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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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SAS

Scandinavian airline SAS passenger numbers ‘highest since pandemic’

The number of passengers who flew with Scandinavian airline SAS in April was far higher than during the same month in 2021.

Scandinavian airline SAS passenger numbers 'highest since pandemic'

Over 1.5 million flew with SAS last month, around four times as many as in April 2020 when Covid-19 restrictions were still in broad effect.

SAS still has some way to go to return to the number of passengers it registered before spring 2020, the “pre-pandemic” period for the hard-hit industry.

The airline was affected by a pilots’ strike in April 2019 which affected results for that month, but 2.5 million people flew with SAS in April 2018, demonstrating how the airline is still lagging behind earlier years despite the apparent recovery.

“We continue the ramp-up and see the highest number of passengers since March 2020,” president and CEO of SAS Anko van der Werff said in a press statement.

“Looking forward, sales and booking trends are positive for the summer period ahead,” he added.

SAS’ capacity in April was around two-thirds of its capacity in 2018.

“SAS is a bit more restrained in increasing its capacity than many of its competitors,” aviation sector analyst Jacob Pedersen of Sydbank told news wire Ritzau.

The company faces a challenge to make as much profit from its services as it did before the Covid-19 pandemic, according to Pedersen.

“The snapshot image of the trend in April is certainly encouraging but a closer analysis gives less cause for encouragement,” he said.

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