Nordic Flag Carrier SAS 'Fighting for Survival' Amid Plunging Shares

Last year, the Scandinavian flag carrier cut 5,000 employees, or 40 percent of its workforce, and received massive credit tranches from the Danish and Swedish governments, its main shareholders, to survive the crisis and stay afloat.

Stocks of the Scandinavian airline SAS have suffered a major drop, losing 14 percent on the Stockholm Stock Exchange, after its chief executive acknowledged that the company was “fighting for its survival” and had to cut costs.

“When I see what the market looks like today, how our clients are changing, and the size of our debt, it’s absolutely clear that we have to do things very differently”, SAS CEO Anko Van der Werff, who took over in July, told Danish business newspaper Finans. “It is a fight to change SAS so that we have a future”.

SAS is currently facing snowballing problems that include a permanent drop in business travel and costly collective labour agreements, he said.

Van der Werff said he had summoned the main unions for three months of negotiations aimed at cutting costs and increasing flexibility. The overall plan is to reduce costs by SEK 4 billion ($460 million).

“This requires understanding and willingness from everyone”, Van der Werff said. “SAS needs to remain competitive so we can survive, grow, and create jobs”, he said.

Simon Pauck Hansen, executive vice president of SAS Denmark, concurred, emphasising that the pandemic is going further than what was expected in the beginning.

“Changes are needed in SAS to ensure competitiveness. And without competitiveness, the legitimacy of any business disappears”, Hansen told Danish Radio. “We must have a higher efficiency. And it requires a change in terms. It requires that we are at work when the customer is there. It needs some adjustments”, he added, emphasising that the customer shouldn't notice any “fine-tunings” of the internal machinery.

Last year, the Scandinavian flag carrier pink-slipped 5,000 employees – or 40 percent of its workforce – and announced in May this year a credit tranche of SEK 3 billion ($360 million) from the Danish and Swedish governments, its main shareholders, to stay afloat and survive the crisis.

The new loan follows a slightly larger credit of SEK 3.3 billion granted last May, as well as a recapitalisation scheme launched in August, which allowed Copenhagen and Stockholm to expand their shareholdings.

As of now, Sweden and Denmark each own 21.8 percent of SAS, up from 14.8 percent and 14.2 percent respectively before the pandemic. Simon Pauck Hansen said he couldn't rule out further tranches in the future.

Before the pandemic, SAS operated 180 aircraft to 90 destinations. Its main hubs include Copenhagen Kastrup, Stockholm Arlanda, and Oslo Gardermoen.