Tag Archives: Scandinavian Airlines-SAS

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:

SAS to restore 6 routes from Stockholm, extends Airtours agreement

SAS will resume service from Stockholm (Arlanda) on the following routes in June:

Alanya, Turkey June 12

Athens June 3

Beirut June 15

Milan (Malpensa) June 2

St. Petersburg June 17

Split June 5

In addition, the Gothenburg (Göteborg) – Palma de Mallorca route will be restored on June 5.

In other news, SAS and Airtours are extending their sales agreement through 2024.

SAS will transport Airtours customers from Stockholm Arlanda and Gothenburg for this summer 2021 travel season. This will be expanded in the summer of 2022.

Top Copyright Photo: Scandinavian Airlines-SAS Boeing 737-76N WL SE-RJX (msn 34754) MUC (Arnd Wolf). Image: 949407.

SAS aircraft slide show:

SAS to resume service to Newark on July 3

Scandinavian Airlines-SAS it is resuming its direct route from Oslo to Newark on July 3, 2021.

The Newark route will start with two weekly round trips, departing from Oslo on Wednesdays and Saturdays and returning on Thursdays and Sundays. SAS will then continuously review a possible increase in frequency based on demand.

On March 13, 2020, the pandemic put a temporary stop to SAS’ direct route between Oslo and Newark. Over a year later, the route is finally reopening and will be operated by the Airbus A330 with 266 seats.

SAS will also continue to fly to Chicago, Los Angeles, New York, San Francisco and Washington from Copenhagen.

Top Copyright Photo: Scandinavian Airlines-SAS Airbus A330-343 LN-RKT (msn 1697) LAX (Michael B. Ing). Image: 946391.

SAS aircraft slide show:

SAS starts a new route from Luleå to London

Scandinavian Airlines-SAS made this announcement:

SAS will introduce a seasonal route with non-stop flights from Luleå to London, Heathrow, starting December 17, 2021, to March 21, 2022. Flights will operate twice a week, on Mondays and Fridays, and it will be the only direct link between Luleå and the UK.

Luleå and the Swedish Lapland region attracts travelers with many high-end hotels and activities suited for the English market. The timetable also works well for weekend trips to London from Luleå and will shorten the distance from the North of Sweden to one of the world’s great capitals and business regions.

The route will be operated with Airbus A320 aircraft.

Top Copyright Photo: Scandinavian Airlines-SAS Airbus A320-251N WL SE-ROY (msn 9316) ARN (Stefan Sjogren). Image: 948819.

SAS aircraft slide show:

SAS sees only a 2% increase in traffic in April

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

In April, nearly 320,000 passengers flew with SAS, an increase of about 2% compared with March. While traffic and demand remain far below normal levels, they improved substantially compared with April last year when traffic was essentially at a standstill at the start of the pandemic. SAS is continuing to efficiently adapt its production to prevailing demand, which was reflected in an unchanged load factor compared with March.

“We have noted that willingness to book strongly correlates with vaccination levels and the relaxation of travel restrictions, and that customers are continuing to book at short notice. There is undoubtedly a considerable pent-up need to travel, which we hope to meet as we are now approaching the important summer season. In the coming summer, SAS is flying to 100 destinations, which provides us with good preconditions to meet our customers’ travel needs,” says Karl Sandlund, Acting CEO of SAS.

SAS scheduled traffic	Apr21	Change¹	Nov20- Apr21	Change¹
ASK (Mill.)	983	385.4%	5 269	-68.4%
RPK (Mill.)	299	455.7%	1 543	-85.7%
Passenger load factor	30.4%	+3.9 p u	29.3%	-35.3 p u
No. of passengers (000)	319	240.0%	1 855	-79.9%

Geographical development, schedule	Apr21 vs. Apr20		Nov20- Apr21 vs. Nov19-Apr20
	RPK	ASK	RPK	ASK
Intercontinental	2757.2%	4376.9%	-95.4%	-69.9%
Europe/Intrascandinavia	1587.2%	810.9%	-88.3%	-80.9%
Domestic	210.0%	111.5%	-61.6%	-38.5%

SAS charter traffic	Apr21	Change¹	Nov20- Apr21	Change¹
ASK (Mill.)	3	-90.8%	34	-95.9%
RPK (Mill.)	1	-87.0%	13	-98.2%
Load factor	40.1%	+11.8 p u	38.8%	-48.4 p u
No. of passengers (000)	0.3	-76.8%	4	-98.5%

SAS total traffic (scheduled and charter)	Apr21	Change¹	Nov20- Apr21	Change¹
ASK (Mill.)	986	323.8%	5 303	-69.7%
RPK (Mill.)	301	381.5%	1 556	-86.5%
Load factor	30.5%	+3.7 p u	29.3%	-36.3 p u
No. of passengers (000)	319	235.9%	1 859	-80.4%

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

Preliminary yield and PASK	Apr21	Nominal change	FX adjusted change
Yield, SEK	1.24	-24.6%	-27.3%
PASK, SEK	0.38	-13.6%	-16.8%

			Apr21
Punctuality (arrival 15 min)			86.6%
Regularity			99.5%
Change in total CO₂emissions, rolling 12 months			-78.4%
Change in CO₂emissions per available seat kilometer			-10.6%
Carbon offsetting of passenger related emissions			52%

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 CO₂emissions 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.

Top Copyright Photo: Scandinavian Airlines-SAS Airbus A320-251N WL SE-ROZ (msn 9323) ZRH (Andi Hiltl). Image: 950841.

SAS Slide Show:

SAS: Continued strict travel restrictions, but Easter holidays lead to increase in travel during March

SAS has issued its traffic figures for March 2021:

In March 310,000 passengers flew with SAS, an increase of about 40% compared with February, but almost 70% lower than the same month last year. The increased demand led to an improvement in the load factor compared with February by 5 percentage points to 31%. The load factor continues to be generally higher on SAS’ Scandinavian and European traffic and amounted to 44% in March, which is an improvement of 2 percentage points compared with February.

“The number of passengers and future bookings has increased during the month, but from very low levels. The development of the demand for air travel is entirely dependent on ongoing vaccinations and that travel restrictions can be eased and coordinated between countries and regions. Although the market for the aviation industry remains challenging, we succeeded in securing favorable financing agreements for future deliveries of aircraft from Airbus during the month. The new aircraft take us toward a unified fleet with significantly lower fuel consumption and emissions,” says Rickard Gustafson, CEO of SAS.

SAS scheduled traffic	Mar21	Change¹	Nov20- Mar21	Change¹
ASK (Mill.)	865	-62,2%	4 285	-74,0%
RPK (Mill.)	266	-76,1%	1 243	-88,4%
Passenger load factor	30,8%	-17,9 p u	29,0%	-36,0 p u
No. of passengers (000)	313	-68,6%	1,536	-83,2%

Geographical development, schedule	Mar21 vs. Mar20		Nov20- Mar21 vs. Nov19-Mar20
	RPK	ASK	RPK	ASK
Intercontinental	-92,3%	-50,3%	-96,3%	-75,8%
Europe/Intrascandinavia	-82,8%	-81,6%	-90,9%	-84,8%
Domestic	-41,6%	-36,8%	-67,6%	-46,0%

SAS charter traffic	Mar21	Change¹	Nov20- Mar21	Change¹
ASK (Mill.)	6	-94,7%	32	-96,1%
RPK (Mill.)	2	-96,9%	12	-98,3%
Load factor	40,8%	-30,6 p u	38,6%	-50,7 p u
No. of passengers (000)	1	-97,6%	3	-98,6%

SAS total traffic (scheduled and charter)	Mar21	Change¹	Nov20- Mar21	Change¹
ASK (Mill.)	870	-63,6%	4 317	-75,0%
RPK (Mill.)	268	-77,4%	1 256	-89,0%
Load factor	30,8%	-18,8 p u	29,1%	-37,1 p u
No. of passengers (000)	313	-69,3%	1,539	-83,6%

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

Preliminary yield and PASK	Mar21	Nominal change	FX adjusted change
Yield, SEK	1.29	26.7%	32.7%
PASK, SEK	0.40	-19.9%	-16.1%

			Mar21
Punctuality (arrival 15 min)			90.8%
Regularity			99.4%
Change in total CO₂emissions, rolling 12 months			-81.1%
Change in CO₂emissions per available seat kilometer			-9.3%
Carbon offsetting of passenger related emissions			47%

Definitions:

Top Copyright Photo: Scandinavian Airlines-SAS Airbus A320-251N WL SE-ROX (msn 9330) PMI (Javier Rodriguez). Image: 951133.

SAS aircraft slide show:

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 CO₂emissions, rolling 12 months			-79.3
Change in CO₂emissions per available seat kilometer			-8.8%
Carbon offsetting of passenger related emissions			44%

Definitions:

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.

Touchdown Stockholm 🇸🇪

In these uncertain times, we know that flexibility is key, and we have therefore made our bookings more flexible. Read more on https://t.co/xofyIW3JLX.

Welcome up whenever you are ready💙#flysas pic.twitter.com/TcILzjD4As

— SAS – Scandinavian Airlines (@SAS) October 28, 2020

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:

This view from cockpit earlier today gives a glimpse of the stunning beauty of the Norwegian landscape on a fall morning. We are proud that Norway is said to be one of the most beautiful countries in the world, blessed with raw, untamed beauty ⛰️ #flysas #norway #tromsø pic.twitter.com/OdA820pHkn

— SAS – Scandinavian Airlines (@SAS) October 10, 2020

“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: