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SAS improves results but warns on costs

Continuing cost cuts and capacity adjustments helped SAS to offset the seasonally weak second quarter, but problems remain.

Cost cutting and capacity adjustments have helped SAS to offset the seasonally weak second quarter, but the airline is expressing concern over rising fuel costs and negative currency effects, the Dow Jones subsidiary MarketWatch reports today.

Its net loss widened to SEK 358 million (€35 million) during the fiscal quarter, which compares with a SEK 320 million loss last year. Analysts in a FactSet poll had previously estimated a net loss of SEK550 million.

The loss before tax for the first half stands at SEK 693 million, which is lower than last year.

Revenues rose slightly to SEK 9.92 billion from SEK 9.84 billion. SAS expects a full-year pre-tax profit before one-off transactions of between SEK1.5 billion and SEK2 billion.

Capacity across the market continues to accelerate, and SAS will keep capacity growth at 1% to 3% during the year.

Developments are going to plan, according to the airline, which is part-way through a program to achieve SEK 3 billion in efficiency gains by 2020. It says restructuring costs so far reach SEK 521 million of the SEK 1 billion planned for 2017-19.

“However, more remains to be done,” cautioned chief executive Rickard Gustafson, “and we have to use longer horizons and start to visualise how we can continue to enhance operational efficiency at SAS after 2020, to ensure we can continue to strengthen competitiveness.”

Rising costs
Fuel costs are forecast to rise in the second half of the year, Gustafson added.

“In parallel, the SEK has weakened against the USD. With considerable purchases in USD, SAS is one of few Scandinavian companies that is penalised by a weak Swedish krona. […] The weakness of the SEK versus the USD together with rising jet-fuel prices concern me.”

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