Air Transport World

SAS alone.(PROFILE)(Scandinavian Airlines System)(Company overview)

Mats Jansson did not get a lot of time to grow comfortable in his new position as president and CEO of SAS Group. Like his predecessor, Joergen Lindegaard, he was presented with a crisis shortly after he came aboard. For Lindegaard, who took over in the spring of 2001, it was the Maersk price-fixing scandal and then, a few months later, far worse. Jansson's baptism by fire came four months into the job when Danish and Swedish cabin attendants walked out, costing the company an estimated SEK265 million ($43 million) in the 2007 second quarter.

That was followed by last autumn's Q400 crisis, with three landing incidents in a matter of six weeks that further eroded public confidence and caused SAS to withdraw the 27 turboprops from its fleet. To understand the gravity of the situation, consider that the Q400s accounted for 32% of Danish departures and 17% of those in Sweden. The airline is wet-leasing a hodgepodge of jets for the time being, but a permanent solution involving up to 30 new CRJ900 NextGen and 21 Q400 NextGen aircraft was announced on March 10 with deliveries beginning this fall and running through 2011. As part of the agreement, SAS will receive slightly more than SEK1 billion in cash payments and credits toward the aircraft on order.

Jansson, who officially came onboard on Jan. 1, 2007, from retail and trading giant Axel Johnson AB, where he was president and CEO, jokes to ATW that "with all the overtime," his first year on the job "was more like two years." But the new chief executive, who combines a genuinely funny, wry view of things with an understanding of the airline industry that belies his brief tenure, has not let himself become a victim of events. He parlayed a stern management response to the illegal strike by the Danish union into a landmark pledge from the heads of the airline's main Danish unions to "use every available and reasonable means to avoid strikes" in the future.

His reaction to the Q400 episode was equally decisive. Although some may question whether SAS was too aggressive in publicizing what it believes are design flaws in its early model Q400s, Jansson kept the carrier ahead of the safety issue. Furthermore, his actions made it clear that SAS would not compromise on what it saw as a fundamental responsibility to its employees and the traveling public regardless of the cost--which amounted to SEK700 million in the fourth quarter and will cost an estimated SEK700-SEK800 million this year--and the disruption to its operation that resonates still.

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Foreboding Skies Unfortunately for the new CEO, it does not look like 2008 will be any less challenging. On a macro level, the industry appears to be headed toward a downturn ignited by the US credit crunch. Closer to home, SAS is engaged in a battle for Nordic supremacy with smaller but more efficient Finnair and faces increasing encroachment from low-cost rival Norwegian. Ryanair has established a beachhead in southern Sweden as well.

Between 2001 and 2005, SAS lost close to SEK6 billion. Sales of noncore assets such as the Rezidor Hotel Group, European Aeronautical Group (navigation charts and route planning), the Jetpak express delivery operation and SAS Component helped to keep the company afloat during this difficult period, as did the Turnaround 2005 program carried out under Lindegaard that cut costs by SEK16 billion. …

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