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Scandinavian airline SAS launches drastic cost-cutting program

Ailing Scandinavian airline SAS on Tuesday announced a major cost cutting plan, as the carrier faced further heavy losses.

Published: 22 February 2022 13:10 CET
SAS planes at Stockholm Arlanda airport
SAS planes at Stockholm Arlanda airport in March 2020. The airline on February 22nd 2022 announced a major costcutting plan. Photo: Jonathan NACKSTRAND / AFP

Under the new plan the company will reduce costs by 7.5 billion Swedish kronor ($800 million, 710 million euros) annually.

“Absent fundamental change,” the current situation in the airline sector, which is plagued by the economic fallout of the

pandemic, “will quickly exhaust SAS’ cash resources,” the carrier said in a statement.

The “full transformation” of the business will affect “its network, fleet, labour agreements and other cost structures”, the company.

Called “SAS Forward”, it will notably result in a “redesigned fleet” which included a “refocusing” on long-haul flights, the company said. 

SAS, which already cut 40 percent of its workforce, 5,000 staff, in 2020, did not mention new job cuts.

The group did not specify when it expected to achieve the 7.5 billion annual reduction in its costs.

Last year, SAS widened its losses after an already disastrous 2020, with a net loss of just over 2.4 billion kroner, with rebounded turnover of about 5.5 billion. 

In the early hours of trading on the Stockholm stock exchange, SAS shares, which have taken a hit in recent days amid concerns about its financial situation, gained over five percent to 1.13 kroner. 

At its current price, however, the company is only worth about 800 million euros.

SAS has benefited from several aid and recapitalisation plans since the start of the pandemic, mainly funded by Sweden and Denmark, which each own 21.8 percent of the company.

READ ALSO: SAS shares plummet after analysts warn it risks going bankrupt

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BUSINESS

Why beer could soon cost even more in Denmark

Denmark is not exactly known for having low prices for alcoholic beverages, but beer could soon be even costlier in the Nordic nation.

Published: 17 February 2022 17:14 CET
Why beer could soon cost even more in Denmark

Two of the world’s largest breweries have warned that higher production costs, which could be passed on to customers in 2022.

Both Heineken and Denmark’s own Carlsberg have suggested higher prices are on the horizon.

Carlsberg’s CEO Cees ‘t Hart recently told Danish newspaper Børsen that the brewery is currently in negotiations with customers, which would see Carlsberg receive higher payments for supplying its beer products.

Heineken signalled price increases on Wednesday, when the Dutch company published its annual results. Higher production costs would mean the price of beer will increase, Heineken said.

Statements from the two companies mean customers should prepare for more expensive beer in the near future, according to an analyst.

“We have already seen that things have already got more expensive in areas like dairy, which have also been hit by high raw material costs,” said Per Fogh, stockmarket analyst with Sydbank.

“We can also see that breweries have been hit by these high raw material costs. You can therefore expect beer to get more expensive in 2022,” he said.

Heineken said that it expects production costs to go up by around 15 percent, although this does not necessarily mean the price of a glass of beer will go up by 15 percent.

“They also have other levers they can pull so as to affect some of these production cost increases,” Fogh said.

“I would expect it to be under 10 percent,” he said in relation to how much beer prices could go up.

Carlsberg and Heineken are the third and second-largest breweries in the world respectively, with Belgium’s AB Inbev the largest.

READ ALSO: Danish beer giant Carlsberg announces increase in prices

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