(AOF) – SAS, the main Swedish airline, has published its results for the third quarter of 2022 ended July 31. The carrier increased its loss per share to 0.25 Swedish kronor (SEK), from 0.18 SEK, at the same time a year ago. It also posted a negative net result of 1.84 billion, compared to 1.33 billion SEK in 2021, while its revenues increased to 8.58 billion, compared to 3.98 billion SEK in the third quarter of 2021, i.e. below the FactSet consensus targeting SEK 10.83 billion.
Passenger traffic jumped 143% but operating costs also followed an upward curve at +101%. In the wake of the Covid-19 pandemic, most airlines have struggled to reposition their operations. SAS was no exception. It therefore had to cut its summer schedule by 4,000 flights out of a total of 75,000. SAS pilot unions went on strike from July 4 to July 19, resulting in the cancellation of some 4,000 flights and affected more than 380,000 passengers. SAS also announced that it would remove 1,700 from its flight schedule for the months of September and October.
On July 5, a voluntary “Chapter 11” procedure, which allows a company to restructure under the protection of US bankruptcy law, was launched in the United States to accelerate the SAS Forward transformation plan, which should lead to a financially stable and profitable airline. Earlier in the year, SAS said it had launched plans to cut annual costs by 7.5 billion Swedish crowns, among other things.
As part of its transformation plan, the company also plans to raise at least SEK 9.5 billion of new shares and convert more than SEK 20 billion of debt into ordinary shares. The proposed new shares and debt-to-equity conversions will result in very significant dilution for existing shareholders.
Last May, SAS said it would not give guidance on financial performance for the next fiscal year due to the geopolitical situation in Eastern Europe and the lingering effects of the Covid-19 pandemic. It reiterated these comments when publishing its results for the third quarter of 2022.
AOF – LEARN MORE
Once again weakened results for European airlines
With fuel accounting for up to 35% of their costs, professionals believe European airlines are unlikely to return to profit until 2023 or 2024 at the earliest. These players predict that energy prices will remain high at least until 2023. The International Air Transport Association (IATA) has announced a forecast of cumulative losses of 9.7 billion dollars in 2022 for airlines at around the world, it will still be necessary to wait until 2023 to see the return to profits on a global scale, due in particular to the surge in oil costs and the rise in labor costs. On the positive side, travel demand seems to be resisting the uncertainties caused by the international economic and political situation. However, the uncertainties concerning the Covid, the war in Ukraine, as well as the rise in prices are strengthening last-minute reservations. According to Iata, only 8% of international reservations made at the end of May went beyond September.
The social climate is deteriorating in low-cost companies
These companies are benefiting from a very strong recovery. They had already managed to monopolize 40% of air traffic in 2021, this proportion could even rise to 50% this year. However, strike movements have affected the activity of Volotea, EasyJet and Ryanair, with confrontations over pay and working conditions. In general, the sector faces a shortage of personnel. After having severely cut their workforce in 2020 and 2021, companies and airports must urgently recruit to support the relaunch of activity.