SAS Group 3rd Quarter 2000 Analyst meeting
Oslo, November 10, 2000 SAS IR/STU
1 www.scandinavian.net
2000-11-10
Contents of 3rd Quarter 2000 presentation The Quarter in brief SAS International Hotels Business review Result improvement program Outlook Appendices
SAS IR/STU
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2000-11-10
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The Quarter in brief
SAS IR/STU
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SAS Group
Summary 3rd Quarter Significant traffic growth in both classes Rising yields Passenger load factors sharply up Unit costs down except Jet Fuel SAS International Hotels develops well Nordic Travel Hub launched One SAS share in progress SAS IR/STU
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SAS Group
Other events of note 3rd Quarter to date SIH in cooperation with Malmaison SIH sold Düsseldorf hotel Aeroexchange Business to Business site launched Star-NET launched SAS expands winter traffic program SAS IR/STU
2000-11-10
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SAS
Key airline profitability drivers JAN-SEP 2000
Traffic growth (RPK)
up 7,6%
Cabin Factor Yields Unit costs Aircraft capacity costs
up 4,1 p.e. up 0,9% up 0,6% up 16,4% SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SAS Group
Financial results - 9 months 2000 MSEK
2000
Revenue Op. inc. bef. depr. Financial net Gain on sales
1999
Change
33 367 2 256 -195 +280
30 984 1 523 -167 +610
+8% +48%
1 060
601
+76%
Pre-tax profit
SAS IR/STU
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SAS Group
Financial results - 3rd Quarter 2000 MSEK
2000
Revenue Op. inc. bef. depr. Financial net Gain on sales
11 263 1 017 -190 -9
Pre-tax profit
1999
Change
10 019 530 -96 177
+12% +92%
105
+212%
328
SAS IR/STU
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SAS
Passenger revenue analysis vs Last year Q3
Revenues Volume Yields Currency
Ch.
9m
Ch
7 705 +12% 23 086 +7,5% +8,9% +7,6% +2,9% +0,9% +0,3% -1,0%
SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SAS Group
Rising yields and positive mix 3rd Quarter Traffic growth (RPK) Business Class (RPK-C) Cabin factor Yields
up 9% up 12% up 5,3 p.u. up 2,9%
EBITDAR
up 32% SAS IR/STU
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SAS Group
From EBITDAR to market based EBIT JAN-SEP 2000 MSEK
2000
EBITDAR Gain on sales Depreciation ∆=MV aircraft Leasing (40%) EBIT, market
3 520 +280 -1 385 +2 643 -465 4 594
1999
Change
2 677 +610 -1 498 +50 -408 1 431
+31%
+221% SAS IR/STU
2000-11-10
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SAS Group
Cash flow from operations (EBITDAR) up 31% Jan-Sep 2000 MSEK
2000
1999
Change
Revenue
33 367
30 984
+8%
EBITDAR
3 520
2 677
+31%
Pre tax profit ex gains Pre-tax profit
780 1 060
-9 601
+48% SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SAS Group
Improved EBITDAR and EBITDAR margin MSEK
2000
1999
Change
Revenue
33 367
30 984
+8%
EBITDAR
3 520
2 677
+31%
EBITDAR 11% margin True a/c depr. +1 073 EBIT, market 4 594
9% -1 246 1 431
+221% SAS IR/STU
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SAS Group
True aircraft depreciation positively affected by strong USD MSEK
2000
1999
Booked depreciation - 1 385 -1 498 Gain on sales +280 +610 ∆=MV aircraft +2 643 +50 Leasing (40%) -465 -408 True aircraft depreciation +1 073 -1 246 SAS IR/STU
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SAS Group
CFROI - close to target
35% 30% 25% 20% 15% 10% 5%
95 12 96 06 96 12 97 06 97 12 98 06 98 12 99 06 00 03 00 09
0%
CFROI
Hurdle rate CFROI
SAS Group's key financial metric Focus on operating cash flow (EBITDAR) CFROI 9m/2000 16% Hurdle rate through cycle >17-20% SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
00
09
03 00
03
99
03
09
09
99
98
98
97
03
09
97
96
96
03
09
03
95
95
09
SAS Group
Capital employed vs market adjusted capitaldevelopment 1994-2000
45 000
25 000 15 000 5 000
SEK Million
35 000
-5 000 -15 000 Surplus values aircraft
NPV Operating leases
Capital employed
Market adj capital
Interest bearing assets
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ROCE (m-b) - affected by large SAS Group increases in aircraft surplus values 30% 25% 20% 15% 10% 5%
09
03
00
00
09
03
99
03
09
98
ROCE, Market based
99
03
09
97
98
97
03 96
96
09
0%
Hurdle rate ROCE
Affected by strong USD SAS market based ROCE 9m/2000 19% Hurdle rate through cycle >12% SAS IR/STU
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2000-11-10
SAS International Hotels
SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SIH
Strong profit trend in SIH Income before taxes (MSEK) 600
600
500
500
400
400
300
300 200
200
100
100
0 9m/1999
0 -100 -200
9m/2000
PBT
Gains
1993 1994 1995 1996 1997 1998 1999
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SIH
Radisson SAS Hotels & Resorts - one additional hotel sold 3rd Quarter SIH aquire Malmaison hotel chain 2 new hotels added 134 hotels in total
140
No. of hotels
120 100 80 60 40 20 0 1992 1993 1994 1995 1996 1997 1998 1999 Owned
Leased
Managed
Franchised
– – – –
Managed: 75 Leased: 28 Owned: 2 Franchised: 29
SAS IR/STU
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SIH
Radisson SAS Hotels & Resorts continuous positive value creation ROCE SAS International Hotels 22% 19% 16%
GOP up from 30,2 to 32,0% ROCE up from 11,5% to 19,2%
13% 10% 7% 4% 1994
1995
1996
1997
1998
1999 H1/00
SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
Business review SAS Airline
SAS IR/STU
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SAS
Business highlights - 3rd Quarter Capacity flat Strong traffic growth in both classes Sharply improved passenger load factors Strengthened home market position Historically high fuel costs Result improvement program as planned
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SAS
Sharp increase in passenger load factors - growth trend in Business Class RPK Business Class 1998-2000
Passenger load factor total system 1995-2000
Year on Year values
Moving 12 months values
25%
68%
20%
67%
15%
66%
10%
65%
5%
64%
0%
63%
-5%
62%
-10% -15%
JAN98
JUL
JAN99
JUL
JAN00
DEC94MAR JUN SEP DEC95MAR JUN SEP DEC96MAR JUN SEP DEC97MAR JUN SEP DEC98MAR JUN SEP DEC99MAR JUN SEP
JUL
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Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SAS
Strong traffic growth on Intercontinental routes 1999- October 2000
Passenger load factors North Atlantic/ Asia 100 Passenger load factor
90 80 70
NO V JA N M AR M AY JU L SE P
JU L SE P
AR
AY
M
M
JA N
60 Month
North Atlantic
Positive traffic mix Yields up 4,9% Passenger load factors close to 90% Traffic "spill off" New capacity essential on long haul
Asia
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SAS
European routes - strong 1999- October 2000
G row th vs L Y Inde x
Business Class/ Economy Class 130 120 110 100 90
AY JU L SE P
AR
M
V
N JA
M
L
P SE
NO
JU
AY
AR
M
M
JA
N
80
Strong traffic growth but compared to a very weak Q3 in 1999 Positive passenger mix Business class up 13,5% in Q3 Economy Class up 8,1%
Month
Economy Class
Business Class SAS IR/STU
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Danish routes affected by aircraft introductory problems
SAS
1999 - October 2000 Passenger load factor
Continued capacity reductions Passenger load factor significantly improved Introductory problems deHavilland Q400
70 60
SE P NO V JA N M AR M AY JU L SE P
AY JU L
N
M
M
AR
50 JA
Passenger load factor
80
Month
Danish domestic SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
Norwegian domestic routes - weak overall development
SAS
1999 - October 2000
Total market continued weak New passenger charges to be implemented Seating reservation implemented SAS gain market shares
Passenger load factor
Passenger load factor
70 60 50
SE P NO V JA N M AR M AY JU L SE P
AR
AY JU L
M
M
JA N
40 Month
Norwegian domestic SAS IR/STU
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2000-11-10
SAS
Swedish domestic routes strong 1999- October 2000 Business Class/ Economy Class 125 115 105
JU L
SE P
M AY
JA N M AR
OV
SE P
N
JU L
M AY
JA N M AR
95 Month
Economy Class
Business Class
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2000-11-10
SAS
SAS affiliates continue to add traffic growth 2000 vs 1999:
Q3/2000 Q3/2000 vs vs Q3/1999: Q3/1999: 9,0 8,0 RPK Growth
Growth vs LY Index
135
Strong Swedish economy Continued strong growth Arlanda-Gothenburg and Arlanda-Malmö gain shares from secondary airport Bromma Arlanda Express Train stimulates traffic Boeing 737-800 introduced 08MAY
7,0 6,0 5,0
SAS RPK up 8,6% Total RPK growth SAS & Partners 11%
4,0 3,0 2,0 1,0 0,0
9m 2000
SAS Total SAS & Partners (excl STAR)
SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
Yields significantly up in 3rd Quarter
SAS
Total system - currency adjusted 4%
Rising Jet Fuel starting to spill through Overall yields up 2,9% in Q3 , 0,9% YTD Positive mix in Q3
3% 2% 1% 0% -1 % -2 % -3 % -4 % Q3/99
Q 3/00
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Passenger Yield 3rd Quarter 2000 vs 1999 Route Sector Scheduled
Nominal yield
Currency effect
Adjusted yield
SAS Total
103
100
103
111 102 101 97 108 100
95 100 100 103 102 100
105 102 101 100 110 100
Intercontinental Europe Intrascandinavian Denmark/Greenland Norway Sweden
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Currency Adjusted Yield vs Last Year Total System January - September
2% 1% 0% -1 % -2 % -3 % J A N -S E P 9 9
J A N -S E P 0 0
SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SAS
Cargo business yield drop has stopped New Global Cargo has been initiated Weak European demand January-September 2000
Revenue ton-km Revenues
up 6% up 6%
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Favorable unit cost development except jet fuel
SAS
Index Last Year
Increase of 0,6% January-September 2000 Down 3,2% adjusted for fuel costs
3% 2% 1% 0% (1 % ) (2 % ) (3 % ) J A N -S E P 9 9
JA N -S E P 0 0
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Unit Cost Effected by Fuel January - September 2000 vs 1999 MSEK
Adjusted JAN-SEP99 JAN-SEP00
Commissions Fuel Government charges Personnel Other oper. net costs
TOTAL
1 602 1 778 2 664 9 759 6 683
Var. %
1 593 0.6% 2 624 (47.5%) 2 550 4.3% 9 656 1.1% 6 196 7.3%
Share of total var %
0.0% (3.8%) 0.5% 0.5% 2.2%
22 486 22 619 (0.6%) (0.6%)
Volume = average growth in ASK and RPK = 4,3% SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
Unit Cost 3rd Quarter 2000 vs 1999 MSEK Adjusted Q3/99
Commissions Fuel Government charges Personnel Other oper. net costs
TOTAL
512 648 913 3 211 2 053
7 338
Q3/00
Var. %
544 (6.2%) 925 (42.7%) 860 5.8% 3 163 1.5% 1 804 12.1%
7 296
0.6%
Share of total var %
(0.4%) (3.8%) 0.7% 0.7% 3.4%
0.6%
Volume = average growth in ASK and RPK = 4,6% SAS IR/STU
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2000-11-10
SAS
Estimated jet fuel expense for full year 2000 raised to MSEK 3 700 Brent Crude vs. Jet Fuel 50
November 1997 - November 2000
45
US Dollar per Barrel
40 35 30 25 20 15 10 5
03 -1
103 97 -0 1 03 -98 -0 303 98 -0 503 98 -0 703 98 -0 9 03 -98 -1 1 03 -98 -0 1 03 -99 -0 303 99 -0 5 03 -99 -0 703 99 -0 9 03 -99 -1 103 99 -0 1 03 -00 -0 3 03 -00 -0 5-0 03 0 -0 703 00 -0 900
0
Spot Jet Fuel up 12 % since prognosis given in August 2000 Crude oil /Jet Fuel differential has not decreased as anticipated Further strengthening of USD vs SEK SAS IR/STU
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2000-11-10
Result Improvement Program
SAS IR/STU
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2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
SAS
Result Improvement Program 1999/00 MSEK 2150 achieved as of 3rd quarter 2000 Increased pace during rest of year 2000 Area Cargo Catering & In-flight service IT & communications Distribution & Electronic channels Air crew Ground handling Technical maintenance Overhead & other Total
Achived effect vs. 1998 90 MSEK 300 MSEK 130 MSEK 610 MSEK 380 MSEK 210 MSEK 200 MSEK 230 MSEK 2150 MSEK SAS IR/STU
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2000-11-10
Electronic Channels current volumes of total sales first 9 months 2000
SAS
Travel Pass TPC (new in 1999) E-TIX Other Internet Total volume E-channels MSEK 2 200 10% of total passenger sales SAS IR/STU
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Outlook 2000
SAS IR/STU
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
Macroeconomic outlook SAS' main markets - a general softening Sweden: • Export, consumption and GDP somewhat weaker
UK: • Slightly weaker • GDP +2-3%
US: •Soft landing? •GDP +2-3% (down.)
Norway: • GDP 2.5-3% • Int. rates uncertain
Euroland: Euroland: • Germany & Italy catching up
Japan: • Slightly better but from low level
Denmark: • Better growth
Asia excl. excl. Japan: • Continued recovery in most regions SAS IR/STU
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2000-11-10
October traffic figures- slightly lower growth Continued positive passenger mix Business Class +8,2% - Economy Class +4,0%
SAS Total Intercontinental Europe Domestic and Intrascandinavian
Passengertraffic (RPK) +5,3% +1,2% +7,7% +7,7%
Seat capacity (ASK) +3,0% +0,8% +4,5% +3,4%
Cabinfactor +1,5 p.u.
SAS IR/STU
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2000-11-10
SAS
SAS expands winter traffic program Capacity up 9% on European & Intrascandinavian routes Birmingham, U.K. Active business and industrial area Copenhagen efficient for Eastbound flights Week-end Palma de Mallorca, Spain Spare capacity Increased capacity on Dublin, Zurich, Paris, Tel Aviv, Budapest, Hamburg and St. Petersburg Capital triangle SAS IR/STU
45
2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
Operating key figures - year 2000 Increased traffic growth scenario Rising yields Underlying unit costs down Key figure ASK Frequencies
2000 Up approx 2,5% Up 1%
RPK Passenger yield (currency adjusted) Unit costs
Up approx. 8% Up 1-2% Up 1-2%
SAS IR/STU
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2000-11-10
The Board of Directors Assessment for full year 2000: Full year forecast from February 17 maintained Reduced unit cost except jet fuel Jet fuel expense estimated at MSEK 3700 for 2000 as a whole Income before taxes ex gains - around MSEK 1000 SAS IR/STU
47
2000-11-10
Scandinavian Airlines System, Investor Relations Tel. +46 (0) 8 797 1451 Fax: +46 (0) 8 85 58 76 e-mail:
[email protected] --- Homepage: www.scandinavian.net -- Results Jan - Sep 2000
