SAS announces heavy Q1 loss – cuts in capacity and jobs to follow
30 Apr 2008
The SAS Group said rising fuel costs, overcapacity and falling yields have resulted in a SEK1.13 billion ($189.5 million) loss in Q1 of the current fiscal. This marks a a huge slide from the SEK47 million deficit reported in the same period of last year.
Through a short-term "action plan," Profit 2008, the company will seek to generate SEK1.05-1.15 billion through "price adjustments, changes to the traffic programmes, additional efficiency enhancements of overheads and the discontinuation and postponement of certain planned activities."
In addition, SAS will implement a 6-7% cut in planned autumn capacity through removal of 11 aircraft and cancellation of entry into service (EIS) of a 12th "intercontinental aircraft." These measures will necessitate elimination of 1,000 full-time equivalent positions, it said.
It also said its Strategy 2011 restructuring programme will be continued "with full force."
While Group revenue rose 8% year-over-year to SEK12.83 billion, it reported an operating loss of SEK872 million, a reversal from the SEK12 million profit reported in the year-ago period.
According to SAS, the "primary reason" for the downturn was "the rapid rise in jet fuel prices to record high levels that could not be offset, while unit earnings fell as a result of further intensification of competition. There is also certain overcapacity in the market and tendencies toward a decline in business travel." CEO Mats Jansson warned, "There are indications that global trends are so serious that we must prepare for a more enduring economic downturn."
The group transported 7.3 million passengers during the quarter, which was up by 2.6%, flew 7.24 billion RPKs, which was a 6.4% increase over the year-ago period. Capacity rose 6.7% to 10.67 billion ASKs, which brought load factor down 0.2 points to 67.8%.
SAS Scandinavian Airlines, comprising the International, Norge, Danmark and Sverige divisions, reported a 0.8% increase in combined revenue to SEK7.71 billion and a reversal in EBIT to a SEK460 million loss from a SEK93 million profit in the 2007 first quarter.
