SAS announces 1.3 billion kronor Q1 loss

Scandinavian Airlines System (SAS) said on Thursday that fuel costs and strike action had thwarted attempts to reduce its quarterly loss, neutralising ambitious cost-cutting efforts.

SAS said its first-quarter loss excluding capital gains and non-recurring items was 1.319 billion kronor (176 million dollars) no better than the 1.312 billion loss the airline suffered the year earlier.

In February, SAS had reported that it had returned to profit in 2005 as targeted in an ambitious multi-year restructuring plan.

But the first quarter results were a disappointment to analysts, who had been looking for a reduced loss of 843 million kronor.

“The results were clearly negative,” analyst Ann Bowers at Handelsbanken told AFP’s financial news subsidiary, AFX News.

Costs had actually risen, she said.

“People are disappointed that they haven’t managed to steer their fuel costs, that they haven’t managed to claw back the increases through other means,” she said.

SAS shares nosedived on the Stockholm stock market in reaction to the earnings report, trading 4.5 percent lower at 94.75 kronor.

SAS said a pilot’s strike in January weighed on results with 250 million kronor, fuel costs rose and it admitted that results from subsidiaries and affiliated airlines as well as from airline support had been “poor”.

Despite ongoing cost savings efforts, “earnings did not improve”, the company acknowledged.

SAS said it was targeting savings of 2.5 billion kronor, of which 44 percent had been achieved.

Earlier this year, it completed a first round of cost savings to the tune of 14 billion kronor as part of its Turnaround recovery plan.