SAS says travel demand improving but restructuring progress is limited
Scandinavian airline SAS is benefitting from improving travel demand, but has sounded a note of caution on efforts to make progress with cost-cutting and debt restructuring.
The airline said on May 31, 2022, that it wants to raise SEK9.5 billion ($968 million) in fresh equity to boost its liquidity and convert approximately SEK 20 billion ($2.04 billion) of debt and hybrid notes into common equity.
However, SAS said that “limited progress” has been made in discussions with the airline’s stakeholders about the participation in the cost-cutting program, called SAS Forward.
“Given the limited progress made so far, there can be no guarantees that SAS FORWARD will be successfully completed,” the airline outlined in its Q2 2022 financial report.
The SAS Forward program, which was presented in February 2022, aims to reduce annual costs by SEK7.5 billion ($765 million). According to the company, the implementation of this plan is necessary to improve its financial strength and ability to compete, as it needs to adapt to new travel trends and deal with debts incurred resulting from the COVID-19 pandemic.
However, to move forward with the plan, the airline said it needs all stakeholders in the company, including employees, unions, investors, lessors and shareholders, to play their part in the restructuring.
In March 2022, SAS sounded a warning after pilot unions walked out of cost-cutting talks after the second day of negotiations.
Despite the difficulties, SAS narrowed its loss in Q2 2022. The airline reported a loss before tax (EBT) of SEK1.56 billion ($160 million). This compares to a loss of SEK2.33 billion ($237 million) during the same period in 2021.
During the quarter, SAS passenger traffic improved by 28% compared to the first quarter of 2022. The positive result was attributed to eased travel restrictions and strong travel demand. However, SAS said it has cancelled 4,000 flights for this summer season over staff shortages across the aviation sector.
According to SAS, ticket sales are continuing to increase ahead of the summer season. The airline also aims to operate at 80% of pre-pandemic capacity.
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