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SAS Q3 2023: A Quarter of Resilience and Remarkable Growth

Scandinavian Airlines (SAS) released its Q3 2023 report, showing renewed strength and the highest passenger figure since the onset of the pandemic.

Key Highlights

  • Passenger Surge: Almost 7 million passengers flew with SAS in the third quarter, marking it as the highest quarterly passenger figure post-pandemic.
  • Financial Comeback: The airline has posted a quarterly profit for the first time since 2019.

Financial Overview (May 2023 – July 2023)

  • Revenue: MSEK 13,173, up from MSEK 8,580 the previous year.
  • Income before tax (EBT): MSEK 457, a significant improvement from MSEK -1,991.
  • Net income for the period: MSEK 461, up from a loss of MSEK -1,848.
  • Earnings per share: SEK 0.06, a marked recovery from SEK -0.25.

Anko van der Werff, President and CEO, expressed his optimism, noting a clear sign of being on the right track, and emphasized continued work on the SAS FORWARD plan for long-term competitiveness.

Challenges & Acknowledgements

Air traffic control capacity issues posed challenges this quarter, especially for passengers traveling through Copenhagen Airport. The airline acknowledges the inconvenience and appreciates the hard work of its employees during these testing times.

Progress on SAS FORWARD & Chapter 11 Process

SAS continues to move forward with its Chapter 11 process in the US and the overarching goals of the SAS FORWARD plan. The equity solicitation process launched during the quarter to secure essential capital saw substantial interest from potential investors.

Significant Events During the Quarter

  • May 10: Ruling regarding the recapitalization of SAS in 2020 by the General Court of the Court of Justice of the European Union.
  • May 15: SAS receives court approval for the company’s equity solicitation procedure.
  • June: Partnership with Skellefteå municipality on sustainable aviation fuel for business travel.
  • SAS aims to complete its US court-supervised process by year-end, followed by regulatory approvals in 2024.

Expansion and Achievements

  • SAS announced two new intercontinental routes: Copenhagen to Bangkok and flights to Agadir, Morocco.
  • Star Alliance, of which SAS is a part, won the ‘World’s Best Airline Alliance’ title at the Skytrax World Airline Awards.

Sustainability at the Forefront

In June, SAS showcased its dedication to sustainability:

  • Skellefteå Municipality collaborated with SAS’s Corporate Sustainability Program.
  • SAS opened seat reservations for its first-ever commercial electric flight in Scandinavia.

A Look Forward: Scandinavian Airlines (SAS) Turnaround Program

The airline remains positive about the winter season, noting an encouraging trend in ticket sales. SAS continues its efforts with SAS FORWARD and the Chapter 11 process in the US.

Anko van der Werff concluded with heartfelt gratitude towards SAS colleagues for their dedication and looked forward to welcoming more passengers aboard.

Highlights of SAS Teleconference Q3 2023

SAS held a teleconference and webcast for investors, analysts, and media. Anko van der Werff, President & CEO, and Erno Hildén, Executive Vice President & CFO, presented and commented on the report. Here are the FlightChic highlights of the call:

Call Summary

  • Introduction of the third quarter.
    • The third quarter was a busy summer season for SES, with 7 million passengers traveling with SES during the third quarter. RPKs are up 42%, and capacity increased by 36% compared to last year.
    • SES started a competitive and broad equity solicitation process in the United States.

CEO Comments:

“The third quarter was also an important milestone for SES as it was the first time since 2019 that we made a quarterly profit. Our EBT amounted to a profit of 457 million Swedish kronor for the quarter. We still have a lot of work ahead of us in our transformation and in securing our long-term competitiveness. But, clearly, it is a sign—the first profitable quarter since 2019 — that we are on the right track and that our efforts are paying off. Our ticket sales were strong throughout the third quarter, indicating a healthy underlying demand for travel. And we continue a ramp-up with a year-on-year increasing capacity this winter season.

We made steady progress with our transformation plan and our Chapter 11 process in the United States. During the quarter, we started a competitive and broad equity solicitation process to secure the capital that will help drive our airline forward and facilitate our emergence from the Chapter 11 process.

Anko van der Werff, President & CEO, SAS
  • Passenger demand and capacity growth.
    • Passenger demand increased by 37% to almost 7 million in Q3 compared to Q3 last year, adding 13 new routes for the summer season and two new intercontinental routes to Bangkok, Thailand, and Agadir in Morocco.
    • Ramping up capacity and improving load factor by 3.7 percentage points year-on-year.

CEO Comments:

“I want to reiterate that the third quarter was a challenging quarter for operations capacity issues for air traffic control, mainly at Copenhagen also strikes at various airports around Europe. And of course, challenging weather, to name a few. Our operational performance during the quarter was not where we wanted it to be. And we are committed to improving. I am pleased to see a strong improvement in August apart from Monday’s meltdown in the UK. The numbers that we published that I saw this morning, have August come in as a regular regularity above 99%.”

Anko van der Werff, President & CEO, SAS

SAS Financial Reporting

  • Revenue and cost performance.
    • Q3 revenue performance was strong, with total traffic revenue increasing by almost 38% and slightly more than the increase in capacity and stable yield performance.
    • Q3 operating costs developed mostly according to the expectation and totaled 11 point 6 billion kronor, below the expected level.
  • Revenue and traffic growth.
    • Overall revenue performance during the quarter was strong, with total capacity increased by 36% and revenue increased by almost 43%.
    • Other operating revenue increased significantly from Q3 22 levels by 1.2 billion, but there was a slight decline in scheduled passenger yield.
  • Cash flow and liquidity position.
    • Cash flow and liquidity positions improved in Q3, with strong revenue performance, positive operating results, and strong bookings. Cash flow from operations was positive by 2.5 billion kronor.
  • Key elements of the SAS FORWARD transformation plan.
    • Three key elements of the SAS FORWARD transformation plan: reduced cost structure, restructuring of balance sheets, and raising new equity.
    • Highlights from the quarter include the progress made towards fossil-free aviation, the corporate sustainability program, and sales of sustainable aviation fuel.
  • Summary of the quarter.
    • The team is executing its plan, seeing clear progress, and ramping up the first profitable quarter since 2019, a clear sign that they are on the right track

“We are building the future at SAS. We’re very happy to see these results for our own staff and colleagues. For us, of course, it’s a clear sign that their hard work is paying off. Therefore, I want to close by thanking everyone on the SAS team for their hard work—not just the last months and leading to a profitable quarter, but for the last years. They really have led to our first profitable quarter since 2019. It is a good momentum. We still have a lot of work ahead of ourselves, but it is a good sign that we are at least now showing these profitable numbers.”

Anko van der Werff, President & CEO, SAS

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