2000s: A rocky road
The last year of the 20th century had been a disappointing one for SAS. The airline did turn a profit of 1.8 billion krona (€240 million in 2016) but it was about a billion krona down from the previous year, and it was mostly due to non-operational income. The marketplace was crowded, thanks to deregulation, which had made it easier for low-budget carriers to enter the arena.
SAS decided to gamble and in February 2000, placed an order for twelve new Airbus A321s, following an order for ten long-haul planes.
Then came September 11, 2001, and everything changed, including the way people viewed air travel.
"We were literally on our knees within one hour," Roger Dow, president of the US Travel Association, told the Los Angeles Times in 2011.
As if that hadn’t been enough, an SAS plane collided with a business jet on takeoff at Milan airport. All 114 people onboard the planes were killed, making it the worst tragedy in SAS’s history.
When the world economy turned into a recession, SAS’s situation went from bad to worse, and it posted a loss of 1.1 billion krona for 2001. In 2002, SAS was forced to introduce the first of its many cost-savings programs and for the first time in a long time the word “bankruptcy” was brought up in the media.
“Turnaround”, as the savings program was called, was estimated to cut costs by 1,3 billion krona over five years. The measures included a capacity reduction of 16 planes, restructuring of the company, and cutting personnel by 5,500.
Swedish Expressen and Danish Ekstra Bladet ran an extensive series of investigative articles on SAS in July 2002, listing the many problems the airline faced.
“The SAS management has been in a Sleeping Beauty sleep for 15 years,” they wrote and aimed most of the criticism on the airlines’ first Danish CEO, Jørgen Lindegaard, saying his knowledge of the industry was poor.
“When you take a job in an airline, you know something dramatic can happen,” Lindegaard told Expressen. “Had I known about these financial things, the restructuring … well, I would have accepted this position anyway. This is an unfathomable challenge.”
Between 2001 and 2002, SAS went from 1,050 daily flights and 200 aircraft to 900 daily takeoffs and 160 aircraft.
Voices about privatizing SAS were growing louder. The Deputy Speaker of the Swedish parliament had written an op-ed about this already in 2001, and in 2002, the editors of Expressen joined the choir, ending their case with, “the void behind SAS will be filled quickly.”
The losses for 2002 were “only” SEK 450 million, but in the first quarter of 2003, SAS was SEK1.8 billion in the red, “the worst result in SAS history,” according to the CEO who cited the Iraq war, SARS epidemic, and the weak global economy as the reasons behind it.
It was a limping airline that in 2006 celebrated its 60th anniversary. The savings programs had followed one after another, as had gigantic losses and labor disputes. Lindegaard resigned in May 2006, and during the 60th anniversary, Gunnar Reitan was Acting CEO for a few months.
While SAS’s operational result had been positive in 2007, in 2008, Mats Jansson, the new CEO Reitan had kept the seat warm for, announced another savings package. More planes were grounded and another 500 people were let go. “Strategy 2011” aimed to save the company SEK3-4 billion in 2010 and 2011.
In October 2009, Dagens Industri announced that “Time is running out for SAS”.
SAS had divested its ownership in several subsidiaries, sold aircraft, and its share in British Midland, but according to analysts, it wasn’t enough.
“The problem is that SAS is covering holes to keep the ship from sinking, but they’re off-course. They can’t afford a new fleet and they’ve created a strange long-haul strategy in a no-man’s land,” Anders Lindman, an analyst, told Dagens Industri.
SAS simply couldn’t catch a break. Even the Swedish state, the biggest owner, took parts of its business elsewhere, to the low-cost airlines.
Another analyst, Christer Ahström, was fairly optimistic, though. He envisioned an SAS that would be a regional airline that would focus on Europe and the US.
“I think they’ll continue to stand on their own and as long as the long-haul travelers can fly on Star Alliance partners, it’ll work. I don’t think anyone wants to buy SAS with the collective bargaining agreements they have. They’ll just have to figure things out,” he said.
Simple as that.
Published: January 2, 2017
Last edited: March 15, 2017