SAS - Anko van der Werff kikker inn i glasskulen - AW&ST

 

SAS Taking Conservative Approach To Summer Capacity

Kurt Hofmann February 24, 2023

 

Credit: SAS

Scandinavian Airlines’ (SAS) fiscal 2023 first quarter (Q1), which is typically a lot weaker than other quarters, featured steady increases in passengers and revenue. 

Nonetheless, the carrier plans a conservative approach for its summer program and is ruling out a return to its full Asia program as it is not possible to fly over Russian airspace.

The carrier reported a SEK2.5 billion ($240 million) pre-tax loss for the three months to Jan. 31, a small improvement from its SEK2.6 billion loss for the same period a year prior.

During the airline’s fiscal Q1 results call Feb. 24, SAS President and CEO Anko van der Werff said the carrier is prepared for a healthy summer 2023 and will add 20 new routes. “This means that we will have a total of more than 5,000 weekly flights to over 100 destinations this summer,” Van der Werff said. The new summer program includes more than 200 routes.

Reflecting on recent news that Lufthansa plans to reduce 34,000 flights to stabilize its summer 2023 operations, SAS is following a different process. “We are more conservative with the planning for the forthcoming summer. We will take the other approach and add more capacity, if necessary,” Van der Werff said, as the entire SAS fleet is manned for the summer operations. It is a very different playing field in 2023 and will be far more under control, thanks to a more conservative approach, he added.

Asked by Aviation Daily about long haul operations and what the closed Russian and Ukrainian airspace means for SAS’s Asian operations, the CEO said, “let me say this is the first anniversary of the war in Ukraine, and it is terrible to see still what’s going on. It is also clear to see by now this will be not over in the next few weeks or months.”

Van der Werff told Aviation Daily that the carrier is constantly accessing what that means for SAS but made clear that a comeback of its full Asia network is unlikely. “We are not going back to as many Asian destinations that we flew prior to the pandemic,” he said. “And I’ll have to see a structural solution to the Russian-Ukrainian war before we are able to do that.”

He believes that over time SAS can absorb the missing Asian routes and grow to the U.S. “But in order for Asia to really go back, then you need Russian overflying to open up again,” van der Werff added.

Related to that, SAS will launch new Aalborg-New York services starting in April, operating the Airbus A321LR on the route. The carrier is also re-launching its Copenhagen-New York JFK services in its fiscal second quarter (Q2), which will begin with five weekly flights and ramp up to daily flights in the summer. 

As of Jan. 31, SAS operates 129 aircraft, of which 28 are under wet-lease contracts. Four of SAS’s Boeing 737-800s are undergoing a phase-out process.

SAS has a total of 31 aircraft on order. Thirteen A320neos and five Embraer E195-100s for SAS Link are expected for delivery this year. In 2024, seven A320neos and two A350-900s are scheduled, as well as four A320neos in 2025.

During fiscal Q1, the carrier took delivery of two A320neos. “We are one of the biggest operators of this type,” CFO Erno Hildén said. The two A320neos are funded by competitive sale and lease contracts.

The quarter also demonstrated a comeback to pre-pandemic levels for SAS. Total number of passengers grew by 48% compared to the same period last year, Van der Werff said.

Load factor reached 69.3%, nearing SAS’s pre-pandemic levels of 69.5% for its fiscal 2020 Q1. At the same time, currency-adjusted passenger yield increased almost 7% compared to Q1 2022.

On Jan. 13, SAS concluded its lessor negotiations as part of the chapter 11 process. SAS reached agreements with a total of 15 lessors, representing 59 aircraft. Through the amended lease agreements, SAS expects to achieve its targeted annual cost savings of at least SEK1 billion in reduced aircraft lease expenses and annual cash flow items relating to aircraft financing.

The SAS restructuring program “Forward,” which was launched in February 2022, is targeting SEK7.5 billion annual cost savings by fiscal 2026. “This is a journey for us,” Van der Werff said. “And we are making progress.”

SAS continues to work toward meeting certain conditions under the debtor-in-possession (DIP) term loan agreement to access the second tranche of DIP financing as soon as possible during the fiscal Q2 (February–April 2023). The carrier also expects completion of the chapter 11 process in the second half of 2023.

Looking ahead, Van de Werff said economic uncertainty is still a headwind, but a strong recovery in passenger demand is expected to continue.