An airplane stands at the ramp of the tarmac of Landvetter Airport outside Goteborg, SwedenIn the words of a Danish market analyst, the Scandinavian airline is moving closer to the abyss with each quarter and may soon be in acute need of government help.A forecast by the Norwegian bank DNB that the Nordic flag carrier SAS is on the brink of bankruptcy has sent the airline’s shares into freefall with a plunge of over 25 percent.The plunge came after DNB analysts updated their sell recommendation, noting that the company’s debts of $4.35 billion are “unsustainable” and that restructuring is needed to “avoid bankruptcy”.Every month, SAS moves ever closer to the abyss, and within a few quarters the airline may need help with reconstruction, Jacob Pedersen, the head of equity research at Sydbank, told Denmark’s TV2, envisaging the need for further Danish and Swedish help.
"Within a few quarters we can easily land in a situation where SAS may find it more than difficult to go out and get the ordinary financial markets to take part in a reconstruction", Pedersen told TV2. "Whether that abyss comes in four or six months, or whether it is in twelve or 15, is a slightly more open question", he added.
Yet, since the airline is unlikely to solve its problems alone, according to Jacob Pedersen, it will be ultimately saved by Danish and probably Swedish taxpayers. During the pandemic, the ailing airline has lost around 80 percent of its market value and received over SEK 9 billion (about $1 billion) in financial support from the main owners, the Swedish and Danish states.The poorer earnings opportunities have been ascribed to SAS having traditionally had many business customers, but the COVID-19 crisis has shifted international travel patterns, moving many physical meetings in the business world to digital platforms.However, despite many of the COVID-19 restrictions that have plagued the troubled airline industry having now been lifted, SAS ran into new hardships barely days ago when a baggage handler strike in Copenhagen, a major hub, caused delays and cancelled flights.In 2020, the sickly airline cut 5,000 jobs, some 40 percent of its workforce, and in May 2021 received a credit lifeline worth $350 million from the Danish and Swedish governments, its main shareholders, to stay afloat.In October 2021, the airline said it was fighting for change to make sure that the company “has a future”.The new report on earnings for Q4 in 2021 is due on 22 February and is seen as potentially fateful.