SAS returns to profit in FY2013 through cost reduction, but is not out of the woods yet

The SAS Group returned to net profit in FY2013, mainly through successful cost reduction. There was no growth in revenues, in spite of 6% ASK growth by the core SAS airline. In addition to cost cutting, the group's restructuring in the year also included the sale of 80% of its Norwegian regional subsidiary Widerøe and the sale of 10% of its ground handling operation to Swissport as a first step in what is intended eventually to be a full disposal.

Improved profitability was essentially the result of SAS lowering its unit costs, CASK, faster than the decline it suffered in unit revenues, RASK. In both cases, this extends the trend of recent years. However, in spite of attempts to shore up demand (with some success - it has grown membership of its EuroBonus FFP), the slide in RASK accelerated in 4Q2013. This was partly currency related, but also reflects tough competitive dynamics in SAS' markets.

Moreover, its CASK reduction in the year, while commendable, still leaves it with one of the highest levels of unit costs in Europe. SAS is not out of the woods yet - but the profit is a welcome result.