The board of the airline SAS gained authorisation to implement a new issue of a maximum of 66 million ordinary shares during an extraordinary shareholders’ meeting on Friday. This corresponds to almost 20% of the number of common shares outstanding. It remains unclear whether the board is going to use the mandate, and if so, when.
On Friday the airline’s shares climbed after SAS presented new forecasts for the 2017/2018 financial year. SAS expects profits before tax and one-off posts to be between SEK 1.5 and 2 billion. This would constitute steady progress from the recent financial year.
The forecast indicates the company is in a significantly stronger position than several years ago, says Jacob Pederson, aviation analyst at Sydbank.
On Friday morning, SAS announced the airline will hold an extra meeting on 3 November to seek authorisation for a directed share issue. If the application is approved the company will have the right to issues 66 million common shares, 30% of the total common shares.
Principle owners Denmark, Sweden and Norway are expected to back the request. However in press release from the government, Enterprise Minister Mikael Damberg says the state is not going to buy shares as it is not a long-term owner in SAS
In Dagens Industri today Christian Clemens, BRA, Rickard Gustafson, SAS and Bjørn Kjos, Norwegian, address the government’s plans for an aviation tax stating there are more effective ways of tackling emissions than through the “symbolic” tax and present “joint targets for how Sweden can lead the way for more sustainable aviation by 2030”.
The Swedish aviation industry has a joint ambition to halve fossil carbon dioxide emissions from domestic flights by 2030, from 2005 through more effective aircraft and a higher proportion of bio-fuels.
The entire aviation industry, they write, is working to create a market for large-scale bio-fuel production. Investing in more fuel-efficient planes is significantly more effective than bringing in an aviation tax. They believe the proposed tax would reduce accessibility and potential for growth. Under the first year alone it is estimated the aviation tax would mean 7,000 fewer jobs and GDP loss of almost SKr 4 billion. In the best case scenario the tax would bring emissions down by 0.2%. Sweden needs aviation not least to achieve the government’s goal for regional growth.
The airline SAS is to set up a new air operator certificate in Ireland and two operative bases in London and Spain as a measure to reduce staff costs and better meet low price competitors. SAS’s Swedish press officer Fredrik Henriksson says that the airline’s cost base is around 20% higher than its newly established competitors.
SSAB, Stora Enso and SAS are the biggest climate culprits on the Stockholm stock market, according to a new survey by consultants South Pole Group.
Noel Morrin, sustainability manager at Stora Enso, says it features high on the list because it is more international than its Nordic competitors. The company plans to achieve almost zero emissions through investment and purchasing renewable electricity.
On the other hand manufacturer Atlas Copco performed well. An investment in the company produces a tenth of the emissions as an investment in ABB.
The Swedish and Norwegian states have together sold 23 million shares in airline SAS (see SPR 13/10 Early Ed.).
Enterprise Minister Mikael Damberg says he is satisfied with the timing of the deal despite SAS shares falling by over 30% this year.
DN reports that the government wants to sell more SAS shares, and ideally wants the whole group to be taken over by another airline. “Our message is that we are not a long term owner of SAS,” he says.
Bjoern Kjos, the boss of Norwegian, has talked for a long time about making Stockholm’s Arlanda airport the hub for the budget airline’s long-haul flights to Asia, on the assumption that Norwegian will be able to fly over Russia.
Mr Kjos has urged the Swedish government to negotiate a new fly-over agreement with Russia, since Sweden, Norway and Denmark’s present agreement really only applies to SAS.
“If the Swedish government wants a major hub in Stockholm then they can have one. But we must also be allowed to fly over Russia. The Swedish government appears to be interested, but Denmark and Norway prioritise SAS more,” he tells SvD, suggesting that the government should be bold enough to sidestep its Scandinavian neighbours in order to create thousands of new jobs in the Stockholm region.
After five days and 1,000 cancelled flights, the strike by SAS pilots is finally over. Under the terms of the new agreement, the pilots will receive a pay increase of 2.2%.
For SAS, which is under severe financial pressure, the strike has been inopportune. Experts calculate the cost of the conflict to the airline to between 10 and 25 million kronor per day.
Meanwhile, Infrastructure Minister Anna Johansson (S) said on Tuesday that the government saw no reason to review Swedish strike legislation. Saying she understood the problems experienced by travellers, the minister nevertheless pointed out that, “both strikes and lockouts are weapons that can be used by the parties to put pressure behind their demands”.
SAS CEO Rickard Gustafson expressed relief that the strike was over and said he regretted that so many of the airline’s customers (more than 100,000) had been affected.
The strike among SAS pilots has forced the airline to cancel 240 flights today, which will affect more than 25,000.
The strike could break SAS, suggests SvD. The airline is already struggling on a cut-throat market, and once again there is talk of a takeover by Lufthansa. Above all, however, passengers are losing faith in SAS, and that could cost the airline dear.
The paper also reports that there is some disagreement between the employer and the union over just how much a SAS pilot earns; the employer says the average monthly salary is SKr 78,000 while the union says it is SKr 60,000. The union claims the conflict is about more than money, and that SAS pilots have seen their salaries lag since 2009.
Meanwhile, the strike raises the question as to whether legislation should be introduced to limit the right of pilots to strike, says the Swedish Federation of Business Owners (Företagarna).
“A study should be made into whether industrial action is proportionate to the impact it will have on business and society,” CEO Günther Mårder tells DI.
Carola Lemne, CEO of the Confederation of Swedish Enterprise (Svenskt Näringsliv) agrees and describes the strike as irresponsible and preposterous, both in terms of the pilots’ demands and the impact it could have on the airline.
Scandinavian airline SAS has confirmed that talks with the Swedish Airline Pilots’ Association (Pilotförbundet) have ended in deadlock and that the strike will continue today, Monday. Two hundred and thirty flights will be cancelled today, leaving 27,000 passengers stranded.
SAS CEO Rickard Gustafson is concerned over the chaos the pilots are causing and the consequences of the strike, saying the airline cannot afford wage demands of SKr 100 million per year. “We are not competitive and you have no future if you are uncompetitive in a low-margin industry,” he says.