SAS to slash costs as profits nose dive

Troubled Scandinavian airline SAS reported a sharp fall in net profits for the fourth quarter on Thursday and announced further cost-cutting measures to meet increasing competition from budget airlines.

SAS posted a net loss of 303 million kronor ($39.4 million) from August to October compared to a profit of 1.47 billion in the same period last year.
Sales fell slightly to 10.97 billion kronor from 11.06 billion in the same period last year, when two months included revenue from a former subsidiary, as cheaper tickets cut into margins with a 3.1 percent drop in the average earning per passenger.
"SAS has delivered the promised efficiency measures, with declining unit costs as a consequence," SAS chief executive Rickard Gustafson said in a
statement, adding however that "earnings were impacted by intense competition and strong price pressure."
The airline increased its passenger numbers by 8.4 percent and succeeded in lifting its load factor — which measures how full planes are — by 2.3 percent.
SAS has come under increasing pressure in recent years from low-cost rivals including Ryanair and Oslo-based Norwegian, Europe's third-largest budget airline.
The company announced a "final call" recovery plan in November 2012 which has included job cuts, salary reductions and administrative cutbacks.
Further savings worth 2.1 billion kronor would be put in place by 2017 to meet "changing competitive conditions for European aviation" chief executive Rickard Gustafson said.
SAS, which is 50-percent owned by the Swedish, Danish and Norwegian states said it has the "potential" to report a pre-tax profit for the 2014-2015 fiscal year "provided that the economy does not weaken", and that there is no change in falling jet fuel prices or other unexpected events.
SAS announced last week that it will overtake control of Danish airline Cimber at a price of 20 million kroner ($3.3 million), a move industry insiders say signals SAS's intention to move employees to a more cost-effective collective bargaining agreement.

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SAS announces reduced loss and pins hopes on summer flights

Scandinavian airline SAS narrowed its losses in the second quarter, the company said Thursday, as it set its hopes on an easing of coronavirus restrictions this summer.

SAS announces reduced loss and pins hopes on summer flights
A SAS aircraft taking off in Paris. Photo: Charles Platiau/Reuters/Ritzau Scanpix

The earnings report came a day after the governments of Sweden and Denmark announced another round of aid to the ailing carrier.

From February to April, SAS booked a net loss of 2.43 billion Swedish kronor ($292 million, 240 million euros) — 30 percent smaller than in the second quarter last year.

The company also reported an improved operating profit “for the first time since the pandemic’s outbreak, both year-on-year and compared with the previous quarter,” pointing to its cost cutting efforts.

However, the number of passengers in the period declined by 140,000 compared to the first quarter, to 857,000.

This caused revenue to fall to 1.93 billion kronor, a 15 percent drop from the preceding quarter and 63 percent from a year earlier.

“The increase in vaccination rates provides some hope for the relaxation of restrictions, and an increase in demand ahead of the important summer season,” chief executive Karl Sandlund said in a statement.

However, the CEO also noted that “many customers are now increasingly choosing to book their tickets much closer to their travel dates, which makes it difficult to predict demand during the summer.”

SAS also said it expected claims from passengers of up to 150 million kronor after a European court ruled in March that customers should be compensated over disruptions due to a pilots’ strike in 2019.

After cutting 5,000 jobs last year — representing 40 percent of its workforce — SAS announced Wednesday an additional credit line of three billion kronor from the Danish and Swedish governments, its main shareholders, to get through the crisis.

The airline received a similar loan and a capital increase last year.

READ ALSO: Virus-stricken airline SAS secures new public loan from Denmark and Sweden