DALLAS – SAS Scandinavian Airlines (SK) today released its Q4 2022 financial results and described how it was progressing through its transformation plan and meeting important milestones.
Notably, SK transported the highest number of passengers since the onset of the pandemic. Capacity increased 15% over Q3 and grew by 52% year-over-year. SK also says that its “Customer Satisfaction Index” is increasing, leading, the airline says, to a higher level of repeat customers.
SAS enjoyed the benefits of this summer’s surge in demand and saw that trend continue through Q4. SK expects to see a repeat of that cycle in 2023 and is rehiring/hiring to meet the expected demand.
The scope of U.S. law in determining whether Chapter 11 is applicable is very broad. The U.S. Bankruptcy Code allows businesses to declare bankruptcy if they have assets or operations in the United States. Technically, any airline that operates flights to the U.S. falls under this definition.
SAS voluntarily filed for Chapter 11 bankruptcy protection in the U.S. in July. The airline is making progress in its SAS FORWARD plan to emerge from that protection. In August, SK secured US$700m debtor-in-possession (DIP) financing from Apollo Global Management, of which US$350 was drawn in September.
This arrangement allows SAS to continue to operate under Chapter 11 while the airline also strikes deals with lessors to reach cost-saving initiatives in line with SK’s objectives. As of November 30, new agreements had been reached with 13 lessors on amended terms and conditions for 46 aircraft.
The 5.5-year collective bargaining agreements reached with its pilots’ unions in July will increase flexibility and productivity. Those agreements, however, are still subject to US court approval.
During the quarter, SK signed a letter of support with Heart Aerospace for the option to add their new electric aircraft, ES-30, to the SAS regional aircraft fleet.
SAS anticipates that it will complete its court-supervised emergence from Chapter 11 in the second half of 2023. As additional legal proceedings are likely in other jurisdictions than the US, the airline offers no assurance that there will be any recovery for the shareholders of SAS AB.
However, SAS expects that its operations will be unaffected by any legal proceedings and will serve its customers as normal.
For the quarter, earnings before tax ended at negative SEK1.7bn (US$161.5m). As with all airlines, currency exchange rates, inflation, and jet-fuel prices have had a strong negative effect on financials. The cash balance at the end of the quarter was SEK8.7bn (US$826.5m).
This winter, SK will open new routes and add flights to both classic ski destinations and warmer holiday locations. It aims to reach 170 routes and 90 destinations. SK is returning to Miami (MIA), Sälen/Trysil (SCR), Innsbruck (INN), and Salzburg (SZG).
Featured image: SAS currently has eight A330-300s in service. Photo: Mateo Skinner/Airways.