SAS Group (SAS), the Nordic region’s largest airline, delayed earnings targets for fiscal year 2015 by one year in the face of greater competition and less business travel in the carrier’s main Scandinavian markets.
Plans to achieve an operating margin greater than 8 percent and an equity-to-assets ratio above 35 percent will not be achieved before fiscal year 2016, SAS said in a statement today. The stock fell as much as 1.2 kronor, or 6.7 percent, to 16.8 kronor in Stockholm, where SAS is based.
The airline has pursued asset disposals and job cuts as it seeks to return to profit and fend off rivals including low-cost carrier Norwegian Air Shuttle (NAS) ASA and Ryanair Holdings Plc (RYA), as well as network long-haul operators. SAS has seen an influx of airlines keen to capture Scandinavian traffic, as well as a decline in corporate traffic as companies reign in costs, Chief Finance Officer Goran Jansson said today.
“Large corporates have seen the need to decrease their costs,” Jansson said. “We have really seen that after the summer and since we have more corporates in general than many of our competitors it has affected us more,” he said, adding that weakness of the Norwegian krone also weighed on earnings.
Pretax profit climbed to 433 million kronor for the year ended Oct. 31, compared with a loss of 3.26 billion kronor a year earlier the airline said. Revenue was little changed at 42.2 billion kronor. SAS, which is cutting about 1,000 jobs at its headquarters, trimmed payroll expenses 4.5 percent year-on-year, while also introducing new wage and pension plans.
“We have been very focused on delivery of this restructuring program,” Jansson said. The company is unlikely to make anymore significant divestments after selling 80 percent of its Wideroe Flyveselskap AS unit for 2 billion kroner in May and signing an agreement to sell a 10 percent stake in the airline’s three ground handling companies to Swissport International Ltd.
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