Very interesting presentation, thanks for sharing Oliver!
Originally Posted by
dodgeflyer
So in 2019/2020 (year ending Jan-20) which is the last normal year of ops, SAS posted 44bn in revenue, ~7bn in payroll and ~35bn in opex. Numbers somewhat similar year prior but lower opex.
I am genuinely curious how they believe 7.5bn of savings are feasible? It can’t be payroll; I know there’s a lot of hate for staff but everything I read say they have one of the lower staff costs in Europe. It can’t be fuel efficiency as that will max give you 10-15% (and many of those savings have already been achieved). Perhaps SAS Connect gives you some but I’m dumbfounded how it can be the bulk when staff costs are what they are.
I guess some will come on back of higher margin growth in new revenues but then you need revenues - how will they (based on normalised ops) achieve that? SAS doesn’t attract/extract premium revenues as all home markets are highly competitive with a flyer base not willing to pay up.
I’m only an airline armchair CEO here but if SAS wants growth they need heavy investments and become a premium airline upfront and whatever they want down back, but for that to succeed they will need a bigger network, new lounges, etc…
My guess, and not savings, is they will consider selling Norwegian operations, and keep feeder flights to ARN/CPH, as removing a third hub would need to equal kr-savings. Also guess another round of single l/h hub consolidation will come.
On page 14 of the presentation they show in which fields the savings will be achieved:
2.3 operational model and planing
1.8 fleet maintenance (I assume this can be achieved by removing older aircraft and subfleets such as the 737s? Not sure how the Embraers fit in there, would have bet on A220s tbh)
1.2 Admin and Distribution
1.1 Airport Services
1.1 Other
I'm not sure what they mean with the latter two as in other slides they do claim to want too capitalize on the SAS brand in regards to lounges etc.
In a further slide they mention they want to better grasp customer expectation and get ancillary revenue through personalization. Two things that sound great but as a customer absolutely horrify me given the implementation at LH and other airlines for example. I guess the removal of two bags for SAS Plus Smart is one of the steps in that direction to further customize tickets fr every customer. On a more positive note, they do seem to want to improve SAS Plus and Business?
In general I think this could be a positive thing for the airline and the customers overall if done correctly. But it could also end up in a huge devaluation and alienating of customers. We'll have to see.