SWEDEN. SAS, the Nordic region’s largest airline, said this week iit would have to cut costs by 25% to 40% in order to cope with the downturn in business travel and tough competition from low cost airlines. The new cutbacks come on top of extensive savings programmes, which have so far failed to trim the airline sufficiently.
With its strong reliance on business travel and its cost base, SAS has been hit hard by the slump in premium-class passengers and intensive competition from low cost rivals. This is set to intensify now Ryanair has created a Scandinavian operating base at Skvasta near Stockholm.
SAS passenger traffic was down -8.9% year-on-year in January to 2.2 million. In February there was an improvement in intercontinental routes which saw a +11.5% increase in passenger traffic. However numbers on European routes declined by -8.0% and by -21.5% on intra-Scandinavian routes and by -15.1% to -18.7% on the three Nordic domestic routes. The group’s costs involved in ground services, sales and distribution and overheads are to be reviewed.” The current macroeconomic environment remains very challenging for all airlines in the group,” said SAS in a statement.
In the three months to 31 December 2002, SAS made a pre-tax loss of SEK683m (US$81 million), down from a loss of SEK1.127 billion (US$134 million) in the same period a year earlier.
