Açores - SATA airlines jettisons aircraft and staff

Over in the Açores the heavily indebted regional airline SATA International is to reduce its fleet and cabin crew to increase eficiency and reduce some of the €179 million debt the airline management reported at the end of 2014.

As part of a restructure, 23 long-haul cabin crew will go as part of a new strategic plan 2015-2020 announced at a press conference on Friday.

The SATA board admits the company is in a crisis and says that it has had to increase short term debt to €128.8 in an effort to cope.

"The SATA Group's debt requires volume rapid implementation of a process of financial restructuring," according to a blindingly clear analysis by the board which reports to the Açorean regional government as the single 100% shareholder in the business.

This local monopoly is facing two additional threats. The first is the reduction in passengers as the Americans pull out of the Lajes airbase with a planned reduction in civilian employees and general reduction in island income and, secondly, the opening up of the Açores to tourist carriers such as easyJet.

On the plus side is the growth of tourism but the airline is in danger of having to make way for low cost carriers rather than taking on some of the key routes and competing.

SATA estimates that it closed 2014 with a debt of 179 million. Of this total, €128.8 is related to bank loans that it wants to restructure.

The airline expects to reach 2020 with a debt to the bank €40 million. The collection of the €63 million due to the airline would be a good start.

In what may be a final act of 'reorganisation,' SATA Internacional is to change its name to Açores Airlines to associate the name of the region to the airline for international markets.

In addition to strengthening the links to the United States and Canada, the company intends to invest in the Açores, Cape Verde, Canaries and Madeira area, especially Cape Verde.

It is expected to increase by 60,000 the number of passengers in five years to 660,000 although a 10% increase in 5 years would be viewed by many industry observers as an underachievement.

This increase needs to be achieved despite the company announcing that as part of the review it is abandoning most of its regular routes to and from Europe.

SATA International lost €12.87 million of the total €15.75 million loss in 2013. An optimistic board of directors expect Açores Airlines to make a net profit of €1.1 million in 2015.

The plan also predicts that SATA Air Açores, the company carrying out internal Açorean island flights, will continue to break even to 2018 as long as the airline’s ‘public service obligations’ to the government are still in force after this year’s review.

The board in its wisdom has decided that running two airlines with the same shareholder and management would be more efficient if accounts, personnel and IT systems came under one roof rather than running two separate company structures.

This will save 12.5% of total admin costs according to the Chairman, Luis Parreirão who said there will of course be no staff redundancies or sackings, but that staff may drift off as and when it suited them or when they retire or their contracts end.

Next week the Board of Directors will meet unions representing over 1,300 workers for a chat about the latest plans.

On the very positive side the management is to create ‘SATA Services,’ a ground handing service to take advantage of the Ryanair and easyJet businesses when they start to fly into the area with their usual per head 'inducement' due from the regional government, some of which will at least end up with the company doing the ground handling. SATA Services will be created in 2016.

Given these changes, the group will have a new structure with SATA SGPS owning directly and fully all the shares in SATA Air Açores, Azores Airlines,  SATA Serviços Partilhados and SATA Serviços.

In the most hopeful development announced, the board itself may be subject to some long overdu change as the company bravely announced that its new management model will endeavour to give "greater breadth to the Board of Directors, in particular, through the representation of stakeholders, shareholders and professional managers.”

This last move alone could save SATA and it is saddening that it has taken a debt burden of €179 million for the board to see that the board itself needs replacing.

___________________

SATA International (full name SATA Internacional - Sociedade Açoriana de Transportes Aéreos) is an airline based in São Sebastião, Ponta Delgada, in the Azores, Portugal.

It operates scheduled flights to the Madeira Islands, mainland Portugal and other destinations in Europe and North America, as well as charter flights.

The airline was first established in December 1990 under the name of OceanAir and in 1991 was authorized to operate air transport services as a non-scheduled carrier. SATA Air Açores became the major shareholder when OceanAir suspended flying in 1994 and later became the sole owner. On 20 February 1998 it was renamed SATA International and started operations on 8 April 1998.

The airline is 100% owned by SATA Air Açores. Following its bid by public tender, SATA International was awarded scheduled routes from Ponta Delgada to Lisbon, Madeira Island and Porto. Today SATA operates a number of transatlantic routes such as Faro to Toronto nonstop.

SATA owns two tour operators in North America: SATA Express in Canada and Azores Express in the United States.

© Wikipedia 2014

You must be a registered user to make comments.
Please register here to post your comments.