New CEO but still billion-dollar losses.
That's what to expect when SAS presents figures for the latest quarter this week.
Rickard Gustafson is gone. In comes Anko van der Werff, most recently from Avianca in Colombia. When 46-year-old When van der Werff was introduced, it was, among other things, the justification for why he was given the CEO job: "his ability to handle crises.".
Then he has come to the right place. Anko van der Werff is taking over a company that has long been financially struggling and, although the third quarter is expected to be better, it is still in the red.
”"Even though passenger revenue will be higher, it will be a weak quarter. I estimate the loss will be 1.8–1.9 billion Swedish kronor," says Jacob Pedersen, an analyst at Sydbank who, among other things, covers SAS.
For SAS, this would now be the least weak quarter in terms of results since the pandemic broke out. Just like for the industry as a whole, there has been a recovery in the past six months.
In a survey conducted in July by the industry organization IATA, three out of four companies surveyed stated that they are now seeing reduced losses and half, 52 percent, predict that demand will have fully recovered to pre-pandemic levels by 2023.
It's about However, this is mainly about leisure and leisure travelers who have started to resume flying as vaccination has picked up pace around the world and restrictions have eased. For Anko van der Werff and SAS, however, there remains a big question mark – when and to what extent will business travel start again?
”"SAS is probably one of the European companies that is most dependent on business travelers," says Pedersen, who estimates that SAS loses between 5-8 billion annually in revenue due to reduced business travel.
”"You have to find a way to compensate for this loss of revenue, but it's not easy. If you lose 3-5 business class passengers, you need to replace them with 10-15, maybe even more, passengers further back in the aircraft," he says.
However, the uncertainty surrounding the company has hardly stopped small savers from stepping into the company. Avanza, for example, now has just over 88,000 individual shareholders, almost as many as stock market giant H&M (92,000). They have certainly seen SAS shares rise eleven percent this year.
On the other hand The Stockholm Stock Exchange's OMXS index has climbed 28 percent this year.
Pedersen now does not expect Anko van der Werff to release any extensive program statements for SAS and any future visions; that will probably have to wait until the fourth quarter.
One challenge, he points out, will be convincing staff to agree to further cost savings, something that several other companies have now succeeded in doing, for example regarding salaries.
”SAS will need to reduce costs further in the future, I am absolutely convinced of that,” he says.
Source: TT
