SAS loses $400 million in 2009, extends cost cuts

[Manuel Fantoni]

da ATWonline

Wednesday February 10, 2010
SAS Group lost SEK2.95 billion ($400 million) in 2009, improved 53.7% from the SEK6.36 billion deficit suffered the year before, but the company felt additional cost cuts were necessary and extended its Core SAS reduction program by SEK2 billion to SEK7.3 billion.

The group has implemented two-thirds of the originally planned SEK5.3 billion in cuts so far and reported a SEK2.2 billion benefit last year. It said it has signed a letter of intent with unions representing flight deck and cabin crew identifying an additional SEK500 million and that it is planning a SEK5 billion rights issue, details of which will be announced on April 6. It also announced amended terms and extensions on certain loans.

"The unprecedented severity of the market downturn has been far worse than anticipated in the original Core SAS plan and has had an adverse impact on business travel, affecting yields and thus our revenues and liquidity position," President and CEO Mats Jansson said.

Core SAS already has resulted in divestment of its stakes in Spanair, airBaltic and bmi (ATWOnline, Oct. 2, 2009), disposal of 18 aircraft, closure of 45 routes and significant layoffs. The SEK2 billion extension will include an unspecified number of personnel reductions in administration and "production" areas, realizing SEK650 million in savings, as well as salary freezes at Blue1, Wideroe and SAS Cargo. It expects the majority of the SEK1 billion in costs associated with implementing the new cuts to be realized this year and said 2009 costs were "significantly higher than expected" due to the decline in travel demand, which in turn made subleasing grounded aircraft more difficult, and other factors.

Full-year revenue fell 15% to SEK44.92 billion and operating deficit deepened to SEK3.08 billion from SEK696 million in 2008, when the net loss was worse than last year's because of heavy one-time costs related to discontinued operations.

The SAS Scandinavian Airlines unit reported a SEK2.86 billion operating loss, widened from a SEK625 million deficit in 2008, while Blue1's operating loss increased to SEK204 million from SEK13 million and Wideroe enjoyed a 3% increase in EBIT to SEK34 million.

The group had 240 aircraft in its fleet on Dec. 31, comprising 172 in SAS livery, 30 with Wideroe, 13 with Blue1 and 25 leased out. Full-year passenger numbers declined 14.1% to 24.9 million and load factor was down 0.3 point to 70.9% on a 15.3% cut in ASKs.

In the fourth quarter, SAS reported a SEK1.3 billion loss that compared to a SEK2.79 billion deficit in the three months ended Dec. 31, 2008. Operating loss widened to SEK1.42 billion from SEK282 million.


by Brian Straus

[atalanta89]