Scandinavian Airlines (SAS), caught in severe turbulence over its heavy debt and high costs, failed to present as scheduled on Thursday either its third-quarter results or its plans for dealing with its latest financial crisis. Analysts and reporters were told SAS executives need more time to renegotiate the airline’s debt and prepare its cost-cutting program.
The highly unusual postponement means SAS won’t release details of its current financial situation, or its plan for improving it, until Monday “at the latest,” according to SAS spokesman Knut Morten Johansen. The airline now seems engaged in a dramatic struggle for its survival, after years of heavy losses and tough competition from rival low-fare airlines that have a much lower cost structure.
Johansen put a more positive spin on the postponement, saying that SAS will still present a plan “for how SAS will meet the future, regarding cost-cutting plans, financing and strategy.” He blamed the postponement on several “external factors” over which SAS had no control, and claimed management wanted to present both the airline’s results and its financial plans together.
Swedish newspaper Dagens Industri reported earlier this week that the Swedish finance ministry had pressured SAS’ banks to extend major loans. The Swedish, Norwegian and Danish governments remain SAS’ largest shareholders and Norway’s government also has moved away from previous claims that it would not provide any more new capital to the struggling airline. So now both the banks and the Scandinavian state treasuries may be willing to help SAS once again, but that hasn’t been confirmed.
Few want to see SAS head into bankruptcy. and employee representatives were called in once again to crisis meetings this week. They were to be briefed on what SAS’ board would decide at a scheduled meeting on Wednesday, just before the planned release of results on Thursday. SAS already has said it must cut costs to boost profitability by SEK 3 billion (around USD 400 million).
Executive pay levels ‘unacceptable’
Many think SAS can start by dramatically cutting the salaries of its own top executives. Newspaper Dagens Næringsliv (DN) and other media have been reporting this week that SAS’ overall salary costs are twice as high as those at its arch-rival airline Norwegian.
SAS chief executive Rickard Gustafson, for example, has a wage and benefit package valued at NOK 11.1 million including pension contributions, compared to NOK 1.9 million paid to Norwegian’s founder and chief executive Bjørn Kjos. While SAS’ finance director Göran Jansson gets a base salary of NOK 4.12 million, his counterpart at Norwegian gets NOK 1.56 million. The huge differences extend through the executive ranks, with even SAS’ communications director commanding a salary of NOK 4.1 million compared to Norwegian’s NOK 1.3 million. Since SAS’ new top executives assumed their posts this year, newspaper Aftenposten reported the figures as calculated over a 12-month period.
The sky-high executive pay at SAS, as compared to far lower pay also for executives at low-fare carriers like Norwegian and Ryanair, has infuriated leaders of SAS’ traditionally strong unions, which continue to be asked to accept pay cuts themselves. “I barely have words for it,” Asbjørn Wikestad, leader of SAS Personalklubb in Norway, told Aftenposten. “This is unacceptable. Folks are losing their jobs while others go around collecting enormous amounts. If we’re to get through this (cost-cutting) process now, the leaders must lead the way.”
The contrast between SAS and Norwegian Air was also due to be illustrated later in the day, when Norwegian scheduled a presentation of its already-announced expansion plans including new long-haul routes to the US and Asia. While SAS faces selling off remaining assets such as its ground services operation, its profitable short-haul carrier Widerøe and perhaps even its frequent flyer program EuroBonus, Norwegian is taking delivery of new aircraft and flying high.
Views and News from Norway/Nina Berglund
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