Scandinavia’s SAS has outlined the preconditions for placing an order to renew the mid-sized fleet of single-aisle jets serving its regional network.
It says that some 20% of its network uses Airbus A319s and Boeing 737-700s and that using aircraft of the appropriate size is important for both financial and sustainability reasons.
“However, these aircraft will need to be replaced in the next few years,” says SAS chief Rickard Gustafson, speaking as the airline unveiled first-quarter results.
He says there are “several prerequisites” to be met before a new order can emerge.
SAS must ensure that each entity within its operating model is based on a single-type fleet, to minimise complexity and costs, and it also needs to have crew agreements “tailored” to regional operations in Scandinavia, he says.
The company has newly signed an agreement with Danish flight personnel union FPU which, it says, “fulfils the requirements” of locating mid-sized regional production in Scandinavia.
“With this in place, we will continue our intensive efforts to address the other prerequisites,” says Gustafson.
FPU claims the new deal will secure more Danish jobs for pilots and cabin crew under Scandinavian working conditions.
The union says it pursued the collective agreement after SAS indicated intentions to invest in “smaller” aircraft with 110-140-seats, aiming to place them with a subcontractor or within a new SAS operation.
Most of SAS’s regional flying out of Denmark is conducted by CityJet, Regional Jet and Air Nostrum.
FPU says that, while trends have seen regional production relocated to other countries, the new SAS agreement – which followed “intense” negotiations – could secure “hundreds of flight positions”, focusing on a new Danish regional platform with its own aircraft and personnel, tasked with operating Scandinavian routes to feed SAS.
“There are still a number of [details] that need to be in place before production can begin,” says FPU chair Thilde Waast. “But, overall, we are proud of the deal.”
SAS says a third condition for the mid-size fleet renewal will be the ability to select and source “proven aircraft types” suitable for northern European operations.
Over the first quarter the company’s net loss increased by more than 80% to SKr861 million ($88 million), which it attributes to unfavourable currency movements and changes in accounting standards.
But SAS says its cash position “remains strong” and that forward bookings for the summer have improved. It is predicting a full-year EBIT margin – before “items affecting comparability” – of 3-5%, but points out that this is subject to a “limited impact” from the coronavirus outbreak.