Burning of 1,850 million per month – E24

– We expect weak cash flow from operations in the first quarter of 2021 (Nov 2020 to Jan 2021, journal.anm.) Due to low demand during the winter season, combined with increased refunds, he said outgoing SAS CEO Rickard Gustafson at December.

On Thursday, the company made the decision and shows how dramatic the corona pandemic is for the Scandinavian airline.

The company accounting shows that SEK 5.5 billion left the coffers in the quarter. This corresponds to an average of NOK 1.85 billion per month.

During the quarter, SAS received SEK 1.43 billion through a new loan guaranteed by the Norwegian government, which SAS applied for and was granted at the end of 2020. At the same time, the company paid off part of the debt, so this item does not affect the big picture in cash flow.

Much of the reason cash flow dropped so drastically was ticket refunds to customers who did not travel. SAS claims 2.1 billion in refunds were paid during the quarter.

The company has received much criticism for the time it has spent reimbursing canceled trips. The company now reports that they are “up to date” and that they remain within the “seven day requirement” of processing time.

Additionally, 700 million were spent on deferred payments starting in 2020 and restructuring costs.

Excluding this, 2.7 billion SEK flowed in the quarter, or about 900 million NOK per month. This is well above the $ 500 million to $ 700 million level, which SAS management thought last year was the level they would be at consistently.

Last year SAS received 12 billion SEK in fresh capital through a crisis package in which the governments of Sweden and Denmark in particular, as well as the Wallenberg family, contributed large sums of money. Additionally, 1.5 billion was received from the Norwegian aviation loan guarantee scheme.

Without this money, the SAS coffers would have been empty for a long time. The company claims that during the first quarter they went from a cash balance of SEK 10.2 billion to SEK 4.7 billion.

P.S! SAS announced in April last year that 5,000 employees would lose their jobs. Much of the reduction was completed towards the end of 2020 and thus incurred costs related to the reduction.

Waiting for more traffic into the summer

– The pandemic continues to have serious negative effects on the entire aviation industry. An increasing number of infection cases has led to tighter travel restrictions, with consequent reduction in demand during the quarter and an industry-wide collection disruption, CEO Rickard Gustafson says in the quarterly report.

– The development of vaccines and vaccine programs still gives hope that restrictions will be lifted and that we will see growth in travel towards the summer of 2021, he continues.

In the same way as in the previous quarterly report, SAS does not dare to provide any formal guidance or forecast for the time to come. The uncertainty that the pandemic brings with it “makes it impossible,” the company writes.

However, the airline writes that they are preparing to reopen 180 direct routes this summer, “mainly within Scandinavia and Europe,” as travel restrictions are eased. It is also completely dependent on the deployment of vaccines, notes the company itself.

“Demand will likely remain very limited for the foreseeable future, but we expect demand to reach more normalized levels in 2022,” SAS writes.

SAS also believes that the passenger mix will be geared more toward leisure travelers in the future, “placing even greater demands for flexibility and seasonal adaptation on our operations.”

Postpone air expenses and supplies

To ensure the liquidity and financial position of the company, SAS has taken a series of drastic measures in the past year, as have other airlines.

SAS has completed the announced reduction of around 5,000 positions and still uses layoffs heavily.

In addition to having deferred payments to suppliers of 700 million from 2020 to 2021, the company claims that it has “renegotiated a large number of agreements with suppliers.” As a result, SAS will also have deferred payments of almost 700 million in 2021.

Another important piece is the airplanes.

SAS has already agreed with Airbus on delays on several aircraft deliveries. This, combined with the fact that older Boeing aircraft have been phased out faster than planned, means that SAS has reduced the size of its fleet during the pandemic.

In the fourth quarter of last year, SAS got rid of the last and old long-haul aircraft of the Airbus A340 type. In the first quarter, five older Boeing 737s were phased out, while three new Airbus A320neo entered.

In 2021, SAS will receive another A320neo, two long-range A321neo and two Airbus A350s.