Wholly-owned by Oy Nordair as part of the SAS Group, Blue1 is a regional feeder airline to SAS based in Helsinki, Finland. Blue1’s network consists of services to over 11 destinations within Europe. Blue 1 is a regional member of the Star Alliance. It is the second largest airline in Finland and is also the only Finnish airline in the Star Alliance.
Location of Blue1 main hub (Helsinki-Vantaa Airport)
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LCCs are a thorn in the eye of all established network carriers, and the environment is no different in Scandinavia where SAS Group’s historic market share has been slowly crumbling off to the benefit predominantly of Norwegian Air Shuttle, which relentlessly has built a closely-knit network from bases in Norway, Sweden and Denmark. As a national airline partially owned by the governments of Sweden, Denmark and Norway (with a 21.4%, 14.3% and 14.3% shareholding respectively), SAS for too long has been a bystander, hoping that its ownership structure and lobbying would be sufficient to fence off the expansion of Norwegian and other budget airlines.
Now SAS is trying to fight back and it wants to win over the independent leisure travelers who flock to the no-frills operators. As part of its new strategic platform 4Excellence, which was outlined by the company’s new president and CEO Rickard Gustafson in Sep-2011, the airline is expanding its offerings to strengthen its market share within the leisure travel segment.
As in the rest of Europe, the airline industry in the continent’s Nordic region is undergoing a structural change characterised by bankruptcies and intense competition from low-cost carriers with full-service network airlines implementing cost reduction programmes aimed at securing long-term sustainability or just survival. The region saw yet another operator cease operations in 2Q2012, Air Finland, following on the bankruptcy of Cimber Sterling, Skyways and City Airline in the first three months of the year.
Finnair made outstanding progress in 2Q2012 to lower its cost base and heighten revenue although it could not attain profitability while SAS Group’s pre-tax earnings halved year-on-year to SEK371 million (EUR45.1 million ) despite a one-off SEK346 million (EUR42.1 million) capital gain attributable to property transactions. Norwegian Air Shuttle improved in all operating parameters in the three months ending 30-Jun-2012 and reported a consolidated net profit of NOK90.5 million (EUR12.4 million), up 69% over the year-ago period. The LCC’s operating profit expanded to NOK322.3 million (EUR44.3 million) from NOK72.8 million (EUR10 million) in the year-ago period, and 2Q2012 EBIT margin was a respectable 10.2%.
SAS subsidiary Blue1 will undergo network changes that will see it drop its non-Scandianvan European routes in order to bolster services from secondary Finnish cities.
This will allow the SAS group to build greater feed into its Copenhagen Kastrup and Stockholm Arlanda hubs, a competitive move against Finnair and its Helsinki hub, as well as LCC Norwegian Air Shuttle and its Scandinavian hubs.
This development is only the first in what will be a number of changes across the group’s carriers up to 2015 under the new strategy as SAS seeks to become a more formidable force. Meanwhile low-cost carrier Norwegian Air Services continues to grow and threaten SAS’ dominance in the Nordic market.
SAS has unveiled “4Excellence”, the group’s new strategy that replaces its successful “Core SAS” turnaround programme, which will be brought to an end in 2012. 4Excellence will build on the foundations of its predecessor by concentrating the group’s resources on four key areas: commercial, sales, operational and people excellence. SAS has staged a remarkable turnaround in recent years under the Core SAS programme, which culminated in a strong 1H2011 (six months to 30-Jun-2011) performance from the Scandinavian carrier, outperforming the majority of its rivals.
European airlines continued to report positive passenger traffic results in Aug-2011, the final month of the summer peak travel period, when European airlines make the bulk of their revenue. Almost all of the major airlines reported year-on-year increases in load factor and passenger numbers, despite the increasingly worrying economic backdrop affecting business and consumer confidence across the region. If such uncertainty continues, European carriers may be in for a bumpy end to 2011.
SAS Group delivered an unexpectedly strong result second-quarter result, reporting net income of EUR60 million which saw the group finish the first half in the black, in sharp contrast to some of its full-service rivals to the south. The result is a significant turnaround for SAS and is even more remarkable in light of the various challenges faced by European airlines. Its profitability may finally make it an attractive acquisition or merger partner.
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