Airlines in a Crisis

The numbers SAS released in December 2020 reveal only 3/5 cargo income in 2020 compared to 2019. That is 700 million lost and probably a lot more since the potential has shot up.  This is leading one to believe SAS could have done a lot more and that the company haven't taken advantage of what ever they could make money on in the pandemic market. Using the assets they are locked into and are paying for. And this failure of flexibility is ultimately the fault of the CEO Gustafson.  Lack of aggressive local suppliers could be the reason Middle Eastern carriers now is moving into the Scandinavian Cargo market. And once they are in they could be difficult to dislocate. Remember exporters are not as sentimental with what airline they pick as local politicians with their travel expenses refunded by the taxpayer, ref some mayors boycott of Wizz.  One can also see from the numbers how having the actual flying of ones regional network outsourced lead to lack of flexibility in time of crisis

Gustafson in SAS has taken his hat and gone, to a different kind of business all together.  He has been controversial in recent years, How he received significant bonuses after getting other employes to reduce their renumeration packages in recent crisis did not help SAS when pilots went on strike a couple of years ago.  Maybe his greed got the better of him and he foresaw that for the coming years his performance bonuses would not mount up to much. Specially since most airline have negotiated multiyear CoVid19 reductions in the pay of staff and therefore will have problems restoring senior managment perks faster or significantly higher in this period. His share options and other renumeration schemes is also probably solidly underwater after the refinancing SAS went through in 2020. Resulting in any financial loss by leaving would be minimized.   What should SAS look for in their next leader.  First someone who can him/herself show moderation and not only demand it from others.  Somebo

SAS have abandoned their bases in 2 airports in Norway. One of them serves the county's 3 largest city Trondheim and the other serves the oil capital of Norway Stavanger. Since Norwegians are early risers there remains question over if there still will be first wave flights out of these airports. Low costs don't run first wave out of non base locations ince then they would have to overnight crew in hotels. That is one of the reasons Ryanair have(had) over 80 bases around Europe. A low cost principle is every crew home in own bed at night. Now SAS is what is called a network airline that offers a certain amount of service. However as such it is not a very profitable one. The argument is that crew from other bases can overnight in hotels for a first wave departure but this rises the cost considerably. Not only the accommodation and food costs but also the crew on the last flight in can't really fly the first flight out because their rest period will be to short. And if th

Looks like some airline systems are not suited to quick adjustments in the necessary flexibility of the schedule. As CoVid19 fears lightens the careful comeback steps of airlines are being overtaken by a surge in customer demands as a result of constant new re-openings of borders. Prices are going up without airlines responding quickly with additional flights. Sample the prices close in for the 1 hour Oslo to Copenhagen route lay above Euro 500.- It used to be in the 120.- range and have been sold as low as35.- Many airlines are used to a long time perspective looking at the forward bookings weeks and months in advance. That is no good in what is more like a suddenly emerging market. When customers in addition are vary about booking long in advance due to sudden and the airlines lack of immediate refunds for previous  flight cancellations, they therefore book only for next week or the week after. Then you need to add flights in that time perspective. It is not a difficult operatio

Last years plan of decorating the edges of the accounts with removing a few new non profitable routes seems like the equivalent of putting lipstick on a pig. Much more needs doing and I doubt the current management are the ones to do it, except for some financial tinkering. They certainly do not  seem to have the airline experience needed, or from the right airlines, to know what makes a Low Fares carrier a Low Cost. Neither do the new ones added to the management team recently, who have absolutely no airline experience whatsoever. Are they trying to make Norwegian into a shopping mall or think the website rather than actually flying passengers and stuff is what will make the company profitable. There are certainly many steps the airline can do to make it more like the model of the industry Southwest. Where the principle of Low Fares Low Cost was first modelled and who have been profitable in nearly all of the years since, with very little industrial strife to boot. Take the best

He was on a loose footing during the crew strikes last year when his own milking of the company, shortly after getting his crews agreeing to personal cuts, came to the fore. Now it is clear he neither built up enough buffers in the good years or took action fast enough when the millions started running out seriously much faster than they where coming in. How do you manage to loose all your shareholder funds in a quarter where the pandemic for the  mostly was somewhat absent and only did real damage in the last 2-3 weeks. Qustions need to be asked whether loosing all the funds during the winter and then reestablishing them during the summer has been a regulaire thrait over the years. In that case somebody have been compensated way to well, including the CEO himself. Not at all according to the comapany's real overall results. In general the pandemic learns us that top managment compensations need to be even less concentrated on short term quarterly and yearly goals, and much mo

Scandinavian Airline Systems divulged today that its its share owner value at the end of the quarter were -65 million Skr and the company is technically bust. That explains why it didn't take up the loan offer from the Norwegian government that demanded a ownership ratio of 8%.The swedish and danish loans can then neither been seen as normal business loans since they where given to a company with in reality no share holder funds whatsoever. 65 million Skr might not be such a large sum for an airline, but normally one would adjust sample the Goodwill account to see too that one at least was on the postive side with shareholder funds. Have the company maximized the crisis for the purpose of gaining political momentum for their bailouts, to such an extent they are in legally murky waters. Even though they are going for a crisis issue of new shares it doesn't change the fact that in the meantime the company is being run for the creditors money. Is this the new normal. As long

Some airlines are singing the poor man tune to their staff at the same time as they are announcing postivity about the future to the stock markets. Can their eagerness to plead the crisis to get support and cheap loans from governments combine with the need to keep their share prices high to please owners and secure the share price their own bonuses and share options depends on. The Ryanair unions are certainly copping on to that not every thing is like it seems and telling the airlines management they can't have it both ways. Themselves agreeing only to a 1 year cut in their own salaries while saying to their staff that they must take a 5 year cut. https://uk.reuters.com/article/uk-health-conornavirus-ryanair/unions-say-ryanair-exaggerating-covid-threat-to-undermine-conditions-idUKKBN22W1YZ This reminds me of how healthy a bonus the SAS CEO got out of negotiating down his staff terms and conditions while that airline was in a crisis a few years back. Even in a crisis the have