SAS is still one of Europe’s highest cost airlines
The Nordic region’s biggest airline posted another year-on-year fall in profits in the third quarter of 2014, aviation analysts at CAPA report. Progress with cost cutting has been made, but it’s not enough to stop tumbling yields. SAS is still one of Europe’s highest cost airlines.
“Healthy load factor gains demonstrate that SAS has some appeal to the Scandinavian frequent flyers that it desires, but price discounting remains a key feature of this appeal,” CAPA says.
Low-cost competitors continue to be better positioned to provide the lower fares demanded by the market. SAS says it expects continued yield pressure.
During the quarter (May to July), SAS reported a pre-tax profit of SEK 759 million (€83 million), down 36% from the €136 million reported for the same period a year ago. Excluding the profits of former subsidiary Widerøe, the fall in pre-tax profit before non-recurring items was 22%. Excluding Widerøe from last year’s results, revenues increased by 0.7%.
SAS says its 4XNG restructuring program achieved savings of SEK 220 million in the quarter. The program should reach targeted savings of SEK 3 billion by 2015. SAS is seeking further cost savings of SEK 1 billion by 2015 and even more by 2017.
But the full-year results for 2014 will be worse than last year, CAPA predicts. SAS is likely to post an underlying loss. Globally the airline market is still in a cyclical upswing. “If SAS finds it difficult now, life will become much more difficult when the world moves into the next downturn,” CAPA says.
[photo courtesy SAS]