Capacity and price pressure exceed expectations
SAS transported 9.2% more passengers in April while the load factor improved by 8.6 percentage points to a record high of 78.6%. But despite this positive trend, SAS is reducing its forecast for the 2013/2014 fiscal year.
The reason is large capacity growth in the market, which is creating historically high yield pressure, SAS says. As a result, earnings will be below market expectations for the second quarter.
Capacity in the Scandinavian market has grown by more than 5% during the past six months, partly due to more airlines shifting capacity to the Scandinavian market.
“For SAS, this means that yield and PASK had weaker development than expected during the second quarter. In March, SAS’ currency-adjusted yield and PASK fell by 5.3% and 9.8%, respectively,” the airline said today in a statement.
In April, the load factor improved significantly as “a large number of activities were initiated to strengthen revenue”. But yield remained low.
The airline’s restructuring program continues to develop and is expected to generate a positive impact on earnings of SEK 1.2 billion (€134 million) during the current financial year, SAS said.
“The increasing competition for customers means that SAS is now taking an even more aggressive approach,” Rickard Gustafson, SAS president and CEO, said. “The uncertainty relating to the capacity trend in the market means that the revenues from the growing volumes are difficult to estimate.”
[image courtesy SAS]