SHARE
COPY LINK

BUSINESS

Scandinavian airline SAS hit by 1.5 billion kronor loss

Ailing Scandinavian airline SAS reported another quarter in the red on Tuesday, albeit a narrower loss, as it said it would press ahead with its cost-cutting plan.

a SAS flight
Photo: Tony Webster/Flickr.com

The airline posted a net loss of 1.5 billion Swedish kronor ($155 million, 144 million euros) in the second quarter, compared to a net loss of 2.4 billion kronor a year earlier.

SAS said it was seeing positive signs as the number of passengers rose 28 percent compared to the previous quarter.

“Looking back at the second quarter, we can see that demand improved as travel restrictions were eased,” SAS chief executive Anko van der Werff said in a comment.

Revenue also grew by 27 percent compared to the preceding quarter to seven billion kronor, up 5.1 billion kronor compared to a year earlier, “but still 31 percent below the second quarter in 2019, which was unaffected by Covid-19.

“Despite this positive development, SAS continues to face substantial structural cost challenges while also facing growing competition with substantially lower cost structures than SAS,” van der Werff said.

In February, the airline launched a major cost-cutting plan dubbed “SAS Forward,” which included a “redesigned fleet” and a “refocusing” on long-haul flights.

The plan aims to reduce costs by 7.5 billion kronor annually, with a “full transformation” of the business that will affect “its network, fleet, labour agreements and other cost structures.”

On Tuesday, the airline said it was seeking to convert “20 billion (kronor) of debt and hybrid notes into common equity,” and was seeking to raise 9.5 billion kronor in new capital.

“The success of the plan depends upon SAS attracting potential new capital from the capital markets and other sources and upon SAS fully achieving the targeted SEK 7.5 billion annual cost reduction by fiscal year 2026,” van der Werff said.

Hit hard by the pandemic, the airline already cut 40 percent of its workforce, 5,000 staff, in 2020.

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.

Shares in the airline were down over nine percent as trading opened on the Stockholm stock exchange on Tuesday.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

TRAVEL

SAS pilots approve new collective agreement

93 percent of Danish SAS pilots have approved the agreement that ended strike action last month.

SAS pilots approve new collective agreement

93 percent of the Danish SAS pilots have voted yes to an agreement which ended strike action but also means, among other things, redeployments, longer working weeks and lower wages.

This was announced by Dansk Metal on Saturday morning. The pilots could have voted yes or no on the new collective agreement until midnight on Friday evening.

Pilots in Sweden and Norway have also approved the agreement.

Keld B√¶kkelund Hansen, head of negotiations at Dansk Metal, said “I am incredibly happy. It is a bit atypical to see that a collective agreement negotiation ends in agreements being made that reduce wages and conditions.”

“So of course it was exciting how our members viewed the new collective agreement. But they could also see that it was a necessity in relation to SAS’s situation,” he added.

The agreement comes after months of tug-of-war that finally saw SAS and the striking pilots reach a collective agreement on 19 July. It helped end a two-week strike.

Part of the background to the conflict between SAS and the pilots was that, during the COVID-19 pandemic, SAS dismissed around half of its pilots.

With the new collective agreement, however, all 450 dismissed pilots will be offered re-employment in the future.

At the same time, SAS pilots will see a 25 percent pay cut, and the limit for the workload is raised from 47 hours to 60 hours per week.

But even with strike action over and a collective agreement supported by pilots, the problems are far from over for SAS, which has suffered major financial losses during the conflict.

Currently, the airline plans to begin a reconstruction in the United States under bankruptcy protection in a so-called Chapter 11 process.

Bankruptcy protection will mean that SAS can continue to operate and pay wages while the process is ongoing.

SAS is seeking financing of up to $700 million- slightly more than DKK 5.1 billion.

SAS press manager Alexandra Lindgren Kaoukji said in a statement: “We are very happy and look forward to continuing our ongoing Chapter 11 process and our work to ensure a strong and sustainable airline for many years to come.The positive result of the vote will help SAS to attract long-term investors while we go through the Chapter 11 process and work further with the SAS Forward plan.”

SHOW COMMENTS