SAS Cuts Full Year Forecast as Yields Fall on Rising CompetitionKari Lundgren
SAS Group, the Nordic region’s largest airline, trimmed its full-year forecast after second-quarter fares fell, driven down by greater competition in the carrier’s main Scandinavian markets.
SAS may achieve a pretax profit in fiscal 2014 if the positive effect of changes to pension reporting are taken into account, it said in a statement today. Results were expected to be positive excluding pension adjustments when the company released its interim management statement in March.
The airline has delayed earnings targets, pursued asset disposals and cuts jobs as it seeks to return to profit and fend off rivals including low-cost carriers Norwegian Air Shuttle ASA and Ryanair Holdings Plc. Faced with an influx of airlines keen to capture Scandinavian traffic, SAS is focusing on improving its offer to frequent travelers, Chief Executive Officer Rickard Gustafson said in the statement.
“The increasing competition for customers means that SAS is now taking an even more aggressive approach,” Gustafson said. “The uncertainty relating to the capacity trend in the market means that the revenues from the growing volumes are difficult to estimate.”
SAS dropped as much as 0.85 kronor, or 6.3 percent, to 12.70 kronor in Stockholm, and traded at 12.80 at 9:08 a.m. in the Swedish capital. The stock has lost 22 percent in value this year, the worst performer on the 37-member Bloomberg European Travel Index in the period.
Capacity within Scandinavia has grown more than 5 percent over the past six months, with the increase in seats available driving down second-quarter prices, SAS said. Currency-adjusted yields, a measure of average fares paid by passengers, dropped 5.3 percent in March and the load factors, a measure of occupancy, improved last month, the airline said.
SAS will report first half results on June 18.