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SAS expects profits in 2013 after cost cuts

SAS expects profits in 2013 after cost cuts

Published: 12 Dec 2012 17:18 GMT+01:00
Updated: 12 Dec 2012 17:18 GMT+01:00

Scandinavian airline SAS said on Wednesday it will be profitable next year, thanks to an aggressive cost-cutting drive which prompted objections that it had strong-armed unions in the Scandinavian countries.

Assuming "that no significant unexpected negative events occur in our operating environment and that jet fuel prices remain stable at current levels, the SAS group's assessment is that potential exists" for a pre-tax profit in the coming year, chief executive Rickard Gustafson said in a statement.

He added that the current quarter will be "extremely weak" since it's traditionally a less profitable time of the year for the airline industry.

SAS last month struck deals with all of its unions to cut salaries and pensions and raise working hours in a bid to turn the company's dire financial situation around.

Critics have said the company's demands, dubbed its "final call" savings plan, ran counter to the Scandinavian labour model, which relies heavily on collective bargaining and a close dialogue between unions and employers.

"Our unions have shown that they have shouldered responsibility and delivered under extraordinary circumstances. The new agreements create the necessary conditions for increased flexibility, reduced complexity and lower costs," Gustafson said.

SAS has come under increasing pressure in recent years from low-cost rivals such as Oslo-based Norwegian, Europe's third-largest budget airline.

The group said on Wednesday that its high level of customer service and a global network of destinations would differentiate it from budget rivals.

The company, which had already announced its third quarter results, said it made a pretax loss of 1.25 billion kronor ($189 million) in the truncated financial year ending October.

The group's new fiscal year began in November, meaning that the current three-month period is its first quarter.

AFP/The Local/og

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Your comments about this article

19:18 December 12, 2012 by Beavis
Sas senior management still have their heads firmly buried in the sand-- they forget the one thing that is causing them to fail- their prices!! It is not reaonable to offer a 2 hour 30 minute flight for 5000kr one way! Bring your prices down to just above (not 10 times) the budget airlines who are flying the same routes.Apsrt from having the oldest , least safe airlines in all of Europe, they need to go back to school on what good customer service is. Unfriendly old hags that frequent the flights as flight attendants need to shape up with their customer service skills or be done away with
10:37 December 13, 2012 by smilingjack
yes. the swedish business model. we are sweden and we will do things the swedish way - regardless.

I think its called cutting your nose off to spite your face. Its an international business world out there and sweden is only a teeny weeny biy of it. time to integrate folks.
13:31 December 13, 2012 by WelshSwede
They have the worst business model in the world, one day the price will be low, the next it will be high, then when you check again its low again. Its cheaper to fly to Bangkok from Stockholm at times than to fly north to Kiruna, its a joke!
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