SAS chief unexpectedly bolts at ‘critical’ time for airline

SAS AB is unexpectedly losing its chief executive officer, leaving Scandinavia’s main airline to search for a replacement with the industry going through an unprecedented crisis.

CEO Rickard Gustafson is leaving to take the top job at Swedish industrial giant SKF AB, according to a statement late Monday. The 56-year-old, who has spent a decade at the helm of Stockholm-based SAS, plans to leave by July 1 at the latest.

The airline’s board now must find an experienced executive willing to take on the task of steering SAS through the coronavirus pandemic. The health crisis has delivered a body blow to air travel, with rising cases triggering new entry restrictions even as countries race to distribute vaccines.

“Gustafson’s departure leaves SAS in a vacuum at a critical moment,” analysts at Sydbank wrote in a research note. “The task of reviving SAS is enormous.”

For SKF, the maker of ball bearings and seals, Gustafson is likely to further accelerate a transition toward a more customer-focused, innovative and sustainable business, analysts at Citigroup said in a research note. He will need to accelerate acquisitions and organic growth in order for investors to re-rate the company, they said.

SAS shares were up 0.4% at 9:50 a.m. in Stockholm. They dropped 56% in 2020. SKF gained 2.2%, after adding 13% last year.

Flag Carrier

SAS was formed in 1946 by merging the main airlines of Denmark, Norway and Sweden. The Danish and Swedish governments remain its largest shareholders with a combined 44% stake, based on data compiled by Bloomberg. Sweden’s Wallenberg family is the biggest private owner.

Like other European airlines, SAS has been forced to ground planes, cut costs and lean on government support to remain solvent during the coronavirus crisis. In December, the company reported a loss of 9.3 billion kronor ($1.12 billion) for the year that ended in October, and said that it couldn’t provide an outlook for the current fiscal year.

In particular, travel restrictions have forced Scandinavian carriers to cut back on trips to sunny spots and retreat to mostly regional routes. The most recent wave of virus cases has brought new curbs across the continent.

The company is “crying out for continuity and someone who has a deep knowledge of both the airline industry and SAS’s complexity,” the Sydbank analysts said.

Airline Pain

Still, the carrier has had access to government support, most recently receiving a 1.5 billion kroner ($180 million) loan backed by the Norwegian government. Norwegian Air Shuttle ASA, by contrast, has been largely grounded for months. It sought insolvency protection in Ireland and is working on a court-supervised restructuring after Norway refused additional backing.

As of late 2020, Gustafson had plans to remain in aviation for at least several years. On Nov. 25, he was named chairman-to-be of the International Aviation Transport Association, the industry’s main global lobby. The rotating one-year term was set to begin during 2022.

SAS Chairman Carsten Dilling said that while he is “disappointed and sorry” that Gustafson is leaving, the company is in a stable, though critical position.

“The board has of course immediately started the process to appoint a new president and CEO,” he said in the statement.