Cheap flight tickets fail to curb SAS losses

Despite filling a record number of seats, the airline continues to struggle financially due to increased pressure from competition.

Cheap flight tickets fail to curb SAS losses
Photo: Claus Bech/Scanpix
Scandinavian airline SAS announced a further drop in profits for the third quarter on Wednesday, as fierce competition pushed down ticket prices just under two years into a last-ditch
recovery programme.
The company's net profit fell by 44 percent to 400 million kroner ($69 million, 54 million euros) from May to July, with weaker sales — down 8 percent to 8.7 billion kroner — and cheaper tickets cutting into margins.
On average, the company earned 7.1 percent less from each passenger, while the cost per passenger fell by only 5.6 percent. However, the proportion of seats filled reached a record 81.9 percent.
"This result reflects a market under continued intense price pressure. At the same time, the high passenger growth and productivity show that our strategy is generating effects," SAS chief executive Rickard Gustafson said in a statement.
In November 2012, after five consecutive loss-making years, the beleaguered airline launched a "final call" recovery plan, which has included job losses, salary cuts and administrative cutbacks.
On Wednesday the company said it would lay off half the 350 employees at its Finnish charter subsidiary Blue1 — on top of 300 SAS job cuts in support, administration and management announced in June.
SAS has come under increasing pressure in recent years from low-cost rivals such as Oslo-based Norwegian, Europe's third-largest budget airline.
"All in all, the fierce competition in the airline industry is persisting," Gustafson said Wednesday.
The airline, which is 50-percent owned by the Swedish, Danish and Norwegian states, expects to report a profit for the 2013-2014 tax year "provided that market conditions, in terms of capacity, jet fuel and exchange rates, do not decline any further and that no unexpected events occur".

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‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.