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March 2, 2024
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SAS is in advanced discussions with the Swedish and Danish governments about a recapitalization plan that could result in the two major shareholders increasing their share. The aim is to give the Scandinavian airline adequate levels of funding and liquidity, SAS said on May 28 at its Q2-results presentation.

CEO Rickard Gustafson was unable to go into detail about the plan as “we are in active discussion with Sweden and Denmark. Both need to play a very significant role in this scheme, which is not finalized yet. The full package will hopefully be ready in June”, he said. Sweden has a 14.8 percent share in SAS, with Denmark 14.2 percent. Discussions include the “realization of its key business priorities of necessarily increased productivity and a continuation of the green transition.” SAS is seeking market participation as well.
The Norwegian government sold its share a couple of years ago, but SAS is in discussion with its government about some form of state support.

While SAS has strengthened its liquidity position by securing a SEK 3.3 billion revolving credit facility recently that is 90-percent state secured, the airline is facing a major restructuring. In February to April-quarter, it was hit hard by the Covid-19 crisis which cost it SEK 5.5 billion in gross and 3.1 billion in net revenues.
Net loss for the quarter was SEK -3.470 billion compared to -933 million the previous year. Q1 and Q2 combined resulted in a net loss of SEK -4.311 billion versus -1.402 billion last year.
The operating loss in Q2 was SEK -3.315 billion (-1.130 billion last year), for both quarters -4.082 billion (-1.591 billion). Revenues in Q2 were down to SEK 5.264 billion from 9.871 billion, or to 14.971 billion from 19.276 billion in both quarters. At the end of Q2, the airline had SEK 4.2 billion in cash available

Monthly cash burn SEK 500-700 million
SAS expects a monthly cash burn of SEK 500 to 700 million for the rest of FY20. It operated at just six percent capacity in April but hopes to operate 25 routes with thirty aircraft from June again that include an increase in domestic traffic, a selective European network, and a return to North America. Gustafson acknowledged that ramping-up is a costly phase not only for SAS but for all airlines that have been grounded. “Most will try to get up to business again, but we will have to see how many are actually successful with that.”

However, the airline expects to feel the pain for much longer. As reported earlier, SAS announced the reduction of 5.000 jobs, re-sizing the airline roughly by half. While Gustafson hopes to be able to hire some back again when the situation improves, this will not be a quick fix. He expects to agree on a 15 to 20 percent productivity improvement from the remaining staff. “This requires a change to the ‘legacy’ in local agreements. The salaries are not the issue, it’s about how to get the best out of the workforce in what is a very seasonal business.” Expect some serious negotiations here.

SAS is looking at reducing all costs where possible. It pursues another SEK 4 billion in structural saving by 2022 on top of the 1.5 to 2 billion originally planned for 2023. This includes reduced spending on IT, marketing, product development, and supplier contracts. Wet-leases and other lease payments have been placed ‘on holiday’.

Compare SAS fleet plans for May 2020 (top) and December 2019 (bottom)

The airline is also in negotiations with Airbus about the deferral of deliveries. So far, it has agreed to defer four A320neos’s from FY22 to FY24 but it is seeking additional deferrals.
The latest fleet plan includes only five deliveries this year (three A320neo’s, one A321LR, one A350-900) compared to twenty communicated last December (15 A320neo’s, one A321LR, one A350). For FY21, the number is unchanged with eight deliveries but this includes a third A320neo and only one A321LR. FY22 sees a change from fifteen to thirteen deliveries, FY 2023 from eighteen to seventeen.

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Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.

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