sas group 3rd quarter 2000 analyst meeting · msek 2000msek 2000 1999 19991999 change change...

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

2000-11-10

SAS IR/STU

1

Oslo, November 10, 2000

SAS Group

3rd Quarter 2000

Analyst meeting

www.scandinavian.net

2000-11-10

SAS IR/STU

2

Contents of 3rd Quarter 2000

presentation

�The Quarter in brief

�SAS International Hotels

�Business review

�Result improvement program

�Outlook

�Appendices

2000-11-10

SAS IR/STU

3

The Quarter in briefThe Quarter in brief


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2000-11-10

SAS IR/STU

4

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 Group

2000-11-10

SAS IR/STU

5

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 Group

2000-11-10

SAS IR/STU

6

Key airline profitability driversJAN-SEP 2000

�Traffic growth (RPK) up 7,6%

�Cabin Factor up 4,1 p.e.

�Yields up 0,9%

�Unit costs up 0,6%

�Aircraft capacity costs up 16,4%

SAS


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2000-11-10

SAS IR/STU

7

Financial results - 9 months 2000

MSEK MSEK MSEK MSEK 2000 2000 2000 2000 1999199919991999 ChangeChangeChangeChange

Revenue 33 367 30 984 +8%

Op. inc. bef. depr. 2 256 1 523 +48%

Financial net -195 -167

Gain on sales +280 +610

Pre-tax profit 1 060 601 +76%

SAS Group

2000-11-10

SAS IR/STU

8

Financial results - 3rd Quarter 2000

MSEK MSEK MSEK MSEK 2000 2000 2000 2000 1999199919991999 ChangeChangeChangeChange

Revenue 11 263 10 019 +12%

Op. inc. bef. depr. 1 017 530 +92%

Financial net -190 -96

Gain on sales -9 177

Pre-tax profit 328 105 +212%

SAS Group

2000-11-10

SAS IR/STU

9

Passenger revenue analysis

vs Last year

Q3 Ch. 9m Ch

�Revenues 7 705 +12% 23 086 +7,5%

�Volume +8,9% +7,6%

�Yields +2,9% +0,9%

�Currency +0,3% -1,0%

SAS


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2000-11-10

SAS IR/STU

10

Rising yields and positive

mix 3rd Quarter

�Traffic

growth (RPK) up 9%

�Business Class (RPK-C) up 12%

�Cabin factor up 5,3 p.u.

�Yields up 2,9%

�EBITDAR up 32%

SAS Group

2000-11-10

SAS IR/STU

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From EBITDAR to market based EBIT

JAN-SEP 2000MSEK 2000MSEK 2000MSEK 2000MSEK 2000 1999199919991999 ChangeChangeChangeChange

� EBITDAR 3 520 2 677 +31%

� Gain on sales +280 +610

� Depreciation -1 385 -1 498

� ∆∆∆∆=

==

=MV aircraft +2 643 +50

� Leasing (40%) -465 -408

� EBIT, market 4 594 1 431 +221%

SAS Group

2000-11-10

SAS IR/STU

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Cash flow from operations

(EBITDAR) up 31% Jan-Sep 2000

MSEK 2000MSEK 2000MSEK 2000MSEK 2000 1999199919991999 ChangeChangeChangeChange

� Revenue 33 367 30 984 +8%

� EBITDAR 3 520 2 677 +31%

� Pre tax profit

ex gains 780 -9

� Pre-tax profit 1 060 601 +48%

SAS Group


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2000-11-10

SAS IR/STU

13

Improved EBITDAR

and EBITDAR margin

MSEK 2000MSEK 2000MSEK 2000MSEK 2000 1999199919991999 ChangeChangeChangeChange

� Revenue 33 367 30 984 +8%

� EBITDAR 3 520 2 677 +31%

� EBITDAR 11% 9%

margin

� True a/c depr. +1 073 -1 246

� EBIT, market 4 594 1 431 +221%

SAS Group

2000-11-10

SAS IR/STU

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True aircraft depreciation positively

affected by strong USDMSEK 2000MSEK 2000MSEK 2000MSEK 2000 1999199919991999

� 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 Group

2000-11-10

SAS IR/STU

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CFROI - close to target

�SAS Group's key

financial metric

�Focus on operating

cash flow (EBITDAR)

�CFROI 9m/2000

16%

�Hurdle rate through

cycle >17-20%

0%

5%

10%

15%

20%

25%

30%

35%

0009

0003

9906

9812

9806

9712

9706

9612

9606

9512

CFROI Hurdle rate CFROI

SAS Group


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2000-11-10

SAS IR/STU

16

Capital employed

vs market adjusted capital-

development 1994-2000

SAS Group

-15 000

-5 000

5 000

15 000

25 000

35 000

45 000

0009

0003

9909

9903

9809

9803

9709

9703

9609

9603

9509

9503

SEK M

illion

Surplus values aircraft NPV Operating leases Interest bearing assets

Capital employed Market adj capital

2000-11-10

SAS IR/STU

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ROCE (m-b) - affected by large

increases in aircraft surplus values

�Affected by strong

USD

�SAS market

based ROCE

9m/2000 19%

�Hurdle rate through

cycle >12%

0%

5%

10%

15%

20%

25%

30%

0009

0003

9909

9903

9809

9803

9709

9703

9609

9603

ROCE, Market based Hurdle rate ROCE

SAS Group

2000-11-10

SAS IR/STU

18

SAS International HotelsSAS International Hotels


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2000-11-10

SAS IR/STU

19

Strong profit trend in SIHIncome before taxes (MSEK)

-200

-100

0

100

200

300

400

500

600

1993 1994 1995 1996 1997 1998 1999

0

100

200

300

400

500

600

9m/1999 9m/2000

PBT Gains

SIH

2000-11-10

SAS IR/STU

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Radisson SAS Hotels & Resorts - one

additional hotel sold 3rd Quarter

0

20

40

60

80

100

120

140

1992 1993 1994 1995 1996 1997 1998 1999

No. of hotels

Owned Leased Managed Franchised

�SIH aquire Malmaison

hotel chain

�2 new hotels added

�134 hotels in total

– Managed: 75

– Leased: 28

– Owned: 2

– Franchised: 29

�SIH aquire Malmaison

hotel chain

�2 new hotels added

�134 hotels in total

– Managed: 75

– Leased: 28

– Owned: 2

– Franchised: 29

SIH

2000-11-10

SAS IR/STU

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Radisson SAS Hotels & Resorts -

continuous positive value creation

�GOP up from 30,2 to

32,0%

�ROCE up from

11,5% to 19,2%

�GOP up from 30,2 to

32,0%

�ROCE up from

11,5% to 19,2%

ROCE

SAS International Hotels

4%

7%

10%

13%

16%

19%

22%

1994 1995 1996 1997 1998 1999 H1/00

SIH


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2000-11-10

SAS IR/STU

22

Business review

SAS Airline

Business review

SAS Airline

2000-11-10

SAS IR/STU

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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

SAS

2000-11-10

SAS IR/STU

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RPK Business Class

1998-2000

Year on Year values

Passenger load factor

total system 1995-2000

Sharp increase in passenger load

factors - growth trend in Business Class

Moving 12 months values

SAS

62%

63%

64%

65%

66%

67%

68%

DEC94MAR JUN SEP DEC95MAR JUN SEP DEC96MAR JUN SEP DEC97MAR JUN SEPDEC98MAR JUN SEPDEC99MAR JUN SEP

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

JAN98 JUL JAN99 JUL JAN00 JUL


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2000-11-10

SAS IR/STU

25

Passenger load factors

North Atlantic/ Asia

Strong traffic growth on

Intercontinental routes1999- October 2000

� Positive traffic mix

� Yields up 4,9%

� Passenger load factors

close to 90%

� Traffic "spill off"

� New capacity essential on

long haul

60

70

80

90

100

JAN

MAR

MAY

JUL

SEP

NOV

JAN

MAR

MAY

JUL

SEP

Month

Passenger

load factor

North Atlantic Asia

SAS

2000-11-10

SAS IR/STU

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European routes - strong1999- October 2000

� 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%

Business Class/

Economy Class

80

90

100

110

120

130

JAN

MAR

MAY JU

LSEP

NOV

JAN

MAR

MAY JU

LSEP

Month

Growth

vs L

Y Index

Economy Class Business Class

SAS

2000-11-10

SAS IR/STU

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Danish routes affected by aircraft

introductory problems1999 - October 2000

�Continued capacity

reductions

�Passenger load factor

significantly improved

�Introductory problems

deHavilland Q400

�Continued capacity

reductions

�Passenger load factor

significantly improved

�Introductory problems

deHavilland Q400


50

60

70

80

JAN

MAR

MAY

JUL

SEP

NOV

JAN

MAR

MAY

JUL

SEP

Month

Pass

enger

load factor

Danish domestic

SAS


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2000-11-10

SAS IR/STU

28

Norwegian domestic routes - weak

overall development1999 - October 2000

�Total market

continued weak

�New passenger charges

to be implemented

�Seating reservation

implemented

�SAS gain market shares

�Total market

continued weak

�New passenger charges

to be implemented

�Seating reservation

implemented

�SAS gain market shares


40

50

60

70

JAN

MAR

MAY

JUL

SEP

NOV

JAN

MAR

MAY

JUL

SEP

Month

Passenger

load facto

r

Norwegian domestic

SAS

2000-11-10

SAS IR/STU

29

Swedish domestic routes strong1999- October 2000

� 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

95

105

115

125

135

JAN

MAR

MAY

JUL

SEP

NOV

JAN

MAR

MAY

JUL

SEP

Month

Growth vs LY Index

Economy Class Business Class

Business Class/

Economy Class

SAS

2000-11-10

SAS IR/STU

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SAS affiliates continue to add traffic

growth

Q3/2000 vs Q3/1999:

�SAS RPK up 8,6%

�Total RPK growth SAS

& Partners 11%

Q3/2000 vs Q3/1999:

�SAS RPK up 8,6%

�Total RPK growth SAS

& Partners 11%

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

9m 2000

RPK Growth

RPK Growth

RPK Growth

RPK Growth

SAS

Total SAS & Partners (excl STAR)

2000 vs 1999:

SAS


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2000-11-10

SAS IR/STU

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Yields significantly up in 3rd QuarterTotal system - currency adjusted

�Rising Jet Fuel

starting to spill

through

�Overall yields up 2,9%

in Q3 , 0,9% YTD

�Positive mix in Q3

�Rising Jet Fuel

starting to spill

through

�Overall yields up 2,9%

in Q3 , 0,9% YTD

�Positive mix in Q3

SAS

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

Q3/99 Q 3/00

2000-11-10

SAS IR/STU

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Passenger Yield3rd Quarter 2000 vs 1999

Route Sector Nominal Currency AdjustedScheduled yield effect yield

SAS Total 103 100 103

Intercontinental 111 95 105

Europe 102 100 102

Intrascandinavian 101 100 101

Denmark/Greenland 97 103 100

Norway 108 102 110

Sweden 100 100 100

2000-11-10

SAS IR/STU

33

Currency Adjusted Yield vs Last YearTotal System January - September

- 3 %

-2 %

-1 %

0 %

1 %

2 %

J A N -S E P 9 9 J A N -S E P 0 0


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2000-11-10

SAS IR/STU

34

Cargo business -

yield drop has stopped

� New Global Cargo has been initiated

� Weak European demand

� Revenue ton-km up 6%

� Revenues up 6%

January-September 2000

SAS

2000-11-10

SAS IR/STU

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Favorable unit cost development

except jet fuelIndex Last Year

�Increase of 0,6%

January-September

2000

�Down 3,2% adjusted

for fuel costs

�Increase of 0,6%

January-September

2000

�Down 3,2% adjusted

for fuel costs

SAS

(3 % )

(2 % )

(1 % )

0 %

1 %

2 %

3 %

J A N -S E P 9 9 JA N -S E P 0 0

2000-11-10

SAS IR/STU

36

Unit Cost Effected by FuelJanuary - September 2000 vs 1999

MSEK

Volume = average growth in ASK and RPK = 4,3%

Adjusted Share of

JAN-SEP99 JAN-SEP00 Var. % total var %

Commissions 1 602 1 593 0.6% 0.0%

Fuel 1 778 2 624 (47.5%) (3.8%)

Government charges 2 664 2 550 4.3% 0.5%

Personnel 9 759 9 656 1.1% 0.5%

Other oper. net costs 6 683 6 196 7.3% 2.2%

TOTAL 22 486 22 619 (0.6%) (0.6%)


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2000-11-10

SAS IR/STU

37

Unit Cost3rd Quarter 2000 vs 1999

MSEK

Volume = average growth in ASK and RPK = 4,6%

Adjusted Share of

Q3/99 Q3/00 Var. % total var %

Commissions 512 544 (6.2%) (0.4%)

Fuel 648 925 (42.7%) (3.8%)

Government charges 913 860 5.8% 0.7%

Personnel 3 211 3 163 1.5% 0.7%

Other oper. net costs 2 053 1 804 12.1% 3.4%

TOTAL 7 338 7 296 0.6% 0.6%

2000-11-10

SAS IR/STU

38

Estimated jet fuel expense

for full year 2000 raised to

MSEK 3 700�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

�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

Brent Crude vs. Jet Fuel

November 1997 - November 2000

0

5

10

15

20

25

30

35

40

45

50

03-11-97

03-01-98

03-03-98

03-05-98

03-07-98

03-09-98

03-11-98

03-01-99

03-03-99

03-05-99

03-07-99

03-09-99

03-11-99

03-01-00

03-03-00

03-05-00

03-07-00

03-09-00

US Dollar per Barrel

2000-11-10

SAS IR/STU

39

Result Improvement Program


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2000-11-10

SAS IR/STU

40

�MSEK 2150 achieved as of 3rd quarter 2000

�Increased pace during rest of year 2000

Result Improvement Program 1999/00

Area Achived effect vs. 1998

Cargo 90 MSEK

Catering & In-flight service 300 MSEK

IT & communications 130 MSEK

Distribution & Electronic channels 610 MSEK

Air crew 380 MSEK

Ground handling 210 MSEK

Technical maintenance 200 MSEK

Overhead & other 230 MSEK

Total 2150 MSEK

SAS

2000-11-10

SAS IR/STU

41

Electronic Channels -

current volumes of total sales

first 9 months 2000

�Travel Pass

�TPC (new in 1999)

�E-TIX

�Other Internet

�Total volume E-channels MSEK 2 200

�10% of total passenger sales

�Travel Pass

�TPC (new in 1999)

�E-TIX

�Other Internet

�Total volume E-channels MSEK 2 200

�10% of total passenger sales

SAS

2000-11-10

SAS IR/STU

42

Outlook 2000


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2000-11-10

SAS IR/STU

43

US:US:US:US:

•Soft landing?

•GDP +2-3% (down.)

Macroeconomic outlook SAS'

main markets - a general softening

EurolandEurolandEurolandEuroland::::

• Germany & Italy

catching up

Asia Asia Asia Asia exclexclexclexcl. Japan:. Japan:. Japan:. Japan:

• Continued

recovery in most

regions

Japan:Japan:Japan:Japan:

• Slightly better

but from low

level

Norway:Norway:Norway:Norway:

• GDP 2.5-3%

• Int. rates uncertain

Sweden:Sweden:Sweden:Sweden:

• Export, consumption

and GDP

somewhat weaker

Denmark:Denmark:Denmark:Denmark:

• Better growth

UK:UK:UK:UK:

• Slightly weaker

• GDP +2-3%

2000-11-10

SAS IR/STU

44

October traffic figures- slightly lower

growth

�Continued positive passenger mix

�Business Class +8,2% - Economy Class +4,0%

Passenger-Passenger-Passenger-Passenger- Seat capacitySeat capacitySeat capacitySeat capacity Cabin-Cabin-Cabin-Cabin-

traffic (RPK)traffic (RPK)traffic (RPK)traffic (RPK) (ASK) (ASK) (ASK) (ASK) factorfactorfactorfactor

SAS TotalSAS TotalSAS TotalSAS Total +5,3%+5,3%+5,3%+5,3% +3,0%+3,0%+3,0%+3,0% +1,5 p.u.+1,5 p.u.+1,5 p.u.+1,5 p.u.

IntercontinentalIntercontinentalIntercontinentalIntercontinental +1,2%+1,2%+1,2%+1,2% +0,8%+0,8%+0,8%+0,8%

EuropeEuropeEuropeEurope +7,7%+7,7%+7,7%+7,7% +4,5%+4,5%+4,5%+4,5%

Domestic andDomestic andDomestic andDomestic and +7,7%+7,7%+7,7%+7,7% +3,4%+3,4%+3,4%+3,4%

IntrascandinavianIntrascandinavianIntrascandinavianIntrascandinavian

2000-11-10

SAS IR/STU

45

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


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2000-11-10

SAS IR/STU

46

Operating key figures - year 2000

2000

ASK

Frequencies

Up approx 2,5%

Up 1%

RPK Up approx. 8%

Passenger yield (currency adjusted) Up 1-2%

Unit costs Up 1-2%

�Increased traffic growth scenario

�Rising yields

�Underlying unit costs down

Key figure

2000-11-10

SAS IR/STU

47

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 group 3rd quarter 2000 analyst meeting · msek 2000msek 2000 1999 19991999 change change...

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