SAS AB

STO:SAS

Earnings Call Transcript

[Louise Bergstrom, Vice President of Investor Relations]

Good morning, ladies and gentlemen. I would like to welcome you all to Scandinavian Airlines third quarterly results of 2021, which will be presented by our newly assigned President and CEO, Mr. Anko Van der Werff together with our CFO, Magnus Ornberg.Before we start, I would like to highlight that the information being given to you in this presentation today is a summary and should not be considered as advice or recommendation to investors or potential investors in relation to purchasing or selling securities.Forward-looking statements presented to you today by Anko or Magnus do not guarantee future results or developments and the actual outcome could differ materially from the forward-looking statements. I also would like to mention that the results presented today in the interim report are unaudited. For further information, please read our financial and annual report.With that, I hand over to you, Anko, to start the presentation. The floor is yours.

[Anko Van der Werff, President & CEO]

Thank you, Louise, and good morning, ladies and gentlemen. Thank you for joining us here at SAS for our third quarter interim report of 2021. My name is indeed Anko Van der Werff, and I am the newly appointed President and CEO of Scandinavian Airlines. I'll start by providing you with the quarterly overview, and then Magnus Ornberg, our CFO, will take you through our financial figures in more detail. After that, when the presentation is finished, we will then have a Q&A session with all of you. As always, you can follow our presentation online, and we will try to guide you to the pages that we're talking about.So with that, flipping to the first slide, I will highlight some of the key takeaways from the quarter. Once again, we highlight that we continue to be heavily impacted by the pandemic, which should come as no surprise to anyone really, right? There are mixed signs looking at the travel industry. I think travel restrictions remain but very depending on countries and continents. The current infection spread and development of the new delta versions make it difficult for us to plan the future. However, it's encouraging to see that vaccination progress going well and the use of digital COVID passports has increased. And this is something that we believe will aid in getting people back on flights again.Looking back at the quarter, we see an encouraging increase of passengers. As a reminder, I still think it's important to note that the levels remain low in comparison with 2019 right the year -- the last -- well, let's call it, normal year, right, pre-pandemic. And with the increased amount of passengers comes more tickets that we sold, which means that we've increased revenue significantly in comparison with the previous quarter. At the same time, we've managed to retain costs through operational agility and efficiency, which is something that we will be concentrating on in the future very much. During times of headwind, it becomes of highest importance to have strong financial buffers, and we are grateful for the support that has been given to us by our two largest shareholders, the government of Sweden and the government of Denmark, through the establishment of a SEK 3 billion retaining credit facility. And this clearly enables us to strengthen our liquidity position in times of need.Like last quarter, we have continued to adapt our cost base. And as you can see on the right-hand side, on a year-by-year basis, we have managed to increase our revenues by SEK 1.5 billion, while the total operating expenses have decreased with almost SEK 400 million. We will come back to this in the following pages. But it's worth noting that this is the second time in a row during the pandemic that we post a bottom line result that at least has improved on a year-to-year basis. With that said, a loss of SEK 1.4 billion is not a result we're happy with. And we therefore look ahead towards a new normalized future, which I will get back to in my presentation.So with that, let's move to Slide #3, please and talk about the summer. All in all, a good ramp-up during the summer, right? That's how we would describe it. Looking at the graph on the right-hand side, you can clearly see that the total number of passengers have increased significantly during the third quarter, with almost 140%, 138% on passenger numbers and 144%, including charters versus the second quarter.Now summer is, I don't need to tell you this, but vacation time. And we've seen therefore especially an increase in the leisure segments. During the quarter, we've had a wide selection of destinations. And in total, we've had 170 operating routes to 95 different destinations. At SAS, we're trying to make traveling as easy and frictionless or friction-free as possible for our customers. And I'm absolutely delighted to see that our digital Travel Ready Center, which allows passengers to track updates to travel restrictions and prepare their online trip, was rolled out. And this -- we really have made things easier for our customers. And we keep on offering, of course, of flexible ticket rules and generous rebooking alternatives that you have seen and read about and heard about over the last few quarters. Other factors having driven the manner, of course, the eased travel restrictions, the increased vaccination rates that we spoke about already and the digital passport.So moving on to Slide #4. With the decrease in -- with the demand increasing -- sorry, with the increased demand, during the last quarter, it is pleasing to see that we simultaneously have been able to adapt production, right, the agility, the flexibility that we need to tap into the market. The number of new departures has increased with almost 75% compared with the earlier quarter, and great to see that we're better at filling the airplanes that we flew and the load factor increased and at least reached over 50% -- at 52%. We also managed to increase the arrival punctuality, but -- and I definitely do think so there is room for improvement in this area, which is important for the company and certainly its customers.On a more negative side, we have seen an increased number of cancellations during the summer period, which is highly frustrating for those of our customers who have been affected. This is, of course, something that we regret, that we work on and in order to improve those numbers in the future. It is a challenging environment out there with changing government rules that make it very hard, and I think in most of the cases, our passengers do understand. And yet, we, of course, have to make sure that we improve also in that area.Now being able to adjust production and the capacity that we put in and remain flexible is something we believe is important also in the near future and also will help us to become more efficient, right? And efficiency means that the regularity and the punctuality is a key focus of ours to improve going forward, which in itself should make us even more appreciated to our customers, of course.Now with that said, let's talk about Slide 5, some high-level numbers. Like you've seen in the earlier slide, demand increased quite significantly over the summer, and we've been able to adjust production accordingly, even if, let's be honest there, the demand increase was not as high as, well, what we hope for or at least what we were used to pre-pandemic, right? So here, you will see that we demonstrate that we've been able to increase the revenues whilst actually having managed to keep the increased cost under control, right? As you see, the revenues increased more than 100% and cost rose by about 20%, right, 106% on the revenue side and 22% on the cost side to be precise. So that is really good to see an ongoing cost focus and of course, resulting in some further benefits that we'll talk about in a second.As you know, summer is an important period where many people are flying to go on vacation. Before the summer period, we utilized targeted marketing campaigns, and those resulted in that increased demand, which, in turn, resulted in increased revenue. It shows that we know where the customers are and that the customers very much know who we are and want to fly with us, right?So yes, switching to cost. Keeping those costs controlled, right, in an increasing production environment was a key takeaway for us over the last quarter. As for now, I would still like to highlight that this is the first time since, well, 1.5 years really that we're actually seeing a positive result from cash flow from operations as well as reporting a positive operating cash position of SEK 0.5 billion in total, right? So that is, I think, for us, one of the key takeaways really for this quarter and well done by the broader SAS team. We managed to get more revenues in on the back of stronger sales. We managed to control our cost, and we therefore also very clearly managed our cash position. We maintain, therefore, liquidity position of reporting, you'll see that reflected now. This is very positive, and Magnus will talk more about the details of all of this in a few minutes. He is here to my right, and we will hand over to him in a second. The bottom line result is still negative. Very well aware that we need to continue to work hard to improve this. And as you know, and some of you maybe already heard me say this before, we're not out of the woods yet, right? We were the first industry to get into this crisis and highly likely the last one to be out. Now flipping to Slide 6, that was previous quarter. And on this slide, we move on to talk about our expectations in the near-term future. During Q1, the team communicated that we were expecting a slow ramp-up of flight demand, as we were expecting fewer travel restrictions. And we also thought that the spread of the infection rate should have been lower than we are currently seeing. So as that future really remains uncertain, we believe our ramp-up expectations might be somewhat delayed, and we continue to see some headwinds or at least the question marks, right, around the recovery speed. But those signals are really mixed. The delta impact is uncertain. Travel restrictions are ongoing, but we have seen the first governments coming out, and we do expect some of them at least to be less stringent as those vaccination rates, of course, are increased. And once again, we, ourselves, at least are trying to shape our own destiny by rolling out, for instance, those digital solutions and that flexibility that we have been putting forward to our customers ever since the start of the pandemic. Now we will talk about this for sure, also, I think, in the Q&A, what is the different rates of that ramp-up in demand. Well, it will be different. We already are seeing that leisure demand, as we have seen the underlying and potentially pent-up leisure demand is quite strong. We saw that over the summer. And now, of course, we turn into autumn, and our question mark is around the corporate segment, lagging behind leisures, yes, but we do see at least it going up, right? It's still too early to tell. September, October, November, are those months that are typically far more corporate than leisure. And with the short booking windows that we're seeing today, yes, it is still too early to tell. We see increases. To what extent, will they really get to the same level as leisure traffic, we do not know for the time being, which is why we remain cautious. And then moving to my Slide #7, takeaways right. And after this, I will hand over to Magnus. I think I would phrase it this way. This has yet been another quarter, which was heavily affected by the pandemic, no surprise there. It is positive to see that the demand is moving in the right direction, even though we always were hoping for more. The revenue increased accordingly with the higher number of passengers flying and it was pleasing to see that we're able to enhance the capacity through our agile flexibility during the ramp-up. At the same time, we are also pleased to see that our efforts to reduce cash burn is paying off and efficiency, of course, coming out of that is increasingly pleasing, right? So that is good news out of the past quarters or past quarter for the future. Now we need to remain prudent, cautious for the future. We're therefore very grateful that the RCF has now been established. And if that uncertainty remains, it will provide SAS at some point with a sound liquidity buffer that we haven't drawn on and don't intend to draw on, but at least it's there in our back pockets, right? And again, Magnus will talk about that in a second. I am, on a personal note, very happy to be part of SAS' future. Truly is with great honor and excitement that I take on this position as President and CEO of Scandinavia's leading airline. I think these are challenging times for both our customers as well as our employees. All of us have to and had to over the past 18 months had to change to the ever-changing rules and restrictions. And I want to here acknowledge the hard work of the SAS colleagues that we have carried out every single one of us over the summer to keep this performance level at a very high level and, of course, help our customers as much as possible, right? That is what we are in business for.So together with a strong team and very dedicated colleagues, we strive to become the global leader in sustainable aviation. You'll hear me talk about it a lot going forward, whilst at the same time, needing flexibility and working on a competitive environment for that post-pandemic recovery period, right? It will take time. It will take a lot of hard work. We will surely need to make adjustments along the way. But with our team, strong brand, the strong loyalty and, of course, the operational excellence, we will make it happen.So with that, let me hand over to Magnus, and then I'll be back later on for the Q&A.

[Magnus Ornberg, Executive VP & CFO]

Thank you, Anko, and we'll start to dig into the financials, of course. And as Anko said, we are living in a challenging and unusual time. And even comparing to the same quarter last year is not always relevant. And you will hear means that a number of times today here compared to previous quarter because I think the sequential development quarter-on-quarter is important and that we are following clearly. So if we go to the Page 9, we will -- I will highlight some of the numbers. We have a strong increase in the summer demand. And we see an increase in capacity, some 148% from last year. And this increased capacity and demand, of course, also have given us higher revenue passenger kilometers, 146%. Unit revenue declined by 31%, and this is mainly due to a very different route mix. I think last year was the really strange year in that respect and with mainly domestic travel at that time. But also for the cost mitigation that we have been working on, but also in light of that last year very early on in the pandemic, we see a significant lowering of the unit cost. Of course, the whole travel impact of the pandemic is influencing the revenues, but I'm happy to, for the first time, report increased revenue since I started working with SAS. We see now SEK 1.5 billion up in the quarter compared to previous year. EBIT, yes, like Anko said, minus SEK 1.2 billion. This is before items affecting comparability. Here, we should often take a note that when we compare to last year, we have roughly SEK 1.1 billion currency impact negative. I'll show you that more in detail shortly. And then as Anko also said, we're very happy to report back on the cash flow from operation with SEK 0.5 billion positive. So this is a complete different situation, of course, than what we have shown in previous one. And I will go through that more on in detail later on.So let's go into the revenue development, the next slide, some SEK 2.5 billion in the previous year. And of course, the main impact on the increase is the passenger revenue, increasing around SEK 1 billion. And happy to see that. Also, cargo continues to contribute positive and again, it's better yields and better fill rates. And the other traffic revenue is more a function of the increased volume. So that has also increased. So SEK 4 billion, which is then the highest quarter that we have seen since start of pandemic. Let's go to the next slide and look at the EBT development. Here, it's also clear that we -- if we start from like some SEK 2 billion negative last year, we had the currency impact of around SEK 1 billion when we compare the quarters. So from the negative SEK 3.2 billion, we can see here that we have an improvement on the revenue side, as we talked about, SEK 1.5 billion. We have corresponding cost to that volume increase, kept at some SEK 800 million. And then, of course, last year, if you followed us at that time, we took also a charge on our valuation of park or soon to be phased out aircraft of around SEK 1.2 billion. So if we sort of net of currency and the sort of one-offs, you can see that we have roughly SEK 700 million improvement on that SEK 1.5 billion revenue. So that fits quite well with the plan and the ambition that we have on the contribution level.But maybe even more important, next slide, I would go through the development on the sort of sequential quarter. And here, again, we had started with some negative SEK 2.4 billion, not so much currency between the quarters here and not so much difference also on the state support because those were a little bit different in each quarter, but no big changes there. So SEK 2.5 billion is sort of the comparison. And here, you can also see the SEK 2 billion increase on revenues and managed to only sort of increase cost by some SEK 900 million. So again, a good contribution quarter-on-quarter. So more than SEK 1 billion positive on the result. But obviously, the large negative result is nothing that we strive for, of course. And therefore, we have our long-term commitment to drive -- continue with the cost, but also adapting the whole business model to basically as soon as possible. And of course, difficult to say timing, get to a balance in our financials going forward. I go into the liquidity, and this is probably our top priority and something that I've been working on the last 12 months is to preserve the liquidity as best as we can. And I'm really happy to report this quarter where we see a -- managed to sort of keep the liquidity the same, which we almost did, if you remember also for Q2. But this time, we have a better mix in that change, if you want to look at it like that. So we have a positive contribution from the operation. And this, I would say, is an effect of continued cost focus, but also sale of more tickets. So I think that has really started to take off from May, June, but also July. So that is, of course, positive. On top of that, we continue our effort to -- with the help of sale and leaseback activities to support our liquidity. In the quarter, we have an impact of roughly SEK 400-plus million there. And that is mainly the A350 delivery we took, but also that we have engaged in some engine sale and leasebacks, 12, to be exact. So that is almost SEK 1 billion plus. And then we have then used that money to partly pay off in some financing that expired during the quarter, but also the normal lease amortization according to plan. So from that respect, this quarter is, for sure, more solid in that sense. But of course, we continue to focus on this also going forward. Now I want to highlight some of the actions on the next slide. So just to repeat again, we continue with our work on the financing, and I'm happy to see that we are able to close deals. And as you might see in the report also, we also basically -- yesterday have basically closed another financing, which is then for the fourth quarter, where we have been able to finance 10 pre-delivery payments, and that will have an impact of altogether more than $100 million, not all effect will come upfront, but a large portion in Q4 and then the rest, I would say, in Q1. So that is positive. But going forward, of course, and what is so important going forward, I think Anko alluded to it a lot, we need to align our capacity to demand. And I think to find that timing will probably be the most important action for us to read the market, follow the bookings and really assess where we should have our capacity and how much. That's short to medium term, I would say. Long term or medium to long term, we are working on our SEK 4 billion program, and this is, of course, measures to increase our productivity by 15% to 25%, and we are in the middle of that, I would say. We reached more than half of that, but more to come in the near term. So we are heavily working on that. We will continue with our financing on the -- for example, engines, et cetera. We will target campaigns to make sure that we capture the future demand. And of course, we will continue to follow the government support schemes in our three main countries, both in terms of actual support but also further schemes, which, of course, will be important for us, as we have an uncertain volume development. And of course, very important action in the quarter, and we secured the facility that we announced in Q2, and that's now up and running. So we are able to draw on it. It is undrawn, and we have no intention in the short term to draw on it. So SEK 3 billion is there, and we are appreciating the support from the main shareholders on that. I go to the next slide, look at the maturity profile. No big changes from previous quarter. We -- I can say the -- what is maturing in the near term is basically those aircrafts that we are planning to phase out. And so this is well taken care of in our forecast. The hybrid notes are still there. So no significant changes here. On the aircraft orders, we have still 2 Airbus A321LR to be delivered during this financial year. And then starting next year, it's the next phase of our 320neos. What is not included here one change we did actually -- we did one change in the quarter, and that is to push the delivery of the next 2 A350 1 a year. And that is a significant change. And I think that's a positive. And I think that aligns much better with the demand going forward. What is not included in the picture is that we continue to phase out our 737s. I think we believe we did 5 in the quarters. We continue that with probably higher speed than what we have done in the past. So next year will be crucial also for sort of finalizing that to a large extent. And this, of course, supports lower lease costs, but also maintenance costs, and as Anko talked about support our sustainability efforts. We're happy to see that switch. Next slide, talking about our fuel and currency hedges. As you've seen, we -- when I talk about the fuel hedges, we basically have informed you earlier that our hedge policy nowadays is to hedge between 0% and 80%. And obviously, the reason for that is, of course, the onshore sort of prediction of the need for fuel, but also the whole counterpart on how to do fuel hedges. Right now, we have 0 basically the first time. So we have no hedges in place at the moment. And we have also extended our temporary policy with another year to again be able to keep between 0% and 80%. On the currency, we are around also 40% to 80%, and we -- here, we are hedged around 44% on the NOK surplus cash and also 44% on the U.S. dollar cash -- deficit cash.On the financial targets, again, I have to sort of comment that, of course, when you have a negative result or negative EBITDA, of course, these financial numbers come out a little bit not as we wanted because we want to have a return on invested capital, which is above our WACC, of course. We did see some sort of improvement in Q3, and that is, of course, due to the less negative result, of course. But of course, our target is still to improve that one going forward. And on our sort of debt-to-EBITDA terms, it's basically nonapplicable now with a negative EBITDA, of course, but the target is to be long -- medium to long term, less than 3.5x. On financial preparedness, we saw, of course, a large improvement in this quarter and twofold of things. We continue to reduce our fixed cost, but also -- of course, the new RCF that is in place and is even to withdraw on as needed. And with that, I sort of hand over again to Anko to of course summarize and give some comments before we go into the Q&A.

[Anko Van der Werff, President & CEO]

Yes. Perfect. Thank you, Magnus. So yes, let's talk a bit about how we prepare for the future and how we, of course, can ensure that our transformational plan is on track, while also sharing some of my first impressions that I've collected starting here 6 weeks ago. I really am impressed with what I've seen so far. But of course, like you have heard over the past few slides, there are things that we can and will have to change, right? It starts with our customer and our customer is what makes our business. Their satisfaction, their loyalties are high importance to us. And we're trying to make their traveling experiences as friction-free as possible within the current environment, right? But it really starts with that changing customer that no doubt will emerge post-COVID. We are the #1 preferred airline to, from and within Scandinavia, and our ambition is to remain the #1 also post-COVID. We have a dedicated team. I really admire the brand. I think it's an impressive brand with strong 75 years heritage. So if we continue to work on our customer satisfaction, I believe we can continue but also should improve our global position within the coming years. We will have to work on decreasing complexity. No doubt that will resonate with many of you as also previously it has been mentioned and move towards, for instance, a simpler and more energy-efficient fleet, right? We phased out those five 737s that we discussed already during the quarter. We've also phased in a new A350 for more energy efficiency, of course, and reducing our carbon emissions, right? The sustainability focus and the benefit for the environment is therefore clear and it will help in our work to become the global leader in sustainable aviation, something that I personally truly also wanted to achieve. During the quarter, we have continued our efforts with a number of existing and future stuff producers with the same aviation fuel in order to ensure future deliveries of stuff and that I think will really deliver also results in the future, especially in, of course, the Scandinavian context. Now as you're aware, and it's been shared over the past quarters, we -- yes, we have a solid transformation plan in place. Like I've shown you, I think it starts to bear fruit, right? We see it moving in the right direction, but there is simply more work to be done in the future in order to really strengthen our business. We need to be aware of what happens in the market around us. We do need to be conscious of where the customer is going and adjust and adapt to that new customer in a fully competitive environment. And as I see it, our customers and the loyalty that our customers have shown us, of course, our employees is what making us who we are. And I am still in listening and learning mode here and making sure that the right decisions will be taken for our future development. I've started visiting the bases. I've started visiting people. I'll tell you that it's a challenge to get to know a company in COVID times. I, for instance, still can't get into Norway because I was vaccinated in United States. I hopefully will finally be able to convert my U.S. vaccination certificate into the European one and then to be able to go into Norway on Friday, but it shows you still the limit of the restrictions that we have to deal with, right? But very pleased to see the dedication. I was very pleased to see the hard work over the summer once again. Yes, it was higher in 2019, but we do see passengers, we do see that underlying demand. And therefore, on behalf of all of us here, all of the employees, we look also forward to welcoming you back on board of our flights. And with that, let me conclude it and open up for Q&A. Let's see Louise, who starts.

[Operator]

[Operator Instructions] The first question comes from Jacob Pedersen from Sydbank.

[Jacob Pedersen, Head of Equity Analysis & Vice President]

Anko, welcome to SAS. Look forward to talking with you in the future. First of all, I have a couple of questions. My first one is regarding your conversations with corporate clients. What do they say about their travel budgets looking into the future?

[Anko Van der Werff, President & CEO]

Yes. So I think the main challenge is there -- that there is no hard data, right? People are saying, look, we're preparing plans to go back into the office. I think you in Denmark have seen that, of course, there is good news in that sense because those restrictions are lifted. Once again, Norway going to Phase 4. There are talks in Sweden about loosening up. I think the main challenge for us at the moment is, no one is really giving a straight answer yet. Like I said, we do really see corporate bookings increasing, yes, of low basis, but things are increasing. No one is able to tell you yet whether it's whatever percentage, right? People are first focusing on getting people back to the office and making sure that they can plan work again.

[Jacob Pedersen, Head of Equity Analysis & Vice President]

Okay. Then a bit on your cost-cutting efforts looking into the future. We've seen a lot of your competitors being very confident about the salary decreases. Any thoughts on what is ahead for SAS in this regard?

[Anko Van der Werff, President & CEO]

Well, I'm going to go back to the first question that you asked, right? What is our corporate client mix going to be in the future? Jacob, for me, really, that is the discussion, I've started here in the business. It starts with the customer, right? We need to manage a competitive proposition to our customer. And if the customer is changing because the mix of corporate and leisure is changing, then we cannot force our model up on a customer, right? It's a customer who really determines, of course, so much about who we are. So that is what we want to do. We want to remain ultimately flexible, certainly in that interim period, right, in the medium term. Look, the short term, I think all of us will agree no surprises. There will be restrictions here, there, everywhere or to some extent, at least there will be still restrictions and impact in the short term. The medium term really is all about the flexibility and that long term is what is the customer and how can we serve him or her, right? And there with -- if that means changes, well, that means changes, right? And that is something that we will simply have to deliver on.

[Operator]

The next question comes from Hans Jørgen Elnæ from Winair.

[Hans Jørgen Elnæ]

Warm welcome to Anko back to Stockholm, and good luck with your new work in SAS. I think you will do amazing job. So I have a couple of questions regarding debt and costs. The first is regarding SAS interest-bearing debt of SEK 33 billion versus your main competitor in Norwegian that currently have the same debt amount of NOK 1.7 billion, which creates a very good advantage on the cost base for Norwegian. How is SAS going to cope with this in the future to trim down your debt, Anko?

[Anko Van der Werff, President & CEO]

Yes. Let me pass it on to Magnus actually.

[Magnus Ornberg, Executive VP & CFO]

I can start a bit and you can add on because I think it is a financial question, of course, but it's also a matter of how we're going to compete. But I think in the short term, of course, as Anko said, we have to continue with the hard work and good work, I think, to adjust our cost to the demand. And as soon as possible, we need to come to some sort of balance. We have commented earlier that during '22, we should do that. We are probably looking at longer period, probably, but we have -- we are getting closer, and we are closing the gap all the time, and we need to continue to do that. Now -- but we have to, of course, service our debt. There's no doubt about that, and we have to get a capital structure that supports our growth. And we have talked a lot about that internally, how to do that. And number one, and I think I can allude more on that is we have to become profitable. I mean there's no way around that. And yes, we have gotten support now from major shareholders. We've got the support from the States and so on, and that is good and that was needed in this time. But in the end, we need to work on a business model, a setup, where we are competitive and can start to earn money. How other airlines have done and where they are, of course, is important for us in order to compete, but they have to work on their challenges and we focus on our challenges and to get back to profitability. I think I like to add...

[Anko Van der Werff, President & CEO]

You're going to hear from me, Hans. Look, 6 weeks into the business, right? So yes, I need a bit more time. The question is straightforward. The solutions or the answer is, indeed, around, again, who is our customer? How can we be competitive for that customer? Because in the end, they pay who we are, right? Quite frankly, at least personally, I think all of us really here, we welcome that competition, right? So I'm happy with it because it also further emphasizes that sense of urgency and the need for SAS to change, the need for SAS to really be competitive around the future customer because the customer is changing, and therefore, we have no other option, right? And I think that is only helpful in that respect. Many aspects, you will me hear -- or you will hear me talk about in the future, right, let's go a bit more into details. I don't have that plan fully yet, but in a matter of weeks and months, of course, we will fully roll that out. But you will see elements of further digitalization, further decomplexing, how can we be frictionless and touchless, which then, of course, drives the efficiency throughout an organization. Do you need that, in a way, manual power, we have seen throughout the pandemic that clients want to be served digitally, right? It's not something that you just see in airlines, you see it in elsewhere. With that, it's only a short step to further, in a way, unbundling and being more competitive, being more aggressive in your fare structures, making sure that you really have the building blocks through ancillary revenues to personalize and customize your trips, right? I'm a firm believer in that. I've seen that it worked in other airlines. And that is probably the last element I'll leave you with. I think SAS, as so many of these, let's call them older airlines that have been around in the case with SAS for 75 years, there is something fantastic about that, right? 75 years of continuous service to our customers, we know therefore that we have a loyal base. We also know that through 75 years, you have to adjust, right? Let's be honest, the world and the industry is different from what it was 75, 50, 40, 30, 20 years ago. So we have to adjust, right, and we have been able to do that. The challenge, I think, was so far, hey, SAS, in my view, was inward looking, once again, as many of these airlines have been. And that's where I will bring new ideas, new looks, new views outside in, having worked at different airlines, having seen the restructuring and the transformation work that we've done in other parts of the world, and that is what I will bring to SAS.

[Hans Jørgen Elnæ]

Great. I have one follow-up for Magnus there to drill down in your balance sheet for Q3. And I'm looking into the personnel costs. That was SEK 1.35 billion this year versus SEK 1.66 billion in Q3 last year. But Magnus, you have reduced up to 50% of your workforce, but the personnel cost still doesn't show this on the balance. Can you give some flavor on that?

[Magnus Ornberg, Executive VP & CFO]

Yes. We are down some 35% now. You're exactly correct on that one. And of course, with this level of volume now that we see, of course, we have to, of course, continue with that process. There's no doubt about that. We have gotten support from, in the past, also furloughs, and we have gotten support from other actions. But of course, in the end, productivity increase and I think we have talked about that in the last quarters is a must. And we are partly, on our way, I would say, on this one, but we need to continue that one. So I think you spotted a good challenge there and -- but it's something that we take head on, and we are working hard on that.

[Operator]

The next question comes from the line of [indiscernible] from CM Industries.

[Unknown Analyst]

I see that you have SEK 600 million in negative shareholder equity in the quarter. And I assume that you cannot operate with the negative equity. What is your assessment of the situation? And what is your current thoughts on when you will raise more equity? And how much do you need to raise if you have to raise?

[Magnus Ornberg, Executive VP & CFO]

Thank you very much. Balance sheet review or capital structure review is, of course, the top of the agenda as well. Number 1 for me is to sort of stop the bleeding and get in balance with our sort of cost to the demand and revenue and that we are working hard on. During this time, we have also done everything we can to mitigate the gap that was so obvious last year with actions we got support last year from our main shareholders, but also from the private investors in a very good way. So we appreciate that one. We have worked on own action by unfortunately need to reduce employees and take out costs last year. I think it was necessary and not what we wanted to do. And on top of that, we are working heavily on finance activity in order to support that gap. But I would say that going forward, we need to -- when the market normalizes, I would like to say -- and whatever that is, I'm not giving a number, but when they sort of normalize and we are more in balance, I think it's the time to review the situation we see, how the situation are. But our ambition is now we have capital, we have liquidity to manage the short and midterm, I would call it, and have the resources to take the actions we are talking about, Anko talked about digital investments and so on. And we need to have room to take the right actions. And I think we have the balance sheet for that. So I think I'll leave it like that.

[Anko Van der Werff, President & CEO]

Yes. No, no. And I think, again, all these questions and the right questions, right? I'm going to start indeed with the last part that Magnus touched upon. Let's give ourselves some credit at least that in this quarter, we were at least positive on a cash flow basis from operations, right? So that already -- I understand your question was more around the equity. But of course, it's a start there, right? I mean to be in a positive first time in, well, let's call it, 18 months, right, that we were positive from cash flow or positive cash flow from operations for the first time. It shows that we're able to do a few things, step into the market because that is driven on the back of strong sales. We have that cost reduction program in place. And we also have a continuous focus on that cash position. Now so I think there is elements there. And secondly, yes, I'm also a firm believer of -- you can't cost such a way out of everything, right? So we do need in investments. There is things we will want to do and need to do. I'm sure that other people that are very interested in this are listening in, so let me not diverge for a second. We've identified about 4 areas. And like I said, digital, at least is one of those, right? The other ones are potentially even bigger, and we'll come back to that, I think, in the next quarterly call. We do have at least some of that flexibility, and that is something that we will need to keep at least for the time being.

[Unknown Analyst]

Okay. So in the short term, we will continue to operate with a negative equity. Is that the summary which sounds correct?

[Magnus Ornberg, Executive VP & CFO]

Yes. The cash -- the balance sheet that we have today will support us going forward, and then we can take the actions that we need. I think that's how I would raise for. For the meantime, I can -- it supports the way forward.

[Unknown Analyst]

Then I have a question about just the liquidity and the future obligations. I see that until the fiscal year of '22, you have debt amortization of SEK 3.7 billion, and you have aircraft orders that I believe will be in the area of around SEK 6.2 billion, which in total is SEK 10 billion. And how much of these commitments have you already financed? Do you believe that the remaining will be secured in time? I guess you really believe that, but could you please elaborate a little bit about the process and where you stand?

[Magnus Ornberg, Executive VP & CFO]

Yes. I can definitely elaborate on the near term and '21, '22, for sure, the large portion of that is already financed. Some of these are, let's say, normal rollovers of maturity debt that we -- with the underlying assets is normally the aircraft, and you can roll that over. So I'm not concerned in sort of on the near-term in that SME. Also part of these near-term maturity securities also on assets that we are facing up. So basically, the borrowing as well. So I think from that front, long term, you asked a very good question because with the unknown future and the volume going forward, of course, this is the challenge for any company. And that's why I'm so eager to as quick as possible get back to some sort of balance, as I call it, between revenue and cost and preferably that we can start to generate profit again. And I think that's going to be the key for us in the sort of mid-term.

[Operator]

The next question comes from the line of Achal Kumar from HSBC.

[Achal Kumar, Analyst]

Welcome to SAS. So I had a few questions. First of all, it would be really helpful if you could please talk about how you see the competitive environments developing with significant changes happening at Norwegian and then the getting base there and fly? So how -- if you could please talk a little bit about the competitive landscape there, that would be helpful.

[Anko Van der Werff, President & CEO]

Yes. Well, I'll take that one. Look, no surprise there, right? We see increased competition pretty much everywhere. I think it points to two things, at least. One, you do have a group of agile airlines out there, who have cost structures, of course, that enable them to take on business at this moment and maybe take that business in a different direction than what some others are able to do, right? And I do think that we are, of course, in that second group. But let's also not talk ourselves completely in a ditch, right? We have a strong position. We have a strong brand. We have that loyalty of 7 million people in our EuroBonus program. And we do see that people like and want to fly with us, right? We've seen it again over the summer. We had far more passengers fly with us than we put in the additional capacity that we put back in. So yes, challenging field out there. I think I told Hans Jørgen as well 5, 10 minutes ago, you can't shy away from it, but it's also helping, right? It is a sense of urgency and also that push that people really have to wake up and say, hey, guys, we need to do things differently, right? This is where the market is heading, and this is a new environment and a new playing field out there. So in that sense, yes, it's a reality, and that's exactly what it is. But we will also have our own defense pools, and I want us to make sure that we get on to the attack as well. And I've given Hans Jørgen I think also some point is there, right? Further digitalization, further unbundling, being aggressive and really fighting also for passengers that maybe traditionally were not necessarily ours, right? We do have to expand in that area.

[Achal Kumar, Analyst]

Right. And now again, I mean, if you could also talk about how do you expect the pattern changing in the short haul and in the long haul. So previously, I think we talked about that environmental sensitivities, especially in Sweden, that will definitely have a significant impact on the short-haul traffic. So how do you see that the overall situation developing in the -- in both, I mean, the long haul and the short haul, please?

[Anko Van der Werff, President & CEO]

Yes, great question. And of course, what is sometimes challenging to see now in the middle of the pandemic when people have reduced their flying so much is what was the main driver. Now we're doing our focus groups. We have our data, of course, as well. I think the medium to long-term effect on that sustainability question or sustainability elements in customer changes or behavioral changes, I think, still have to be seen as far as I'm concerned. What we want and clearly have as an obligation and a mandate, I think these are -- as a person also, I do find this the existential questions of our time. We want to be the most sustainable airline out there. I would very much like to see a path towards us being the first domestic airline, both in Norway and in Sweden, right, where we have the larger domestic market to be flying with electrical aircraft, where I'm spending some of my time also on that already in the first week. So it's not something that I'll leave for when things are settled. I think it's actually also potentially worth exploring from a customer proposition, right? I mean if this is really something that all of us believe in and certainly in Scandinavia, we are convinced, right -- all of us are convinced that we need to do something about it, well, then also we need to factor it into the customer proposition. I've got some ideas on that. We are trying that out right now. You won't see that yet until possibly, I would think another 3 months, but we are testing that at now, pricing in out and seeing whether those concepts actually fly. Yes.

[Achal Kumar, Analyst]

Right. Okay. Two more quick questions actually. So first of all, on your booking window, I mean, as you said, the booking window is very narrow. But have you seen any changes? I mean has it broadened versus where it was? How it looked like last year? I mean so has the passenger started booking 15 days in advance? Or is just still kind of a week or how the booking window has changed over the last 1 year, 1.5 years? And second question. I wanted to understand about the recent development in Afghanistan and how the world has probably divided. So how could that have an impact on your Asian operations? If you could please highlight that?

[Anko Van der Werff, President & CEO]

Yes. Perfect. So on the booking window, no fundamental change, if you compare that to, for instance, a year ago, right? We do see that leisure demands books. We also ran our campaign, for instance, last week, which we traditionally do in the last week of August when people are really back from holidays. And we try and stimulate and book early loads, right, early board promotions. And we do see that there is activity, right? So also in, let's say, the 30-, 60- or 90-day out periods. Now what is, of course, important is -- and that's just an open question that we're still having. September, October, November are traditionally bigger business months for an airlines such as us. Where is that at, right? And again, we see corporate bookings. We see SME rebounding quicker than corporates, but to what extent. Too early to tell. It's the 1st of September today. We do see movement. We do see action. But to what extent? Yes, we'll have to wait and see, right? We'll have to come back to you in the next few weeks or months. And then Afghanistan, I think two things. One, we have also contributed by flying for the various governments. We've operated a total of close to 50 flights, I think 44 flights that we've operated and that we did, yes, on behalf of trying to contribute, I guess, to what was, of course, a very challenging situation for a lot of people out there and bringing a lot of people back to Scandinavia and elsewhere. The second thing, if you ask me, what is the direct impact on your operations? Well, nothing in that sense because our flights to Asia to the extent that we're flying them anyway at the moment because that really is where you see demand lacking, right? Intercontinental demand really is far behind everything else. There's also not much overflying or anything, right? It's not like we use the Afghanistan airspace. So for us, I think that is absolutely marginal, if anything, the impact coming out of that.

[Operator]

I will now pass back to the speakers for any questions from the webcast.

[Louise Bergstrom, Vice President of Investor Relations]

We have a couple of questions also from analysts. But unfortunately, we're running out of time. And so we will try to make it short. We have some [indiscernible]. He's asking how the current cash burn is looking? And what can we expect over the coming quarter?

[Anko Van der Werff, President & CEO]

Yes. So first of all, and let Magnus just take that, and I do think really that that will be the last question for today. We can hopefully take those questions in writing, and we can come back to those, right, if you can store them. Look, Martin, thanks for the question. I think, first of all, the previous quarter, like we have said, no cash burn. We kept the cash level as it was. And actually, we've generated cash from operations for the first time in 18 months, right? So again, a testament to what you can do when really there is no restrictions, when demand is coming back, it's not even back at 60%, 80% or 100%. But even then already, that is something that we can do through better sales, cost reduction and, of course, that focus on cash.

[Magnus Ornberg, Executive VP & CFO]

And going forward, I think it's going to be -- I mean the big question that we have talked about the whole day so far, what will be now the demand going forward? How will the corporate bookings come out? And what will be the volume? But we have also said that no matter what we will do everything we can to balance the cost according to the revenues. So I mean this is our firm. So a complete different view now than compared to the previous 3 quarters where we had, as I said, a cash burn of some SEK 700 million per month or SEK 400 million, as we described in Q2. And now we are basically a positive number in that respect. But of course, we're not out of the woods, as we have said. We need to continue to work on this and also the volume forward is, of course, a big uncertainty. So I think I'll leave it like that. Thanks for the question.

[Anko Van der Werff, President & CEO]

Yes. Typically, we wrap up and have some nice words. We unfortunately do need to get going again and continue with our media roadshow here. So thank you very much, and we'll be in touch. Louise will follow up on the other questions together with us that were not answered today. And we will speak to you again in 3 months, if not before. Thank you.

[Louise Bergstrom, Vice President of Investor Relations]

Thank you.