SAS fourth quarter results disappoint

SAS fourth quarter results disappoint
SAS reported a pre-tax loss of 24 million kronor during the fourth quarter of 2007, down from a profit of 456 million kronor for the same period a year ago.

On average, analysts had expected the company to post a profit of 230 million kronor, according to Reuters.

Fourth quarter sales totaled 1, 322 million kronor, an improvement of 3 million kronor for the corresponding quarter last year.

For the year as a whole, SAS produced profits of 1, 052 million kronor.

The airline’s fourth quarter losses resulted in large part from the decision to ground its entire fleet of 27 Dash planes.The planes were grounded in October due to safety concerns following a series of incidents.

The grounding resulted in losses of 700 million kronor, 500 million of which was booked in the fourth quarter.

SAS was also hit by a number of strikes in 2007 which cost the airline around 200 million kronor.

Losses from the Dash-grounding are expected to cost SAS an additional 700-800 million kronor in 2008.

In addition to SAS’s ongoing savings measures, the company hinted at additional cost saving measures in 2008 due to weaker economic conditions.

SAS leadership expects weaker demand in its home market of Northern Europe due to a weakening economy.

High fuel prices will also put pressure on profits in 2008.

The results sent SAS shares down 9.5 percent to 55.00 kronor in early trading on the Stockholm exchange.