Despite its frail finances and a European Commission probe of its latest restructuring plan, SAS Group is continuing its fleet renewal and expansion program with an order for 12 new widebody aircraft.
SAS ordered eight-900s with deliveries starting in 2018 and four -300 Enhanced, which will begin arriving in 2015 when the lease agreements of some of its aging expire. The airline currently operates seven A340-300s with an average age of 11.6 years and four -powered A330-300s with an average age of 10.4 years, according to Aviation Week’s commercial fleets database.
SAS says it will also upgrade the cabins of up to seven of its A330/A340 aircraft as part of the fleet modernization. The upgrade will consist of new seats throughout the cabin including fully flat seats in business class and a video on demand in-flight entertainment system throughout the entire cabin.
The Scandinavian airline will be one of the first operators of the enhanced A330-300 with increased maximum take-off weight (MTOW) capability and increased fuel capacity option. Airbus announced the enhanced A330 option last year, and the full payload range increases by around 500nm (930km) over today’s 235 ton A330-300 to 6,100nm. The A330-300’s optional fuel capacity increase comes from a center wing tank.
The airline also placed an order withfor engines for its A350s and Trent 700 engines for its new A330s. The contract includes a long term TotalCare services package.
SAS Group President & CEO Rickard Gustafson says the company opted for Airbus widebodies over’s because “of SAS’s long-standing relationship with Airbus, particularly for the long-haul fleet, and because Airbus provided good delivery slots and terms.” SAS’s long-haul fleet are all Airbus, but its medium-haul fleet is mixed and includes 74 and 27 MD80s. It placed an order for 30 Airbus 320NEOS in 2011.
He expects the group, which has not posted an annual profit since 2007, will have no problem financing the new aircraft.
“We believe there will be sale and leaseback opportunities, there will be export credit facilities available and so forth,” he says. “So there will be a mixture of tools to finance this pretty extensive order.”
The platform for the long-haul feet renewal, he adds, is “that we continue to deliver our restructuring program. That will generate a stronger SAS, a profitable SAS and a SAS that will generate a lot more cash flow. It all hangs together on that one.”
SAS’ 4Excellence Next Generation (4XNG) restructuring plan seeks to reduce costs and improve liquidity through headcount reductions, outsourcing of ground handling and call centers and selling off non-core assets, such as the Norwegian regional airline Wideroe.
SAS in November last year avoided bankruptcy after reaching a last-minute deal with unions in order to obtain a new credit facility from its four main shareholders—the governments of Sweden, Denmark and Norway and the Wallenberg family foundation—and several commercial banks. The credit facility offered by the three governments to SAS is fundamental to the airline’s survival, but several competition authorities doubt that it was carried out on market condition.
The European Commission last week opened an in-depth investigation to verify if participation of Sweden and Denmark in this €400 million revolving credit facility (RFC) is in breach of the EU’s state aid and antitrust rules. The European Free Trade Association (EFTA) surveillance authority opened a parallel investigation regarding the participation of Norway in the RCF in favor of SAS. Norway is not a member of the EU but a full member of EFTA.