Ailing airline SAS on Tuesday launched a cost savings plan and said it hoped to raise new capital after posting a wider quarterly loss as it grapples with weak demand and tough competition.
The group, which has been struggling for years, said it would fully transform its business, including its network, fleet, labour agreements and other cost structures, aiming to save 7.5 billion Swedish crowns (€710 million) a year.
“The last two years have been the most challenging in the history of the aviation industry ... SAS is now, more than ever, in need of a new start,” CEO Anko van der Werff said.
The “plan paves the way for undertaking a complete revitalisation of SAS’ balance sheet and to substantially strengthen SAS’ liquidity position,” SAS said in a statement.
The airline, in which Sweden and Denmark each hold a stake of around 22 per cent, secured a 3 billion crown rescue deal from the two governments in 2020 to keep afloat.
It did not specify how much capital it hoped to raise this time but its CEO later told investors the firm would be able to provide more detail in April.
“The success of the plan and the ability to attract potential new capital relies on SAS fully achieving the SEK 7.5 billion annual cost take-out plan which in turn depends upon SAS stakeholders’ full participation.”
Danish Finance Minister Nikolaj Wammen said in an email the government was monitoring SAS' development closely and declined to comment further.
Sweden’s Enterprise Minister Karl-Petter Thorwaldsson was not immediately available for comment.
"This is a big cost-cutting plan and it means that SAS addresses that they are a few steps behind their competitors which are ready to move," Sydbank analyst Jacob Pedersen said in a note to clients.
The airline reported a loss before tax of 2.60 billion Swedish crowns for the November-January quarter after posting a loss of 1.92 billion a year earlier.
SAS shares fell around 4 per cent shortly after the market open but rebounded to trade up 7 per cent by 0913 GMT. The stock shed some 30 per cent after Norwegian brokerage DNB last week said SAS was edging closer to bankruptcy if no restructuring was carried out. – Reuters