SAS Scandinavian Airlines is reportedly close to bankruptcy with staff set to be advised to take salary cuts or risk losing their jobs, according to reports by The Local Sweden, Expressen, Dagens Industri and YLE. Danish, Norwegian and Swedish governments reportedly sought EU approval for state guarantees to secure an extension to a EUR550 million credit facility with six banks including Nordea, SEB, Swedbank, Danske Bank, DNB, and Royal Bank of Scotland. EU competition and state aid spokesman Antoine Colombani said it has had informal contact with the Scandinavian governments but has not received a formal request to permit state aid. Mr Colombani said, “Of course, any state aid must be notified through and approved by the European Commission. Once we receive a notification of course we will examine what these governments want to do, but I cannot give you any indication on timing at this stage.” SAS, which currently employs approximately 20,000 staff, is to release its interim report on 12-Nov-2012.
SAS Scandinavian Airlines reportedly close to bankruptcy: local media
You may also be interested in the following articles...
SAS: 2Q losses widen after six quarters of improving results. LCCs & SAS growth depress unit revenue
After improving its underlying profit in FY2015 and narrowing its losses in the seasonally weak 1Q2016, SAS suffered a widening of losses in 2Q2016. This was the first year-on-year deterioration in its underlying result for six quarters. It benefited from lower fuel prices and from its own cost savings programme, but experienced plummeting unit revenue.
This reflects the ongoing growth of LCC competition in short haul markets, but is also the result of its own capacity increase. SAS' growth is led by rapid expansion on long haul, where Norwegian is also providing LCC competition. SAS is investing in its network and product and growing its revenue from higher-yielding loyalty scheme members, but these measures do not appear to be giving sufficient support to unit revenue.
These trends are unlikely to dissipate any time soon, and there is now the real prospect that its FY2015 result represented a cyclical peak for SAS. The company recognises the need for further change in order to improve its competitiveness. Strategies to seek labour cost reform can be expected, in spite of a strike call by Swedish pilots.
Norwegian Air: 1Q results continue improving trend thanks to lower fuel. Long haul strategy develops
The Norwegian Air Shuttle group is enjoying a period of good news. It narrowed its underlying operating loss for the seasonally weak first quarter, after returning to full-year profit in 2015 following a loss in 2014. Its 1Q2016 results demonstrate that this improving trend is continuing. Norwegian's 1Q results came soon after the US Department of Transportation (DoT) had given tentative approval of a US foreign carrier permit to Norwegian's Irish-registered subsidiary, NAI.
However, this is not the time for Norwegian to sit back and relax. Its improved profitability is in no small measure due to lower fuel prices, while ex fuel unit cost increased in 1Q2016. In addition, contracts for the leasing out of Norwegian's first A320neo deliveries have been temporarily delayed, highlighting the added challenge of running this new and growing line of business. Moreover, until the DoT approval is final, there may be some nervousness surrounding it.
Meanwhile, Norwegian is growing NAI at its new Rome Fiumicino base, which joins Madrid and Barcelona as major NAI airports with no Norwegian intercontinental routes. As it pursues 40% pa ASK growth over the next several years, these are likely candidates to be its next long haul bases.