SAS Reports Heavy First-Quarter Loss Amidst Scandinavian Airline Market Turmoil

Strategic Insights -

SAS, the region's largest carrier, has reported another heavy first-quarter loss, marking the effects of low fares and overcapacity in the Scandinavian airline market. The company's chief executive, Jorgen Lindegaard, described the results as "very weak," citing a 15 percent fall in yield per passenger in the region, a development that is "historically unique." This trend is largely attributed to new players in the market, particularly low-cost carriers and smaller start-ups, which have led to overcapacity and very low fares.

Key Takeaways:

  • SAS reported a pre-tax loss of SKr1.583bn (Dollars 208m) in the first quarter, a decrease from SKr1.876bn in the same period last year.
  • Sales fell 8 percent to SKr12.567bn in the three months to March 31.
  • The company increased the number of passengers it carried by 7.3 percent in the first quarter, largely through price reductions and special low-fare travel offers.
  • Despite an uptick in volumes in March, with a 10 percent increase, average ticket revenues were rising slower than in previous, similar periods.
  • Revenues are expected to continue falling in 2004 compared with a year earlier, as passengers move from business to economy seats and SAS continues to offer lower fares.
  • The company has embarked on a new cost-cutting drive, splitting SAS airlines into four units, in an effort to achieve sustainable and profitable development.

Statistics:

  • Pre-tax loss: SKr1.583bn (Dollars 208m)
  • Sales: SKr12.567bn
  • Passenger increase: 7.3 percent
  • Volumes increase in March: 10 percent
  • Expected revenue fall in 2004: SKr (specific amount only mentioned as continuing to fall)

Sources:

  • [SAS press release, exact date unknown]
  • [Stockholm newspaper, exact date unknown]