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SAS Fears Big Hit If Virus Outbreak Extends Into Holiday Season

Published on Mar 2 2020 9:00 AM in General Industry tagged: Trending Posts / SAS

SAS Fears Big Hit If Virus Outbreak Extends Into Holiday Season

Scandinavian airline SAS stood by its outlook for the full year despite the coronavirus outbreak as it reported a higher quarterly loss, but braced for the outbreak possibly extending into the summer...

Scandinavian airline SAS stood by its outlook for the full year despite the coronavirus outbreak as it reported a higher quarterly loss, but braced for the outbreak possibly extending into the summer holiday season.

CEO Rickard Gustafson said that if the outbreak does extend into the northern hemisphere's summer holiday season, and spreads, the impact on SAS and the broader industry could be large.

So far SAS, which has increasingly focussed on leisure travel over the past couple of years, sees no radical changes to bookings except to and from China, Gustafson said.

The holiday season booking situation is looking good compared with expectations at the turn of the year, he said.

"As long as the COVID-19 outbreak is contained in scope and the suspension of flights is isolated to the winter season, this should only have a marginal impact on our earnings," Gustafson said in a statement.

Like most of the sector, SAS has suspended its flights to and from Beijing and Shanghai, but not its Hong Kong flights.

"The coronavirus could have a significant impact, but it's very early days to speculate about it leading the company into financial trouble," Sydbank analyst Jacob Pedersen said.

"The coronavirus could be a potential, even substantial earnings hit this year, but SAS should be able to recover from it," said Pedersen, who rates the stock a 'hold'.

SAS's loss before tax in the November-January quarter rose to 1.09 billion crowns ($112 million) from 576 million. It had warned in December of growing losses in the quarter due to tough market conditions.

"Additional Concerns"

It stood by a forecast for an adjusted operating margin for 2020 of 3%-5%, but warned that the virus outbreak "adds additional concerns regarding a slowdown in key economies that may impact customer demand negatively."

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

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