SAS Reports First Quarter Net Loss of $249 Million on 76 Percent Revenue Decline to $277 Million
For the first quarter of the company’s financial year (November 2020-January 2021), SAS reported a net loss of $249 million or ($0.03) per common share on a year-over-year revenue decline of 76 percent to $277 million.
On Thursday (February 25, 2021), SAS reported their first quarter financial results for the period from November 2020 through January 2021. The company reported a net loss of SEK 2.1 billion (US $249 million) or SEK (0.28) per share (US $0.03) on a 76 percent year-over-year revenue decline to SEK 2.3 billion (US $277 million). During the first quarter SAS’ CEO Rickard Gustafson announced his departure from the company, effective July 1, 2021, after ten years of service. SAS also extended their charter partnership with Apollo for three years during Q1, with a contract valued at SEK 3.4 billion (US $412 million). Additionally, the company contracted and utilized a NOK 1.5 billion (US $179 million) three-year credit facility fully guaranteed by the Norwegian Export Credit Guarantee Agency.
In Thursday’s announcement, SAS’ President and CEO, Rickard Gustafson, said,
“The pandemic continues to have a severe negative impact on the whole aviation industry. An increase in number of cases has led to more stringent travel restrictions, with a consequent reduction in demand during the quarter and stalled recovery for the entire travel industry. However, the development of vaccines and vaccination programs provide hope that restrictions will ease and that we will see an increase in travel toward summer 2021.”
SAS’ capacity for the first quarter declined 75 percent year-over-year and 29 percent versus the previous quarter, attributable to weak and volatile demand, while passenger numbers were down 5.3 million versus Q1 last year and lower by 900,000 compared to the previous quarter. Although costs were down 60 percent versus the same period last year, the savings were not sufficient to compensate for the loss in revenue. The company ended the quarter with a total of SEK 4.7 billion (US $569 million).
SAS continues to restructure operations and has cut variable costs by over 70 percent. The company has also completed their redundancy process, impacting 5,000 positions and is still using temporary layoff schemes throughout Scandinavia. These measures have reduced the company’s year-over-year personal expenses by nearly 45 percent. SAS has also renegotiated supplier agreements, resulting in the postponement of nearly SEK 700 million (US $85 million), further strengthening their liquidity position. The company has also postponed deliveries of new aircraft from Airbus and accelerated the phase out of older less fuel-efficient aircraft, including five Boeing 737s.
As vaccinations gain momentum, the carrier has noticed pent-up demand and pending the easing of travel restrictions, SAS is preparing to reopen 180 routes for summer 2021, mostly in Scandinavia and Europe.
SAS is the leading airline in Scandinavia, normally carrying over 30 million passengers annually from its main hubs in Copenhagen, Oslo and Stockholm to 125 destinations in Europe, the US and Asia (pre-pandemic figures). The company has targeted a reduction in carbon emissions by 25 percent by 2025 compared to 2005 levels and hopes to transition to 100% biofuel for domestic flights by 2030. SAS also offers ground handling services, technical maintenance and cargo services. The carrier is a founding member of the Star Alliance, which offers an extensive global network.