Lift-off for SAS in 2006 after cutting costs

Scandinavian Airlines System (SAS) said on Thursday that a vast savings programme had helped lift the group to a robust profit in 2006 amid strong demand.

The group, which was on the verge of bankruptcy just a few years ago, posted a net profit up 18-fold, or 1,758 percent, to 4.74 billion kronor (520.7 million euros, 675.2 million dollars) from 255 million kronor a year earlier.

SAS was still posting a loss in the first quarter but recovered throughout the course of the year to boast full-year sales of 60.7 billion kronor, up by 9.5 percent from 2005.

In the fourth quarter alone, sales totalled 15.1 billion kronor, a 4.6 percent rise from a year earlier but somewhat below analysts’ average forecast of 15.82 billion.

The price of the SAS share was down by 3.30 percent on the news on the Stockholm stock exchange in mid-morning trading.

SAS chief executive Mats Jansson, who took over on January 1, said the group’s good results were largely due to rising demand, in particular in the autumn and winter.

The number of passengers climbed by 6.3 percent to 38.6 million for 2006, and in the final quarter alone the number rose by 3.9 percent to 9.6 million.

“In addition, the introduction of new business models, effective cost control and efficient capacity adaptation resulted in considerable earnings improvements,” Jansson said in a statement.

The savings plan, which is aimed at saving 2.5 billion kronor by 2007, had been 79-percent achieved.

Jansson also announced that the group was developing a new strategic plan dubbed “Strategy 2011” to be unveiled in May.

The new plan “will be no major revolution, rather a significant evolution with the principal aim of firmly establishing our future approach and target scenario for our customers, employees and shareholders,” Jansson said.

For 2007, he said he expected “continued favourable growth” as there were no indications of a slowdown in the economy or the airline market.

“However, uncertainty remains regarding the strength of growth, the future competitive situation and the trend for jet fuel prices,” he said.


‘We agree to disagree’: Still no progress in marathon SAS strike talks

By lunchtime on Friday, talks between the Scandinavian airline SAS and unions representing striking pilots were still stuck on "difficult issues".

'We agree to disagree': Still no progress in marathon SAS strike talks

“We agree that we disagree,” Roger Klokset, from the Norwegian pilots’ union, said at lunchtime outside the headquarters of the Confederation of Swedish Enterprise in Stockholm, where talks are taking place. “We are still working to find a solution, and so long as there is still some point in continuing negotiations, we will do that.” 

Mats Ruland, a mediator for the Norwegian government, said that there were “still several difficult issues which need to be solved”. 

At 1pm on Friday, the two sides took a short break from the talks for lunch, after starting at 9am. On Thursday, they negotiated for 15 hours, breaking off at 1am on Friday morning. 

READ ALSO: What’s the latest on the SAS plane strike?

Marianne Hernæs, SAS’s negotiator on Friday told journalists she was tired after sitting at the negotiating table long into the night. 

“We need to find a model where we can meet in the middle and which can ensure that we pull in the income that we are dependent on,” she said. 

Klokset said that there was “a good atmosphere” in the talks, and that the unions were sticking together to represent their members.

“I think we’ve been extremely flexible so far. It’s ‘out of this world’,’ said Henrik Thyregod, with the Danish pilots’ union. 

“This could have been solved back in December if SAS had not made unreasonable demands on the pilots,” Klokset added. 

The strike, which is now in its 12th day, has cost SAS up to 130m kronor a day, with 2,550 flights cancelled by Thursday, affecting 270,000 passengers.