Dépêches

SAS Group Interim Report January-June 2009

Dépèche transmise le 12 août 2009 par Business Wire

STOCKHOLM, Sweden--(BUSINESS WIRE)--Regulatory News:

SAS (STO:SAS)(OSE:SASNOK):

Key ratios for the second quarter

• Operating revenue: MSEK 12,223 (14,412) (-15.2%)
• Number of passengers: 6.8 million (-17.1%)
• Earnings before nonrecurring items in continuing operations: MSEK 38 (499)
• EBT margin before nonrecurring items in continuing operations: 0.3% (3.5%)
• Net income for the period: MSEK -1,047 (-422)
• Earnings per share: SEK -0.47 (-0.42)

Key ratios for the first six months

• Operating revenue: MSEK 23,519 (26,760) (-12.1%)
• Number of passengers: 12.6 million (-16.4%)
• Earnings before nonrecurring items in continuing operations: MSEK -851 (-351)
• EBT margin before nonrecurring items in continuing operations: -3.6% (-1.3%)
• Net income for the period: MSEK -1,795 (-1,585)
• Earnings per share: SEK -1.11 (-1.52)

Comments by the CEO

The global economy was extremely weak during the second quarter, while we continued to bear witness to a major downturn in orders in many industries. The effects of the global recession are being felt extensively throughout the aviation industry and many carriers are continuing to implement far-reaching cost-saving measures to manage this situation, something that has been confirmed in our competitors’ most recent financial reports. The IATA predicts a substantial loss of SEK 9 billion for the entire aviation industry in 2009, and many airlines find themselves struggling to survive.

For SAS, the quarter was characterized by a more stable load factor but a weaker yield. The stabilization of the load factor is positive and shows that the capacity reductions we are now implementing are starting to generate effects. We are continuing to reduce capacity in accordance with our Core SAS strategic direction. The decline in yield that was also noted during the second quarter provides further confirmation of the extremely difficult situation in which the entire aviation industry finds itself.

Income for the second quarter was weaker than expected and amounted to MSEK +38 before nonrecurring items in continuing operations. This figure does not include nonrecurring items of MSEK -1,030 pertaining to restructuring costs related to Core SAS that we announced in July . Income for the period totaled MSEK -1,039. The earnings trend for the second quarter primarily resulted from falling demand and pressure on the yield.

The implementation of Core SAS, which was initiated in February, is ahead of schedule. We have also expanded the savings program by SEK 0.5 billion and it now totals SEK 4.5 billion. Restructuring costs are significantly higher than previously calculated due to the extended measures aimed at achieving profitability, which have been brought forward. At June 30, we had implemented cost-saving measures corresponding to approximately MSEK 2,082 on a full-year basis, which impacted the first two quarters of the year with an earnings effect of MSEK 721. A total of 1,066 FTEs have left the Group, while seven aircraft have been withdrawn from service. We will see even more extensive effects of Core SAS during the remainder of the year with an additional 14 aircraft scheduled to be withdrawn from operation. A number of commercial initiatives are being carried out in parallel with these capacity and cost reductions to increase the Group’s revenue.

We commenced negotiations with all of SAS’s 39 trade unions in June to further reduce the cost gap compared with our most effective competitors, which after the implementation of Core SAS will amount to approximately SEK 2 billion. Despite having been successful in some areas, an agreement on the reduction of payroll expenses was not reached with all of the Group’s trade unions. To eliminate the cost gap, we will establish competitive collective agreements involving a 10-20% payroll and pension reduction among flight deck and cabin personnel, optimize SAS’s production to make greater use of the most cost-efficient production resources and further enhance the efficiency of administration and of SAS Ground Services and SAS Tech.

In summary, SAS must compete on the same basis as its competitors and completely close the cost gap which ultimately is a matter of survival.

Mats Jansson President and CEO

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