SAS to slash costs as profits nosedive

Troubled Scandinavian airline SAS reported a sharp fall in net profits for the fourth quarter on Thursday and announced further cost-cutting measures to meet increasing competition from budget airlines.

SAS to slash costs as profits nosedive
SAS profits took a dive in the fourth quarter. Photo: TT
The company posted a net loss of 303 million kronor ($39.4 million) from August to October compared to a profit of 1.47 billion in the same period last year.
Sales fell slightly to 10.97 billion kronor from 11.06 billion in the same period last year, when two months included revenue from a former subsidiary, as cheaper tickets cut into margins with a 3.1 percent drop in the average earning per passenger.
"SAS has delivered the promised efficiency measures, with declining unit costs as a consequence," SAS chief executive Rickard Gustafson said in a
statement, adding however that "earnings were impacted by intense competition and strong price pressure."
The airline increased its passenger numbers by 8.4 percent and succeeded in lifting its load factor — which measures how full planes are — by 2.3 percent.
SAS has come under increasing pressure in recent years from low-cost rivals including Ryanair and Oslo-based Norwegian, Europe's third-largest budget airline.
The company announced a "final call" recovery plan in November 2012 which has included job cuts, salary reductions and administrative cutbacks.
Further savings worth 2.1 billion kronor would be put in place by 2017 to meet "changing competitive conditions for European aviation" chief executive Rickard Gustafson said.
SAS, which is 50-percent owned by the Swedish, Danish and Norwegian states said it has the "potential" to report a pre-tax profit for the 2014-2015 fiscal year "provided that the economy does not weaken", and that there is no change in falling jet fuel prices or other unexpected events.

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‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.