) Nov20 Change1
ASK (Mill.) 1 009 -74.8%
RPK (Mill.) 255 -91.0%
Load factor 25.3% -45.2 p u
No. of passengers (000) 331 -86.0%

1 Change compared to same period last year. p u = percentage units

Preliminary yield and PASK Nov20 Nominal change FX adjusted change
Yield, SEK 1,65 57,6% 64,7%
PASK, SEK 0,41 -43,0% -40,4%
Nov20
Punctuality (arrival 15 min) 94.6%
Regularity 98.4%
Change in total COemissions, rolling 12 months -63.1%
Change in COemissions per available seat kilometer -6.0%
Carbon offsetting of passenger related emissions 32%

Definitions:

RPK – Revenue passenger kilometers
ASK – Available seat kilometers
Load factor – RPK/ASK
Yield – Passenger revenues/RPK (scheduled)
PASK – Passenger revenues/ASK (scheduled)
Change in COemissions per available seat kilometers – SAS passenger related carbon emissions divided with total available seat kilometers (incl. non-revenue and EuroBonus), rolling 12 months
Carbon offsetting of passenger related emissions – Share of SAS passenger related carbon emissions compensated by SAS (EuroBonus members, youth tickets and SAS’ staff travel)

From fiscal year 2020 we report change in CO2 emissions in total and per Available Seat Kilometers (ASK) to align with our overall goal to reduce our total CO2 emissions by 25% by 2025, compared to 2005.

SAS aircraft slide show:

SAS loses $235 million in the third quarter, will early retire 21 aircraft

Scandinavian Airlines-SAS reported a significant loss in the third quarter due to surging COVID-19 pandemic:

FULL-YEAR FINANCIALS SIGNIFICANTLY IMPACTED BY THE ONGOING PANDEMIC

AUGUST 2020–OCTOBER 2020

  • Revenue: MSEK 3,035 (13,435)
  • Income before tax (EBT): MSEK -3,271 (1,096)
  • Income before tax and items affecting comparability: MSEK -3,043 (1,226)
  • Net income for the period: MSEK -2,579 (861)
  • Earnings per common share: SEK -4.46 (2.19)

SIGNIFICANT EVENTS DURING THE QUARTER

  • SAS completed a successful recapitalization adding SEK 12 billion in liquidity and SEK 14.25 billion in strengthened equity
  • SAS repays a SEK 3.3 billion revolving credit facility agreement in accordance with its terms

NOVEMBER 2019–OCTOBER 2020

  • Revenue: MSEK 20,513 (46,112)
  • Income before tax (EBT): MSEK -10,151 (794)
  • Income before tax and items affecting comparability: MSEK -8,619 (786)
  • Net income for the period: MSEK -9,275 (621)
  • Earnings per common share: SEK -21.55 (1.54)

COMMENTS BY THE CEO

Since the beginning of 2020, the coronavirus has changed the fundamentals for the aviation industry through globally imposed travel restrictions and general travel concerns among the broader population. Naturally, SAS is no exception, and our quarterly and fiscal year earnings were severely impacted by the ongoing pandemic. After seeing demand slowly improve during the summer, an accelerated number of COVID-19 cases in September and October unfortunately led to reinforced restrictions across Europe with reduced demand as a direct consequence.

SEVERE NEGATIVE IMPACT FROM THE PANDEMIC

The ongoing COVID-19 pandemic has led to a decrease in total revenue of over 77% compared to same quarter last year. To mitigate the revenue shortfall, we continued to deliver on our cost reduction initiatives and total operating expenses were reduced by 53% year-on-year to SEK 5.8 billion. However, the current limited demand for travel precludes positive earnings, which ended at negative SEK 3 billion, down SEK 4.3 billion on last year.

Following a successful recapitalization process, our cash position remains strong at SEK 10.2 billion at the end of the quarter. Cash flow from operating activities ended at negative SEK 2.9 billion. This was within the previously communicated range taking the increased pace of refunds to our customers into account.

The full fiscal year 2020 was of course also heavily impacted by the pandemic. Since March, most of our traffic has been temporarily paused, and demand hasn’t yet returned to anywhere near the previous year’s levels. This led to a decline in revenue of 55% to SEK 20.5 billion, in part mitigated by a 37% reduction in costs due to a lower variable cost and an exhaustive cost reduction program. Still, full-year earnings declined SEK 9.4 billion to negative SEK 8.6 billion.

RENEWED RESTRICTIONS SLOWED DEMAND RECOVERY

There were signs of a demand recovery during the summer season, but as the number of observed COVID-19 cases in Europe and North America accelerated in September and October, renewed travel restrictions reversed a positive trajectory.  At the beginning of the fourth quarter, some 40% of SAS’ pre-COVID markets were under travel restrictions, growing to over 65% by the end of the quarter.

To adapt to the recent developments, SAS had to gradually reduce offered seat capacity to well below 40% by the end of October. However, SAS is maintaining the backbone of the aviation infrastructure in Scandinavia, with a significantly broader offering to, from and within Scandinavia than any other carrier.

ACCELERATED PACE OF CUSTOMER REFUNDS

At the end of the quarter, we launched a set of initiatives to improve the refund lead time, including automated self-service options for travel agents and consumers, robots to tackle the backlog and hiring additional resources to handle more complex cases. We’re pleased to see that our efforts have significantly improved an otherwise unsatisfactory situation. During the quarter, SEK 1 billion was repaid for canceled flights, which is an increase of more than 50% compared to the previous quarter. However, we will not rest until all rightful claims have been settled, amounting to approximately SEK 0.9 billion as of 1 December. I would like to take this opportunity to apologize to all customers who have experienced unsatisfactory lead times, caused by an unprecedented situation for the whole airline industry.

SECURING COST-EFFECTIVE OPERATIONS

Capability and flexibility to scale capacity up or down to mirror the current volatile demand is of utmost importance to preserve liquidity and avoid unnecessary cost. Available furlough (temporary layoff) schemes across Scandinavia are therefore of significant importance as they provide a foundation for more disciplined capacity management to offset volatility in demand. We welcome the fact that the existing schemes have been extended in all three Scandinavian countries, as it enables us to maintain flexibility in capacity planning and in our operating procedures.

Even though we constantly monitor demand and adapt our capacity accordingly, travel restrictions are imposed instantly while capacity adjustments require some operational lead time. Consequently, we noted a ten-percentage-point reduction in the cabin factor and somewhat higher operational costs in the fourth quarter compared to the previous quarter.

However, we negotiated new and more flexible terms with our regional production partners during the quarter, shifting more costs from fixed to variable, and thereby allowing for better alignment between offered capacity and available demand.

Furthermore, we have initiated the process to phase out 21 of our older and less fuel-efficient aircraft at an earlier stage than originally planned, including 15 Boeing 737NG, five Airbus A340 and one Airbus A330 aircraft. The accelerated phase-out will support liquidity through the sales of aircraft and engines, as well as reduce spend on maintenance and leasing. Together with the agreement with Airbus on deferred deliveries of new aircraft, it will also better align our fleet with current and expected demand. The accelerated phase-out will also contribute to lower emissions. Over the last 12 months, our total CO2 emissions have decreased 57.2%, where the majority is related to reduced capacity as a consequence of the pandemic, but usage of more efficient aircraft connected to our ongoing fleet renewal has also contributed with 2.3 percentage points, in line with our ambitious target to reduce total CO2 emissions 25% by 2025.

Scandinavian Airlines-SAS Boeing 737-783 WL LN-RRB (msn 32276) ZRH (Rolf Wallner). Image: 952158.

Above Copyright Photo: Scandinavian Airlines-SAS Boeing 737-783 WL LN-RRB (msn 32276) ZRH (Rolf Wallner). Image: 952158.

In addition, the initiatives implemented since the second quarter, including renegotiated contracts with our major suppliers and halting all non-necessary spend on e.g., marketing, product and IT development, have also further reduced cash burn and overall spend.

We have also remained resilient in our endeavor to secure long-term efficiency gains. The 5,000 redundancies, which were announced in the second quarter, have now been finalized, and as of November 1, 2020, a new organization reflecting the reduced number of positions was fully operational.

We have also advanced the dialogue with our unions to secure additional long-term productivity improvements. In the fourth quarter, a number of changes to local agreements have been implemented and two new agreements securing the required productivity uplift were reached, one with our SAS Ireland crew and one with employees at the technical department in Copenhagen.

SUCCESSFUL RECAPITALIZATION FINALIZED

By the end of the quarter, our recapitalization initiative was finalized, raising SEK 12 billion in new liquidity and 14.25 billion in equity.

According to the terms of the utilized SEK 3.3 billion state guaranteed revolving credit facility, it was repaid in full by the end of the quarter. Following the completed rights issue, we aim to apply for the Norwegian state guaranteed term loan and to explore additional options to preserve a strong liquidity, such as aircraft financing.

To illustrate the value of Scandinavia’s largest loyalty program, EuroBonus, we transferred it to a separate entity in which we will continue to further strengthen the relationship with our customers.

The finalized recapitalization, followed by additional initiatives to manage liquidity, makes SAS prepared for a tough winter season and a challenging fiscal year 2021, that most likely will be loss making. I am grateful for the support that our largest owners, the governments of Denmark and Sweden, and the Knut and Alice Wallenberg Foundation, have demonstrated throughout this recapitalization process. I am also thankful for the support and trust demonstrated by individual and institutional investors by participating in the rights issue, despite the challenging times that the aviation industry is currently undergoing.

LOOKING AHEAD

Until demand returns and the world recovers from the COVID-19 pandemic, we will continue to persistently execute on our business plan and thereby return to a sustainable position both financially and environmentally.

Even though we’re encouraged by the recent progress related to the development and distribution of COVID-19 vaccines, demand remains uncertain and makes it impossible to provide any guidance on the financial performance for the coming fiscal year. However, we expect weak operating cashflow in the first quarter of 2021 due to low demand during the winter season combined with accelerated refunds. Our view continues to be that the ramp-up phase for the airline industry will last until 2022 before demand can reach more normalized levels, with a return to pre COVID-19 levels a few years thereafter.

I would like to express my sincere appreciation to all colleagues at SAS for their fighting spirit and dedication during this turbulent year and I know that all of us are looking forward to once again welcoming our travelers onboard!

Rickard Gustafson,

President and CEO

Stockholm, December 3, 2020

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