Scandinavian Airlines (SAS) hit the front page of most major Norwegian newspapers on Thursday, for all the wrong reasons. Once again, the once-proud flag carrier had reported huge losses, and not many bail-out options remain.
“Don’t give them more money,” blared the front page of newspaper Dagsavisen, quoting the business policy spokesman for Norway’s most conservative party, the Progress Party (Fremskrittspartiet, Frp). Harald T Nesvik of Frp said he was asking Trade Minister Trond Giske for a guarantee that the state won’t put up more capital to keep SAS aloft. “The state has done that time and time again,” Nesvik told Dagsavisen. “There must be an end to that now.”
Nesvik was reacting to SAS’ announcement Wednesday that it logged another huge loss, of SEK 3 billion, for 2010. Fully SEK 2.6 billion, though, included one-time costs tied to restructuring and court cases, and the company also was quick to point out that it lost heavily on the Icelandic volcanic eruption, also an extraordinary cost of around SEK 700 million.
The good news was that passenger traffic was up 8.5 percent on intercontinental flights and 4.7 percent overall, and that major staffing cuts has trimmed the payroll on a permanent basis.
The Norwegian government owns 14.3 percent of SAS, and went along with the Swedish (21.4 percent) and Danish (13.9 percent) governments in pumping fresh capital into SAS. New SAS CEO Rickard Gustafson remains optimistic that the airline has a good chance of delivering positive results by the end of this year.
Another 600 SAS workers will likely lose their jobs as cost cuts continue. The company has already sold off billions worth of assets and, reports newspaper Dagens Næringsliv (DN), doesn’t have much more to cash in on. The airline must start making money, if it’s to survive.
Reports have popped up with regular frequencyy over the past few years that SAS’ Star Alliance partner Lufthansa of Germany is waiting in the wings to take over SAS. Talks have been confirmed, but executives have denied any deal is in the works.
Gustafson and his finance director Mats Lönnqvist instead dared to talk about the prospect of profits in 2011. “We have crossed off most of the problems, we’re soon rid of all the old sins,” Lönnqvist said. Top executive John Dueholm noted that SAS earlier was a company “with many investments in airline-related businesses (like hotels). Now we are a more traditional airline,” he said, following earlier efforts to focus on SAS’ core business.
“This is the first time in I don’t know how many years that I go out with a prognose,” Lönnqvist said. Cash flow has improved markedly, so profits are on the horizon, he claimed, barring, of course, more volcanic eruptions or other crises. There were reports on Thursday that the volcano in Iceland may be acting up again, meaning SAS’ prognoses could go up in smoke.