‘We survive only by competing at lower costs’ | Financial

The airline, which is a quarter smaller than KLM in terms of fleet, needs to be significantly restructured. The pilots do not want to cooperate with this for the time being, so they are now working on a restart. Van der Werff started almost a year ago as CEO of the Scandinavian airline, after a career at Avianca, Aeromexico, Qatar Airways and KLM. He was born in Groningen and a fellow student of Foreign Minister Hoekstra and has been recruited to bring SAS out into more stable waters, but the road to that is a challenge.

The war in Ukraine has affected SAS even more because Russian airspace was used extensively based on Scandinavia’s geographical location, but is now closed due to sanctions. “Five extra hours to fly to Asia with the current fuel prices is not possible for us. That’s why we had to put a lot of destinations in the east behind us “, Van der Werff remains sober. He is one of the few Dutchmen in the absolute top in global aviation.

In addition, SAS CEO also has operational challenges in Scandinavia, as in other airports, this summer. The CEO has canceled thousands of flights due to staff shortages, including at suppliers such as catering companies and of course various airports around the world. Then there is the corona. “Then we wind up the tape, I do not believe that transport in the winter surpasses the summer. For I see the corona flare up again. We are not going to lockdowns again, but I certainly expect a higher sickness absence. It will be a difficult winter, I am convinced of that. ”

Russian airspace

Van der Werff’s plan to help SAS recover consists of recapitalization, debt reduction and cost reduction through, among other things, a simplification of the fleet. The fleet now consists of 123 aircraft, before the corona there were around 150. “We have too many large aircraft due to the closure of Russian airspace, so we are now negotiating with the leasing companies as part of the Chapter 11 process.”

The SAS CEO must deal with Sweden and Denmark, which are shareholders in the airline with around 10,000 employees. Sweden recently announced that it would no longer invest additional money in SAS, leaving Van der Werff to rely on itself, its employees and market partners. “We can only do that if we can compete. Debt and costs must go down, and we must do it ourselves. ”

The pilots do not agree with the measures and have been on strike since last week, which has meant that 70% of flights have been canceled for some days. This costs millions, and because of this, Van der Werff has applied for Chapter 11 in the United States. Van der Werff expects the Chapter11 process to take between nine and 12 months, depending on how long it will take to find new investors.

Spine

The business traveler has always been the backbone of SAS, but it has not yet fully recovered. And the question is whether it will come back, because in Sweden greener flight plays a much bigger role than in the Netherlands. Many domestic flights are made in Scandinavia due to the distances. “Sweden is a leader in sustainable aviation and has the strictest rules. In the domestic market, there must already be climate-neutral consequences in eight years, both in Sweden and Denmark. You do not get there with CO2 compensation here, we have to find the right solutions, “says Van der Werff. The CEO is looking for the solution for SAS within cleaner fuel by 2030 and in the future synthetic petroleum on green energy, which Sweden is well supplied with.

Van der Werff has a hard head when it comes to electric flying with large aircraft, ie on batteries. “We are committed to Heart Aviation, which wants to market electric aircraft with 19 seats. For a regular type, the Airbus A320, electrification will take years, and for the very large aircraft, the batteries are too heavy. I think there is a split between the public’s expectations and what is technologically possible. ”

The SAS chief executive expects the growth in passengers to come more from leisure bookings than from business travel. Back to the pilot projects: “We need to move towards a new future where the environmental sustainability, social sustainability and financial sustainability of SAS are linked.”

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