Smile, Mats Jansson, you’re back in black
Mats Jansson, head of Scandinavian airline SAS, surprised by posting the company’s first quarterly profit in two years.
| Related news: • SAS’ plan to swing back into profit • SAS furious over Ryanair ‘lies’ • Sweden and Denmark want to sell airline SAS • Scandinavian airline SAS to cut 1,500 jobs |
The Stockholm-based airline, half-owned by Sweden, Denmark and Norway, posted a third-quarter net profit of 152 million kronor ($21.5 million), up from a loss of 1.9 billion kronor a year earlier. That’s better than analysts’ expectations and the airline’s first profit in eight quarters.
Still, the swing back into profit was not the result of better earnings but rather of heavy cost reductions, slashed capacity and – luckily - lower prices on fuel.
“Efficiency is coming through. It’s a positive development”, Jacob Pedersen, senior aviation analyst at Danish Sydbank, told The Swedish Wire.
Pretax earnings were 114 million kronor compared with a mean forecast for a loss of 403 million kronor in a Reuters poll. Revenue fell by 17 percent to 11.1 billion kronor.
"Despite the major challenges in the industry, third-quarter earnings were positive," SAS Chief Executive Mats Jansson said in a statement.
SAS has been hit hard by the global economic recession. But the airline was already under pressure before the crisis with higher costs than rivals and an ageing fleet.
SAS Group is currently implementing its strategic approach - Core SAS – that includes cost reduction initiatives of 4.5 billion kronor as well as a 20 percent reduction in capacity.
As a result a total of 3,000 employees will lose or have already lost their jobs, plus an addition of 5,600 persons in those companies that will be sold or outsourced.
Grim negotiations with workers’ unions are ongoing and SAS said Thursday that no agreement had been reached with pilots' trade unions (PFOR) and Cabin Denmark (CAU).
SAS's negotiations with the trade unions concerned have resulted in cost savings corresponding to 130 million kronor, far from the target of 1.4 billion kronor.
Despite a common understanding regarding the need for cost reductions, we have not succeeded in reaching an agreement", Mats Jansson said.
Last week SAS' vice president of corporate communications Bertil Ternert told The Swedish Wire that the airline has to slash costs in order to compete with the newly established competitors.
“We don’t want to start they day by having a handicap. Other airlines, like Norwegian, can do what we do with 25 percent lower costs”, he said.
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Last Updated (Thursday, 05 November 2009 16:53)
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