SAS facing higher costs and fuel prices ahead of Chapter 11 exit

Higher costs from adverse trends in currencies and fuel prices are cloaking a stronger operational and commercial performance at Scandinavian carrier SAS.

The airline, which is on course to emerge from US Chapter 11 bankruptcy protection next year, confirmed that cost reductions across the business “remain in focus”.

SAS is set to exit the Star Alliance and join rival SkyTeam after founders Air France-KLM backed a $1.1 billion consortium bid to support the exit from Chapter 11 in early 2024.

The carrier initiated the court-supervised process in the US by voluntarily filing for chapter 11 last July, warning at the time that a strike by 1,000 pilots put the future of the carrier at risk. 

The airline today reported a cut in full year losses for the year to October as passenger carryings rose by 33% year-on-year to 23.7 million.

President and chief executive Anko van Der Werff, releasing annual financial results, said that “steady progress” was being made in the Chapter 11 process and an associated SAS Forward restructure plan.

“As part of the transaction, SAS also intends to eventually exit the Star Alliance and join the SkyTeam Alliance, of which Air France-KLM is a founding member,” he confirmed.  

“This move towards a partnership with SkyTeam determines a clear path forward for the company. 

“Through the completion of this process and the opportunities presented by being part of SkyTeam, we will be able to further enhance SAS’ offerings for the benefit of our colleagues, customers and communities. 

“This is a truly exciting step for SAS. However, it is important to note that nothing is changing immediately. SAS is still part of Star Alliance and our EuroBonus members will continue to enjoy their usual benefits when flying on our partner airlines. 

“Members can continue to accrue and redeem points – just like today, and their benefits when they fly with SAS will not be impacted.”

He added: “The higher costs from adverse trends in currencies and fuel prices are cloaking a significant part of the achievements from stronger operational and commercial performance.

“Cost reductions across the business remain in focus to secure our cost competitiveness, and total operating expenses for the quarter ended at SEK 12,681 million. 

“Many of the cost efficiencies of the SAS Forward plan are ramping up over time, and some have been implemented but cannot be recognised in our financial results until after emergence from Chapter 11, including cost savings from the fleet restructuring.”

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