Capacity cuts help turnaround at SAS

SAS’s Hong Kong launch suggests expansion for 2016
An improved balance of supply and demand is helping to bring SAS back to profit, CAPA reports. As a result, unit revenue is growing faster than unit cost, despite currency headwinds on costs. Capacity cuts in charter operations and on long-haul routes have had a beneficial effect.
SAS posted a reduced operating loss in the first half of 2015, followed by a healthy rise in profit in the third quarter. That was enough to bring the first nine months back to operating profit, in contrast to a loss a year earlier.
Now, long-haul expansion is starting again this autumn with the new Stockholm-Hong Kong route, continuing with three new US routes in 2016. That will lead to ASK (available seat miles) growth in 2016.
“It is not difficult to make out the influence of low cost competitor Norwegian Air Shuttle, and its growing long haul network, on SAS’ decision to launch/grow on some of these routes,” CAPA suggests.
“SAS is in a more positive mood than at any time for a number of years. […] Nevertheless, this is a strategic shift and not without risks to SAS, given growing long haul competition from local and global airlines, uncertainties surrounding the global economy and the ongoing need to keep a focus on Scandinavia and Europe, which provided 77% of its revenue in 2014.”
Analysis of the stats and facts can be found here.
CAPA

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