SAS makes surprise profit
10 / 11 / 2009
CONSIDERING how badly Scandinavian Airlines System (SAS) has been doing recently, posting its first profit in two years comes as a bit of a surprise.The airline says that cost cutting exercises and lower fuel prices allowed it to make 114 million crowns (US$16 million) in the third quarter. The result was also boosted from the sale of British Midland.SAS has been struggling to restructure and so make itself more efficient and profitable for years. Half-owned by the governments of Denmark, Norway and Sweden, most of its problems stem from its high staff costs. In August it announced cuts of 1,500 jobs and 10 to 20 per cent reduction in salaries. The carrier has been in intense negotiations with unions trying to find a way to push these and further moves through and it hopes that it has now found an acceptable compromise.“The effects of the global recession are tangible throughout the entire airline industry and significant savings programs are being implemented to address the record yield fall in the industry,” it said in a statement.Analyst Robert Jakobsen at Jyske Bank said: “Underlying earnings are improving and moving in the right direction, but we’re keeping our sell recommendation because we still question whether they can increase competitiveness and they still have problems with the unions.”“Unless they strike a deal … they (SAS) are not going to get a sustainable platform,” said Lars Heindorff of ABG Sundal Collier analysts.