SAS Warns Much More Is Needed to Restore Financial Health

SAS AB, which is working its way through a chapter 11 restructuring in the U.S., warned that much more needs to be done to persuade stakeholders to invest in the ailing Scandinavian airline, Bloomberg News reported. The airline is also having to overcome the effects of a pilots’ strike and travel disruptions that have hampered its important summer season, just as the price of kerosene has skyrocketed and inflation is accelerating. “Cost cutting across all SAS remains a focus to ensure our cost competitiveness,” the Stockholm-based airline said in a statement on Friday as it announced third-quarter results. It has identified “the vast majority” of the 7.5 billion kroner ($707 million) in annual spending it needs to cut. It reported total operating expenses of 24.4 billion kroner for the nine months to July, up 10.8 billion kronor after adjusting for currency effects. The tri-national airline made significant progress on both its staffing crisis and financial restructuring plans over the summer. Earlier this month, Apollo Global Management Inc. agreed to provide the company with a loan known as Treasury Financing of approximately $700 million to help it through its chapter 11 bankruptcy proceedings. In addition to the loan deal with Apollo, SAS is nearing the results in talks to renegotiate contracts to reduce leasing costs and “right size” the fleet, CEO Anko van der Werff said in an interview. “We are making progress on our ongoing talks,” he said. “I think they’ll last a few more months.” In August, the company’s pilots also agreed to a collective bargaining agreement the airline and unions struck last month to end a 15-day strike. The July strike hit SAS at its busiest time of the year, when it was forced to cancel 3,700 flights, affecting 380,000 passengers and costing $135 million. Read more.