SAS sees “lethal cocktail” for airlines

CEO: “I would be surprised if we didn’t see further consolidation”

A fresh wave of consolidation in the airline industry is the likely outcome of a combination of high fuel prices, a new global economic slowdown, poor demand, spare capacity and little room to raise fare prices. That’s the view of Rickard Gustafson, CEO of SAS, in an interview with the news agency Reuters this week.
“I would be surprised if we didn’t see an accelerated activity in terms of consolidation in the airline industry driven by this situation,” he said. “I do believe that […] when capacity outruns demand in very tough market conditions […] that is a pretty lethal cocktail.”
The Scandinavian airline is, of course, among those carriers predicted to be bought up if any such industry reshuffle takes place. SAS made a loss of SEK 1.6 billion (€180 million) in 2011, due mainly to the bankruptcy of Spanair, and is pressing ahead with cost-cuts and a SEK 5 billion efficiency drive. The airline’s fuel costs in 2011 rose by almost a third to SEK 7.8 billion. No outlook has been given for 2012, but SAS is scheduled to report its first-quarter results on May 3.
[pictured: SAS Boeing 737; courtesy SAS]


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