SAS Group Interim Report January-June 2010


SAS Group Interim Report January-June 2010

Key ratios January-June 2010

  · Operating revenue: MSEK 19,474 (23,519) 
  · Number of passengers: 12.0 million, down 4.6%  
  · Earnings before non-recurring items in continuing operations: MSEK
‑1,080 (‑851)  
  · EBT margin before non-recurring items in continuing operations:
‑5.5% (‑3.6%) 
  · Net income for the period: MSEK ‑1,214 (‑1,795)  
  · Cash flow from operating activities: MSEK 533 (‑604)

Key ratios April-June 2010 

  · Operating revenue: MSEK 9,979 (12,223) 
  · Number of passengers: 6.3 million, down 8.3%  
  · Earnings before non-recurring items in continuing operations: MSEK
‑236 (38). Adjusted for the effects of the ash cloud, earnings amounted
to MSEK 464 
  · EBT margin before non-recurring items in continuing operations:
‑2.4% (0.3%) 
  · Net income for the period: MSEK ‑502 (‑1,047)  
  · Cash flow from operating activities: MSEK 503 (‑353)  

Comments by the CEO 

“Adjusted for ash-cloud effects, SAS generated a profit for the second
quarter of 2010.” 

Although the situation in 2010 for the aviation industry has improved
compared with 2009, the sector and we as a company are faced with major
challenges moving forward. The IATA industry body anticipates continued
losses totaling USD 2.8 billion for European airlines in 2010. The
Group's reported income before non-recurring items in continuing
operations in the first six months of the year was a loss of MSEK
‑1,080, with the second quarter accounting for MSEK ‑236 of this
amount. 

The ash cloud and the subsequent closure of airspace had a significant
impact on net income for the second quarter and greatly affected our
customers. However, we are pleased that our hard work taking care of and
informing customers was appreciated and helped increase confidence in
SAS. Although services recovered within a few weeks to a normal level,
earnings were negatively impacted by approximately MSEK ‑700 due to the
event. Adjusted for the negative effects, income was consequently
positive in the amount of MSEK 464 in the second quarter, which is
traditionally a strong period for airlines. The fact that cash flow from
operating activities is now positive, MSEK 503, including the impact of
the closure of airspace, it is also a display of financial strength. 

During the first six months, we lowered unit cost by 6.7% despite
reduced capacity and the major disruptions to services. We also noted
growth in travel in Economy extra and Business class and a record-high
load factor on primarily intercontinental flights. This has added to the
platform we must establish to attain profitable growth. Accordingly, we
will now reintroduce one long-haul aircraft that will increase the
number of departures to Asia and the US and, in Scandinavia, we will
increase the frequency of services between the capital cities already in
September. 

Our increased customer satisfaction demonstrates that our focus on
service, simplicity and attractive prices is generating results.
Moreover, we have one of the market's strongest loyalty programs with
three million members. Today, we are also launching our biggest ever
low-fare campaign, with 1,000,000 low-price tickets, which will help
boost capacity utilization and direct focus to our product and brand. 

At present, I believe we are faced with three challenges that are most
decisive in our efforts to achieve a profitable SAS: 

-    Retain our focus and momentum in the implementation of the Core SAS
strategy and cost savings program. We are experiencing intense
competition, which entails continued pressure on yields. It is now vital
that we continue our efforts to cut costs. Over a period of one and a
half years, we have implemented savings totaling SEK 5.6 billion. It is
important that we continue in this manner, even in a period of positive
development. 

-    Continue to be the leader in terms of product and quality. Higher
frequency of services, a broader network and better punctuality than our
competitors constitute significant competitive advantages. Combined with
simplicity on the ground and in the air, this represents considerable
added value for our customers. This is a focus area and we are working
tirelessly to identify new solutions. 

-    Grow profitably in line with a market that remains uncertain. The
market is expected to grow annually by approximately 4-6% and our
ambition is to grow at an equal or higher rate. However, the
macroeconomic trend is uncertain. We will expand our capacity by
increasing aircraft utilization and availing ourselves of short-term
leases. This requires low investment obligations, which combined with
our strong liquidity, reduces our vulnerability. 

In addition to these challenges is the constant volatility in exchange
rates and jet-fuel prices. Although we are on the right path, there is
some way to go before we achieve profitability.   

I recently informed the Board of Directors that I have decided to leave
SAS in the fall. My decision to leave the company was not easy and
although there are still great challenges to come for SAS, the platform
is in place. The Core SAS strategy, including extensive cost savings,
has been established, the financial platform has been secured through
the latest rights issue, SAS has gained strength in terms of our
products, and customer satisfaction has increased. The company is now
well positioned to face the future. 

 

Mats Jansson
President and CEO

Direct questions to: Investor Relations SAS Group: Vice President Sture
Stølen +46 8 797 14 51, e-mail:
investor.relations@sas.se (investor.relations@sas.se). 

All reports are available in English and Swedish and can be ordered on
the Internet: www.sasgroup.net or from:
investor.relations@sas.se (investor.relations@sas.se). 

The SAS Group's monthly traffic data information is normally issued on
the fifth business day of the following month. A continuously updated
financial calendar can be found at:
www.sasgroup.net (http://www.sasgroup.net). 

For definitions, refer to the SAS Group website,
www.sasgroup.net (http://www.sasgroup.net), or contact
investor.relations@sas.se (investor.relations@sas.se).

Press/Investor Relations

Telephone conference, Frösundavik    10:30 a.m. August 18, 2010
Telephone conference, investors/analysts    2:00 p.m. August 18, 2010 

SAS discloses this information pursuant to the Swedish Securities Market
Act and/or the Swedish Financial Instruments Trading Act. The
information was provided for publication on August 18,  2010 at 8:00
a.m. 


Attachments

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