Værdiansættelse af SAS AB

Daniel Dahl

Student thesis: Master thesis


The main object of this report is to analyze the impact that SAS’ new strategy “Core SAS” has on the value of the company. Core SAS was introduced in February 2009 as a way out of the economic difficulties that SAS has experience in the last decade. SAS operates in the airline industry which is known of being a very cyclic industry which follows the general movements in the economic. In economic downturns the airlines make huge loses, since both the households and companies cuts their travel expenses. In economic upturns the airlines only make marginal profits because the competition in the industry is so fierce. SAS is a company which offers high standards of service and operates with a high punctuality and many departures, which is appreciated among business travelers. Core SAS focus are the business travelers since they are able to pay the full price of the ticket compare to the leisure travelers. It is therefore essential for SAS to make the business travelers returning customers after the crisis and to make sure they don’t use the low-cost carrier as a low cost alternative. SAS is operating with high fixed cost compare to their competitors which make it difficult for SAS to compete on price and become profitable. SAS has the largest wage budget compare to their competitors but still SAS is not very efficient. Core SAS has also focus on cost and the objective is to catch up with the cost gab of SEK 8.8 billion up to their competitors mainly through downsizing and wage cutting programs. If SAS is able to implement the strategy completely the cost gab between SAS and their competitors will only be SEK 1 billion which will make SAS a more competitive company. SAS has a much older fleet than their competitors which increases the cost of fuel significantly. SAS has therefore decided to invest in 39 new aircrafts in the period of 2012 – 2013 which will have a negative impact on the cash flow in these years. In addition IAS19 is being revised which mean that actuarial gains and losses may no longer be amortized over the remaining average period of service, but continuously recognized directly in equity or the income statement, will likely come into effect on January 1st, 2013, at the earliest. SAS have to recognize their SEK 11 billion actuarial loses on their income statement, which will have a significantly negative impact both on the cash flow and the equity in 2013. If SAS managed to implement Core SAS completely and after the scheduled the theoretical value of SAS will be SEK 13.23 per share according to the DCF-model. SAS’ stock price was SEK 26 per share on January 2nd 2011 on Stockholm Stock Exchange, which is 97 percent higher than the theoretical value. Even if SAS is successful with implementing Core SAS the stock is very overrated. The multiple analyze give a theoretical stock price of SEK 14.66 per share which is only 11 percent higher than the DCF-models estimate. It is only the most optimistic scenario that comes close to the real stock price since the theoretical value in the optimistic scenario is SEK 32.35 per share, which is 24 percent higher than the real stock price. This is bad news for SAS since there is only a 25 percent chance that the positive scenario will come true.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2011
Number of pages88