LONDON – The COVID-19 pandemic is having a significant impact on the aviation industry, and SAS (SK) has been unable to avoid it.

Its operation has changed significantly over the last quarter, with its route network reduced to a few domestic routes in Norway and Sweden.

Notably, this meant for the first time in its history, SK had no scheduled flights internationally from Scandinavia.

The small number of international flights it had been operating was repatriation flights.

SAS started the fiscal year with high demand for its service and reliable performance in both regularity and punctuality. It also reported high passenger numbers, improved market share, and revenue.

The second quarter is where the COVID-19 pandemic started to show, with capacity down 94% and passengers down 96% compared to the same time last year. Its quarterly revenue, therefore, fell nearly 50% to MSEK 5,264.

To combat the sharp decline, SK has implemented a wide range of measures to reduce its outgoings significantly.

Picture from Airbus.

In total, these reductions of fixed and variable cost amounted to SEK 2.4 billion compared to the same quarter last year.

The cost reductions include 5,000 staff position permanent reduction, renegotiated supplier agreements, and payment holidays from most of its lessors. SAS has also elected to postpone aircraft deliveries.

SAS has now secured a three-year SEK 3.3 billion revolving credit facility, 90% guaranteed by the Danish and Swedish states.

The facility assists its financial situation over the already developed and forthcoming difficulties for the airline will face.

Currently, SK anticipates a negative operating cash burn in the range of MSEK 500–700 per month until the end of the fiscal year 2020.

Commenting on how Scandinavian Airlines would be turned around into a post-COVID-19 world was Richard Gustafson, the President and CEO of the carrier.

“Once a plan is in place, I am confident that we can overcome the current challenges and start to rebuild our business based on the strengths of SK, including committed and dedicated employees, a strong brand, and a valued customer offering.”

During the outbreak, SK has operated unusual flights to repatriate Scandinavian nationals from Peru, Brazil, and Pakistan amongst other countries.

Alongside this, it has worked with all Scandinavian governments and the Knut and Alice Wallenberg foundation to keep air bridges for essential medical supplies running.

SAS employees have been working in the healthcare and education sectors, assisting in carrying out public COVID-19 tests and volunteering as substitute teachers in elementary schools.

Like the majority of airlines, SK has modified its boarding and flying procedures.

Its lounges are now closed, passengers are being seated with increased personal space where possible, and hand luggage allowance is limited.

Alongside this, the airline has also removed all loose, non-essential items on board. Additionally, passengers are required to bring and use face masks at all times.

It remains clear that across the airline sector in Europe, more losses will be posted due to the disruptive nature of the Coronavirus pandemic.

When recovery emerges within the next few years, it will be interesting to see how SK will take this strategy going forward or whether it will be minimised even after recovery is complete.

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