Ailing airline SAS SAS.ST has launched a cost savings plan and said that it hoped to raise new capital after posting a wider quarterly loss as it grapples with weak demand and tough competition.
The group, which has been struggling for years, said it would fully transform its business, including its network, fleet, labour agreements and other cost structures, aiming to save 7.5 billion Swedish crowns ($799 million) a year.
"The last two years have been the most challenging in the history of the aviation industry ... SAS is now, more than ever, in need of a new start," CEO Anko van der Werff said.
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The "plan paves the way for undertaking a complete revitalisation of SAS' balance sheet and to substantially strengthen SAS’ liquidity position," SAS said in a statement.
The airline, in which Sweden and Denmark each hold a stake of around 22%, secured a three billion crown rescue deal from the two governments in 2020 to keep afloat.
It did not specify how much capital it hoped to raise this time but its CEO later told investors the firm would be able to provide more detail in April.
"The success of the plan and the ability to attract potential new capital relies on SAS fully achieving the SEK 7.5 billion annual cost take-out plan which in turn depends upon SAS stakeholders’ full participation."
Danish Finance Minister Nikolaj Wammen said in an email the government was monitoring SAS' development closely and declined to comment further.
Sweden's Enterprise Minister Karl-Petter Thorwaldsson was not immediately available for comment.
"This is a big cost-cutting plan and it means that SAS addresses that they are a few steps behind their competitors which are ready to move," Sydbank analyst Jacob Pedersen said in a note to clients.
The airline reported a loss before tax of 2.60 billion Swedish crowns ($275 million) for the November-January quarter after posting a loss of 1.92 billion a year earlier.
Sweden Says SAS Plan To Raise Cash Needs "Thorough Analysis"
The above news was followed by news that Sweden, which has a 22% stake in SAS SAS.ST, said that it was examining the Scandinavian carrier's plans to raise capital, suggesting Stockholm was not yet ready to back the airline with more money.
As stated above, SAS said that it aimed to slash annual costs by 7.5 billion Swedish crowns ($805.5 million) across the company over five years, and that it hoped to raise more cash from its main owners Sweden and Denmark following a multi-billion rescue deal in 2020.
Swedish Enterprise Minister Karl-Petter Thorwaldsson subsequently told Reuters that it would take time to analyse SAS' plan.
"The company has just presented a comprehensive plan consisting of many different components. We will include both financial and legal advice in the comprehensive analysis that needs to be done," he said.
"As a responsible owner, it is important to make a thorough analysis of the content of the plan before we give further comments," he said in an e-mail.
Nikolaj Wammen, Finance Minister in Denmark, which also holds a 22% stake in SAS, told Reuters the day before that the government was monitoring SAS' developments closely and declined to comment further.
Loss-making SAS had already been struggling for years in the face of growing competition from low-cost carriers when the pandemic and travel restrictions slammed the aviation industry.