SAS ! SK ! SAS

SAS Group currently operates nine A330s/A340s and will not continue to operate a long-haul network if it is forced to reduce that fleet to fewer than seven, President and CEO Mats Jansson told ATWOnline at last week's Star Alliance event in Newark. "The crisis hit SK in November/December 2007, at a time where we had actually been evaluating extending our long-haul fleet from 11 to 12 aircraft. But we eventually had to reduce the fleet," he said. "Hopefully we can keep the nine aircraft." Should SAS be forced to cut long-haul capacity further as a result of additional declines in demand or yield, it could be facing a situation in which it would not make financial sense to fly intercontinentally. "Seven aircraft would be the limit," Jansson confirmed, adding that the company's restructuring will not include a merger. "We are not in business to be taken over," he said.

SAS sells18 MD-80 surplus aircraft to Allegiant Travel Company

The SAS Group will in relation to the Core SAS program reduce its capacity by a total of 21 aircraft. By end of December 2009, 18 aircraft has already been taken out of production. As a result of this and earlier capacity reductions SAS holds MD-80 series surplus aircraft.

SAS has entered into a contract to divest 18 MD-80 Aircraft to Allegiant Travel Company, parent company of Allegiant Air, a US based airline. The aircraft are from 1985 to 1991 and will be delivered during the first half of 2010.

Allegiant has previously bought 13 SAS MD80's and claim that these are some of the best MD-80's available. This shows that SAS aircraft and maintenance program has a strong quality reputation in the market.

After the transaction the SAS Group will have 24 MD-80's in operation out of a total of 191 Aircraft. The remaining MD-80 Aircraft are intended to be kept in SAS operation as inexpensive reliable Aircraft, as well as Aircraft to manage the seasonality effect in the Nordic region.

The transaction will reduce the SAS Groups financial net debt by approximately 200 MSEK. There is no capital gain since sales value equals book value. SAS Group Corporate Communications

SAS reports that it has found a lessor for its eight MD-90-30s and will phase out the aircraft by mid-2011. The company identified the lessor as an "undisclosed" U.S. airline, so either Delta is continuing to expand its MD-90 collection, or the MD-90 is getting a new U.S. operator.

SAS Group has entered into 5-year leases covering its eight MD-90-30 aircraft with an undisclosed US airline. The eight aircraft will be delivered in a phase out schedule starting Q3-2010 and ending Q2-2011. The MD-90 has, in terms of number of aircraft, been a niche aircraft in the SAS Group fleet and this transaction fits very well in to SAS initiative to simplify and standardize its fleet and thereby reduce the number of aircraft types used in its total fleet. The average age of the MD- 90's is 13.5 years.

Bombardier's CSeries jetliner, which has won orders from only three customers, is a leading contender for a contract from SAS Group as the biggest Nordic airline prepares to add as many as 55 planes over six years.

SAS, already one of Bombardier’s biggest European clients, is evaluating the CS300 variant of the CSeries, seating 120 to 145 people, Niklas Hardange, the carrier’s fleet-planning chief, said in an interview at its headquarters in Stockholm.

“Bombardier is the one offering the newest technique, and has a plane that’s a lot more fuel efficient than Airbus and Boeing have today,” Hardange said yesterday. “If the CSeries keeps its promises it’ll be a very successful product.”

SAS is weighing the single-aisle CSeries against the competing 737 from Boeing Co. and Airbus SAS A320 family. The airline plans to phase out 37 older 737s and Boeing MD-80s over the next few years while adding capacity to meet anticipated annual passenger growth of 4 to 6 percent through 2016.

Montreal-based Bombardier has so far secured 90 orders for the CSeries; 30 from Germany’s Deutsche Lufthansa AG, which is buying the planes for its Swiss unit, 40 from Indianapolis-based Republic Airways Holdings Inc. and 20 from Lease Corp. International Aviation.

CRJs, Q-Series

SAS and its units own 12 Bombardier CRJ900 regional jets and 28 Q-series turboprops, including seven Q400s. The carrier got more than 1 billion kronor ($143 million) in compensation from the Canadian company and Goodrich Corp. in 2008 after Q400 landing-gear problems caused three crash-landings in six weeks.

The CSeries model is attractive because of its lighter composite-based construction and more fuel-efficient engines from United Technologies Corp.’s Pratt & Whitney unit, Hardange said. Still, the technology is untested and the CS300 probably won’t be available to SAS until 2014, he said.

Bombardier spokesman John Arnone said the company doesn’t comment on potential customers, while adding that it is “involved in discussions with many airlines and operators regarding the CSeries aircraft.”

Buying Boeing 737s would “simplify” the SAS fleet as there are 83 planes from the Chicago-based manufacturer among the 193 that the airline currently operates, Hardange said. SAS is also interested in Airbus’s A320 and A319 variants, he said, and is looking at the European company’s planned “Neo” upgrade, which would feature a new, more efficient engine.

Leasing Option

The Scandinavian airline, half-owned by the governments of Sweden, Norway and Denmark, has yet to decide to what extent it will buy or rent planes, and is also talking with lessors.

“Historically it’s been better for us to own than to lease,” Hardange said. “Today we’re not so sure. We’re flexible and want to grab the best opportunities we can. We’ll do it gradually and don’t see a big bang ahead of us.”

The fleet-renewal plan comes as SAS is deep into a 7.8 billion-kronor cost-cutting program, and the carrier wants to improve cash flow and boost credit ratings before committing to a purchase, which “is not coming tomorrow,” said Sture Stoelen, its head of investor relations. Selling more shares to help fund new planes is not an option, he added.

SAS has been unprofitable in all but one of the past 12 quarters after struggling with declining traffic, strikes and airspace closures following a volcanic eruption in Iceland.

Qatar Airways Ltd. Chief Executive Officer Akbar Al-Baker said yesterday that Bombardier needs to resolve “commercially sensitive issues” regarding the CSeries or risk seeing it eclipsed by Airbus’s re-engined Neo. Pratt & Whitney said Sept. 17 it aimed to iron out a “misunderstanding” that prompted the Gulf carrier to delay an order for as many as 30 planes.

Bombardier was trading down 0.4 percent at C$4.82 as of 11:24 a.m. in Toronto. The stock is up 0.5 percent this year.

SAS closed 3 percent lower at 22.80 kronor and has declined 55 percent this year for a value of 7.50 billion kronor.