As a result of the ongoing downturn in air travel, Scandinavian Airlines (SAS) has today announced that some 5,000 employees might be let go. Many of the Nordic airline’s staff had already been furloughed as travel restrictions and quarantine measures made it impossible to continue operations.
Now Reuters is reporting that some 5,000 staff almost half of Scandinavian Airlines may lose their jobs permanently as a result of the crisis.
SAS could cut its staff in half
As airlines around the world keep pushing back the date when they hope to resume flying, many realize that even when they are allowed, it will be nothing like the way it used to be. Several airlines like JetBlue and AirAsia are already stipulating that passengers must wear face masks on flights and that social distancing will remain a priority.
Some airlines are even talking about blocking off the middle seat or flying planes two thirds empty to comply with coronavirus safety rules. If that wasn’t bad enough, airlines will now have to convince the traveling public that it is safe to fly.
With all this in mind, it is evident that the number of flights and the staff needed to operate them needs to be reduced if airlines are going to survive.
SAS needs to adapt to a new climate
Scandinavian Airlines explained its current state of affairs in a stock exchange announcement about how it needs to adjust to the current environment. Its statement read:
“As a result of COVID-19, demand is expected to be significantly affected for the remainder of 2020, and it will take several years for demand to return at the levels before the outbreak. SAS must, therefore, take decisive measures to adapt the business to an environment with lower demand.”
In March, SAS announced that it was temporarily laying off 10,000 employees, which equates to around 90% of its workforce after the coronavirus brought air travel to a virtual standstill.
SAS CEO Rickard Gustafson is almost sure that the demand for flights will be substantially lower than it was last year and that the amount of business seen in 2019 will not return until 2022.
The 56-year-old airline executive previously led SAS away from the possibility of bankruptcy in 2012 and now finds himself with another crisis. When speaking with Swedish online business newspaper E24 the SAS boss said that the decision is “one of the most difficult” he’s had to take.
“We now see that this crisis that the industry and the whole world is facing will last so long that we will not have a summer season to rely on. We do not expect to see anything similar to normal levels of demand that we had before the crisis before maybe 2022.”
Norwegian Air Shuttle is hoping for state aid
Meanwhile, SAS rival Norwegian Air Shuttle is in a world of hurt following a massive expansion, which could now see them run out of cash by the middle of May.
To avoid being a casualty of the COVID-19 crisis, Norwegian is desperately seeking to turn debt into equity to qualify for state aid. If Norwegian is to weather the storm, it will look nothing like the airline it was before the coronavirus.
As for SAS, it hopes to survive by cutting back and taking a cautionary route to recovery.