SAS: 2Q losses widen after six quarters of improving results. LCCs & SAS growth depress unit revenue
After improving its underlying profit in FY2015 and narrowing its losses in the seasonally weak 1Q2016, SAS suffered a widening of losses in 2Q2016. This was the first year-on-year deterioration in its underlying result for six quarters. It benefited from lower fuel prices and from its own cost savings programme, but experienced plummeting unit revenue.
This reflects the ongoing growth of LCC competition in short haul markets, but is also the result of its own capacity increase. SAS' growth is led by rapid expansion on long haul, where Norwegian is also providing LCC competition. SAS is investing in its network and product and growing its revenue from higher-yielding loyalty scheme members, but these measures do not appear to be giving sufficient support to unit revenue.
These trends are unlikely to dissipate any time soon, and there is now the real prospect that its FY2015 result represented a cyclical peak for SAS. The company recognises the need for further change in order to improve its competitiveness. Strategies to seek labour cost reform can be expected, in spite of a strike call by Swedish pilots.
Read More
This CAPA Analysis Report is 2,225 words.
You must log in to read the rest of this article.
Got an account? Log In
Create a CAPA Account
Get a taste of our expert analysis and research publications by signing up to CAPA Content Lite for free, or unlock full access with CAPA Membership.
Inclusions | Content Lite User | CAPA Member |
---|---|---|
News | ||
Non-Premium Analysis | ||
Premium Analysis | ||
Data Centre | ||
Selected Research Publications |