SAS continues with restructuring program
In what it described as a weak quarter in terms of earnings, SAS today revealed a loss before tax of SEK 146 million (€16.5 million) for the period November 2013 to January 2014, down from the SEK 767 million loss posted the previous year.
“The first quarter is seasonally the weakest, but this quarter was also marked by overcapacity and lower growth, which put pressure on margins across the entire market,” President and CEO Rickard Gustafson admitted.
Revenue for the quarter stood at SEK 7.9 billion, down from SEK 9.6 billion for the same quarter the previous year. Scheduled traffic increased slightly, by 0.7%, while passenger revenue adjusted for currency effects and the divestment of Widerøe decreased 4.9%. Unit costs adjusted for currency and jet-fuel decreased 3.2%.
“Although the result is as expected, it is not satisfactory,” Gustafson said. “The market trend shows quite clearly the importance of continuing at a high tempo with our three strategic priorities: to establish an efficient operating platform, to win the battle for Scandinavia’s frequent travellers and to invest in our future.”
Yet unit costs declined compared with the preceding year, the chief executive highlighted.
“With an increasingly competitive cost base, we can fight for the frequent travellers more effectively. We continue to invest in our offering to the frequent travellers.”
As previously reported, a significant upgrade of EuroBonus was launched at the beginning of the year with the biggest changes since the SAS loyalty program was introduced in 1992, including a new membership level, EuroBonus Diamond. SAS also presented 44 new routes to be launched during the year.
The airline’s forecast for the full year remains in place. The expected impact on earnings from restructuring is SEK 1.2 billion, and bookings at the beginning of the second quarter were at the same level year-on-year.
“Provided that the market conditions, in terms of capacity, jet fuel and exchange rates, do not decline any further and no unexpected events occur, potential exists to post a positive EBT, excluding the positive effect from changed pension terms, also in the 2013/2014 fiscal year,” Gustafson said.
[image courtesy SAS]