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Risks

Strategic Risks

Risk   Context   How to mitigate?
Sector’s regulations   Air Transport is an extremely regulated sector, therefore any changes will have a significant impact on SATA’s daily operations.   Regular and careful monitoring of regulatory changes by the Legal Department assisted by an element from Management.
For more information on Compliance.
Syndicates   SATA has several syndicates; therefore it is necessary to manage negotiation processes in order to meet the interests of all parties involved.   Adoption of an open dialogue with the syndicates to be assured by Labour Relations.
Human Resources   This is of great strategic importance since SATA intends to maintain and value its employees.   Conducting a communication policy based on dialogue.
Promotion of an open door culture, where employees should feel free to contact and communicate with the Management.
Regular supervision of remuneration policies.
Quality & You project.
Brand   The SATA brand is of high value to the Azores and has been taking on a leading role in the markets where it operates.   Regular brand monitoring at all communication stages.
Careful reading and analysis of the brand’s promotion means (news, opinion pieces, comments on blogs) by Marketing and Communications.

 

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Operational Risks

Risk   Context   How to mitigate?
Safety & Security   Safety and security of SATA’s employees and customers are a priority.   Risk management through the Safety Management System (SMS)
Regular external and internal auditing that is transversal to all business áreas.
Management of a crisis by Emergency Management department.
Specific training sessions for this matter.
Information systems   All business areas are assisted by computer equipment and tools operating in established interfaces for ensuring proper information reliability, safety, and availability.   Monitoring of information systems and computer applications by Information Systems ensuring their creation according to the AGILE methodology.
Remote control from Ponta Delgada in order to assure a quick service to the internal customer.
Failure in the supply from third parties   As any other airline, SATA has to subcontract external services that are essential to ensure successful operations, such as security, cleaning, catering services, the police, fire fighters, and meteorologists.   Management of agreements with service providers with a chief at each operational unit assisted by a member of the Board of Directors as to assure those services.
Initial risk assessment as to define the strategic relevance of the contract to be signed.
Planning routes   Planning routes in time with the proper equipment is essential to ensure that all operations are successful as well as customer satisfaction.   Elaboration of an Operational Plan for each IATA station establishing the routes to be carried out.
Audits performed by the accredited entities ensuring that the good international practices are being fulfilled.

 

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Hazard Risks

Risk   Context   How to mitigate?
Natural and social disasters   Weather events, such as seaquakes, earthquakes, heavy fog, and volcanic ash, and social events such as civil wars, strikes, and terrorist attacks are difficult to manage and in spite of causing social constraints may result in significant profit or loss and/or additional costs for SATA.   Contracting insurance as to continue SATA’s business and strategic goals
Emergency Management Group managing all crisis situations according to the Emergency Procedures as to give a fast, proper, and reliable response to the involved stakeholders.
Political risks   SATA is a 100% public undertaking depending on regional political changes and the Portuguese legislation.   Promotion of daily dialogues with the shareholder in order to provide feedback regarding the established goals and all relevant Management matters to be analysed.
Fleet damage   As to carry out their activity, SATA needs proper, able, and capable equipment as to ensure that the operations gather all safety conditions.   SATA’s air operator’s certificate (AOC).
Insurance contracts minimising SATA’s exposure to fleet damage/loss.

 

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Financial Risks

Risk   Context   How to mitigate?
Price of Jet Fuel   The consumption of jet fuel within SATA is growing 72 million kilos per year, where any change in price will have a significant impact on SATA’s operational profit and loss.   Contracting hedging operations within a total that may vary up to 80% of the overall annual consumption of jet fuel, being the time span for the operations up to 24 months, as well as careful and regular monitoring of fuel price variation.
Currency risk   SATA’s exposure to this risk is a result of imbalance between foreign currency revenues and costs. At SATA, we trade the Canadian Dollar, American Dollar, and the Pound Sterling.   Monthly conciliation between payments and receipts as to ensure a more assertive analysis of SATA’s currency position.
Contracting hedging operations for the main traded currencies.
Credit risk   During commercial relations with its customers, SATA is exposed to a credit risk as its counterpart may not fulfil their contractual obligations.   A perfectly established policy for limiting credit validated by SATA’s Management.
Weekly monitoring of customer balance and analysis of their impact in SATA’s financial position, allowing for actions to be taken as well as the necessary optimisation initiatives.
Monitoring and contracting hedging operations for covering risk associated with interest rate.
Revenue management   SATA’s revenues are conditioned by the economic and financial conditions of the markets where it operates. The Portuguese market is currently noteworthy due to its economic crisis with direct impact on the power to buy and remaining social conditions.   Daily management and control of revenues by Revenue Control.
Collaboration with the Financial Department in assessing the impact of revenues in SATA’s financial position.
CO2 licensing price risk   According to the legislation issued by the European Emissions Trading Scheme (EETS) airlines with arrivals or departures in an aerodrome located within a member-state of the European Union must monitor the number of emissions and report them.    

 

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