Scandinavian airline SAS launches drastic cost-cutting program

Ailing Scandinavian airline SAS on Tuesday announced a major cost cutting plan, as the carrier faced further heavy losses.

SAS planes at Stockholm Arlanda airport
SAS planes at Stockholm Arlanda airport in March 2020. The airline on February 22nd 2022 announced a major costcutting plan. Photo: Jonathan NACKSTRAND / AFP

Under the new plan the company will reduce costs by 7.5 billion Swedish kronor ($800 million, 710 million euros) annually.

“Absent fundamental change,” the current situation in the airline sector, which is plagued by the economic fallout of the

pandemic, “will quickly exhaust SAS’ cash resources,” the carrier said in a statement.

The “full transformation” of the business will affect “its network, fleet, labour agreements and other cost structures”, the company.

Called “SAS Forward”, it will notably result in a “redesigned fleet” which included a “refocusing” on long-haul flights, the company said. 

SAS, which already cut 40 percent of its workforce, 5,000 staff, in 2020, did not mention new job cuts.

The group did not specify when it expected to achieve the 7.5 billion annual reduction in its costs.

Last year, SAS widened its losses after an already disastrous 2020, with a net loss of just over 2.4 billion kroner, with rebounded turnover of about 5.5 billion. 

In the early hours of trading on the Stockholm stock exchange, SAS shares, which have taken a hit in recent days amid concerns about its financial situation, gained over five percent to 1.13 kroner. 

At its current price, however, the company is only worth about 800 million euros.

SAS has benefited from several aid and recapitalisation plans since the start of the pandemic, mainly funded by Sweden and Denmark, which each own 21.8 percent of the company.

READ ALSO: SAS shares plummet after analysts warn it risks going bankrupt

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Airline SAS cancels thousands of flights over staff shortages 

Scandinavian airline SAS will cancel around 4,000 flights over summer. This will cover the period between May and August, where the airline had a total of 75,000 flights planned.

Airline SAS cancels thousands of flights over staff shortages 

“The vast majority of travellers won’t be affected by this, other than they will be rebooked to a flight within a few hours or on the same day,” press officer Karin Nyman told newspaper Dagens Industri (Di).

In total, around 5 percent of flights will be affected.

Nyman told the newspaper that the reason behind the cancellations is a staff shortage combined with delayed deliveries of new aeroplanes.

A spokesperson for SAS in Denmark also said very few passengers will even notice the cancellations, beyond the fact that some may be rebooked to a different flight. 

“We’re doing this to prevent a situation this summer where it turns out we can’t fly and passengers are stranded,” Alexandra Lindgren Kaoukji, head of media relations for SAS in Denmark, told news wire Ritzau. 

SAS laid off nearly half its employees during the Covid-19 pandemic, Ritzau writes, and is still feeling the squeeze. 

Di reports that pilots’ unions have repeatedly warned of potential staff shortages this summer.

Aviation expert Jan Ohlsson agrees that staff shortages are a problem.

“SAS have loads of planes, loads of flight routes but no one flying the planes. There’s a total overcapacity,” Ohlsson told Swedish news wire TT.

He said that numerous experts have warned SAS of this situation. Despite this, SAS put even more planes, including older planes with their livery changed, into rotation. The lack of staff means that they need to hire in pilots from external companies to get the planes flying.

“SAS have put themselves in a difficult situation,” Ohlsson told TT. “I – and others with me – think that SAS should have fewer planes flying instead and should be looking at which routes they are even flying at all”.

READ ALSO: Scandinavian airline SAS passenger numbers ‘highest since pandemic’