SAS works on further financing solutions, optimises fleet

As it looks for further financing and reworks its fleet to fit depleted demand, SAS Scandinavian Airlines (SK, Copenhagen Kastrup) has been working on aircraft sales and sale-leasebacks, has sold B737s to be converted into all-cargo aircraft, and is applying for a government-backed credit facility in Norway. In a conference call to contemplate the company’s fourth-quarter earnings released on December 3, president and chief executive Rickard Gustafson revealed that “significant progress” had been made in cutting costs. SAS has, for example, “finalised the massive redundancy of 5,000 positions”, equating to 40% of the total workforce, which the CEO described as “a great but sad and regrettable achievement”. The airline has striven to adapt its fleet to match demand, delaying some deliveries while older and less fuel-efficient aircraft are phased out earlier than planned. The latter include fifteen B737s, five A340-300s, and one A330-300, Gustafson summarised. Among other types, SAS currently operates fifteen B737-700s, fifteen B737-800s, and nine A330-300s, the ch-aviation fleets advanced module shows. As previously reported, it retired the last of its A340-300s on December 1. Talks to rework contracts with vendors and suppliers continue, “and we have made progress, especially among our wet-lease providers, where we have been able to both reduce overall cost and also shift from fixed to variable cost to a large extent,” Gustafson said. Orders have been deferred on some A320-200neo and A350-900s “through constructive dialogue with Airbus.” Magnus Örnberg, chief financial officer since October 1, elaborated that delivery of two A350s had moved from 2021 to 2022 and 2023; four A320s from 2022 to 2024; and four A320s from 2023 to 2025. There have also been some shorter deferrals of two to five months. SAS is in the process of renewing its long-haul fleet with A350-900s, of which it already has four. It had also aimed to have at least eighty A320neo in service by 2024, ordering an additional fifty of the type in 2018. It currently has thirty-five of these in its fleet. “But we’re not going to be naive. […] No one knows exactly how and when demand will come back. And to be on the safe side, we have said that we will continue to try to find ways to further enhance our liquidity, to build in some headroom for a longer winter than anticipated,” Gustafson said. So, SAS has been looking into both the sale and sale-and-leaseback of some aircraft. Three B737s “will be converted to all cargo operation and we’re looking to do similar things with a small bunch of additional aircraft,” the chief executive said. Niklas Hårdänge, vice president fleet management, later clarified to ch-aviation: “SAS sold three B737-800s to an undisclosed customer who will convert the aircraft for cargo. It’s not for SAS use.”