Airline SAS Warns Of Bigger Q1 Loss

By Dave Simpson
Airline SAS Warns Of Bigger Q1 Loss

Scandinavian airline SAS has said that it expects losses to deepen in the first quarter of next year due to challenging market conditions.

SAS has been restructuring and making cost savings to cope with rising fuel costs and competition from the likes of Norwegian Air and Ryanair.

SAS's full-year result was hit by higher jet-fuel costs, unfavourable currency movements and a strike. It said that an uncertain economic outlook and a slowdown in key economies will negatively impact customer demand.

"The continued weakness of the Swedish and Norwegian krona against the US dollar and the euro also remains a challenge," SAS said in its results statement.

Operating Margin Before One-Off Items

The company said that it expects an operating margin before one-off items of 3% to 5% for the fiscal year 2020, given market conditions, higher costs for new aircraft, increased training volumes and the implementation of the IFRS 16 accounting system.

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Further Cost Savings

The airline said that it expects further cost savings of 1.5-2.0 billion by 2023 and beyond.

Pre-Tax Profit

The company's pre-tax profit was 1.2 billion crowns ($124.66 million) in the August-October period, against 822 million profit a year ago.

Missed Financial Targets

SAS said that it has seen a strong momentum in the quarter, with profits lifted by cost-cuts and reduced market capacity, but it failed to meet two out of three financial targets for the fiscal year 2019.

Return On Invested Capital And Adjusted Net Debt To EBITDAR

"Financial preparedness remains strong, but the return on invested capital came in at a disappointing 8% and our adjusted net debt to EBITDAR increased to 3.7x," the airline said said.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.