Business

SAS airline reports deeper third-quarter loss as strike bites

Crisis-hit carrier reports a quarterly loss before tax of €190m

SAS is part-owned by the governments of Sweden and Denmark. File photograph: Getty Images

Fri Aug 26 2022 - 12:07

Crisis-hit airline SAS on Friday reported a deeper May-July loss than a year earlier and said it remained cautious of the upcoming winter as Covid-19 restrictions and political uncertainties persist.

Long-struggling SAS, ravaged by the pandemic and pressured by low-cost rivals, sought bankruptcy protection last month as pilots went on a two-week strike, hoping to emerge within nine-12 months as a more competitive airline.

The carrier reported a third-quarter loss before tax of 1.99 billion Swedish crowns (€190 million) against a year-earlier loss of 1.33 billion crowns.

“The quarter was impacted by major events that influenced the overall result. First and foremost, the 15-day pilot strike in July, which had a severe effect on the overall result,” SAS said in a statement, adding underlying demand for travel was healthy in the quarter.

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Difficult and challenging

To date, the financial impact of the strike has been 1.4 billion crowns, it said.

Nordnet analyst Per Hansen said that as losses were continuing, the coming quarters would also be difficult and challenging.

“This quarter [May-July] is normally the one where SAS earns its money together with the current quarter,” Hansen said in a note.

SAS recently agreed a $700 million (€700 million) bridge financing with Apollo Global Management to fund its reorganisation under US Chapter 11 bankruptcy protection proceedings, although the loan remains subject to court approval.

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Some analysts have said Apollo could become a major shareholder in SAS by converting the loan to equity at the end of the Chapter 11 process.

SAS, which is part-owned by the governments of Sweden and Denmark, said its cash balance at end-July stood at 6.1 billion crowns, down from 8.5 billion at the end of April.

Denmark has pledged to write off some of SAS’s debt and convert some more into equity, as well as to inject new cash, if private investors participate, too. Sweden backs a debt conversion but says no to injecting more cash. — Reuters

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