Continued headwinds from the pandemic for SAS in Q3 2021

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MAY 2021–JULY 2021

  • Revenue: MSEK 3,982 (2,507)
  • Income before tax (EBT): MSEK -1,358 (-2,071)
  • Income before tax and items affecting comparability:
    MSEK -1,237 (-784)
  • Net income for the period: MSEK -1,355 (-2,365)
  • Earnings per common share: SEK -0.19 (-6.18)

SIGNIFICANT EVENTS DURING THE QUARTER

  • SAS arranged a credit line of SEK 3 billion
  • Anko van der Werff joined as President and CEO

SIGNIFICANT EVENTS AFTER THE QUARTER

  • SAS has signed an additional pre-delivery payments financing of c. USD 100 million, covering 10 x A320neo aircraft with deliveries into Q2 FY2023
  • SAS has operated 22 flights on behalf of the Scandinavian authorities contributing to evacuation operations from Afghanistan

NOVEMBER 2020–JULY 2021

  • Revenue: MSEK 8,196 (17,478)
  • Income before tax (EBT): MSEK -5,655 (-6,880)
  • Income before tax and items affecting comparability:
    MSEK -5,546 (-5,576)
  • Net income for the period: MSEK -5,838 (-6,696)
  • Earnings per common share: SEK -0.82 (-17.66)

COMMENTS BY THE CEO

We noted encouraging signs during the summer season with demand slowly increasing. Vaccination rates are also rising, but significant challenges remain ahead as new cases of the Delta variant are multiplying and delaying ramp-up. The imposed travel restrictions remain in force and continue to adversely affect demand for air travel.

QUARTER NEGATIVELY IMPACTED BY THE ONGOING PANDEMIC

Demand continued to gradually increase during the important summer season, and we increased our capacity by 94% compared with the second quarter. Passenger numbers increased 144% compared with the last quarter and the load factor reached 52%, up almost 23 percentage points in comparison with the earlier quarter. However, the uncertainties surrounding the COVID-19 pandemic are far from over. Efforts to transform SAS’ entire business must continue to offset lower demand with lower costs. Earnings before tax ended at negative SEK 1.4 billion, which is still an improvement of SEK 0.7 billion compared with last year.

Total revenue increased 106% compared with the second quarter. Compared with last year this is an improvement of approximately SEK 1.5 billion, but still 70% below the third quarter of 2019, which was unaffected by COVID-19.

REDUCING COSTS AND MANAGING LIQUIDITY

SAS is celebrating 75 years of operations with a proven track record of successfully adapting to changing market conditions necessitated once again due to the pandemic. Cost reduction initiatives, such as reduced personnel expenses and streamlined operational functions, continue to deliver and total operating expenses were controlled during the quarter and landed at SEK 4.9 billion. We also continue to develop our operational platforms to increase competitiveness further.

The work to safeguard liquidity continues and at the end of the quarter, the cash position was SEK 4.4 billion, which corresponds to the liquidity position at the end of the second quarter. Moreover, during the quarter a credit line was signed with major shareholders, the Danish and Swedish governments, thereby making an additional SEK 3.0 billion of liquidity available if necessary. The facility can be utilised until the end of 2022 and ensures that SAS has a liquidity buffer during the recovery phase following the COVID-19 pandemic. The facility complements the ongoing cost reduction activities.

MAKING TRAVELING EASIER AND OPENING ROUTES

The imposed travel restrictions make travelling difficult, and SAS is doing everything possible to facilitate a smooth travel experience for passengers. Our digital tool, SAS Travel Ready Center, allows passengers to track updates to travel restrictions and prepare their trip online, thus ensuring everything is ready when they arrive at the airport. We are also offering more flexible ticket rules and generous rebooking alternatives.

In parallel with adapting to a new market reality, we continue to open new routes. SAS increases the flights between the Scandinavian capitals and important destinations in its network to further improve connectivity for travellers. Meanwhile, more of our new, fuel-efficient aircraft are planned to be delivered during the year, making our fleet one of the most modern in Europe. We also proudly flew Scandinavian athletes to the Olympic Games in Tokyo during the quarter.

LOOKING AHEAD

The recovery of the aviation industry depends greatly on the uncertain development of the pandemic. We are expecting travel to increase gradually as more and more people are vaccinated worldwide, but we are also aware that demand has changed during the pandemic. SAS expects a greater number of leisure travellers and even more intense competition in the future. In addition, customers are booking their tickets closer to their travel dates, which means that flexibility to ramp up and down, will be a success factor in the airline industry going forward.

I am very happy to be part of SAS’ future and I feel honoured to assume the role of President and CEO of Scandinavia’s leading airline, which I take on with great enthusiasm. These are of course difficult times, both for customers and for employees, having to adjust to ever-changing rules and restrictions. In this regard, I would like to recognize the hard work performed by my SAS colleagues, to maintain our performance at a high level and to help customers as much as possible.

Together with a strong team of dedicated colleagues, we are striving to become the global leader in sustainable aviation, in parallel with navigating our way through the post-pandemic recovery period. It will take time and a lot of hard work, and we will need to make adjustments along the way, but with our great team, strong brand and operational excellence, we will make it happen.

On behalf of all of us at SAS, we look forward to welcoming you onboard our flights!

Anko van der Werff,
President and CEO

Stockholm, September 1, 2021

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