SAS’ discounted USD688 million rights issue was over-subscribed by 38% (Reuters, 03-May-2010). SAS launched its rights issue at a heavily discounted price in Apr-2010 as it pushes through a sweeping programme of cost cuts worth USD1.1 billion.
SAS rights issue over-subscribed
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SAS' new foreign bases in London & Spain show rare innovative thinking for a legacy airline
On 01-Feb-2017 SAS announced that it is to establish a new AOC in Ireland, with operational bases in London and Spain. It has yet to specify the airports that will become its first bases outside its three Scandinavian home countries. SAS is following a course established by Norwegian, apparently forgetting its previous objections to its LCC rival's approach.
Indeed, it seems that SAS' move is a pragmatic response to intense competition from LCCs, particularly from Norwegian. According to SAS' 2016 Annual Report, 65% of its ASKs compete with LCCs. Scandinavia's high labour costs are a significant handicap in competing with airlines that have bases outside the region.
Spain and UK are its two biggest markets outside Scandinavia, with London Heathrow its biggest non home airport. After years of cost reduction programmes – also years of initiatives aimed at enhancing the appeal of SAS' product and brand to its core target market of Scandinavia's frequent flyers – a bolder step is needed. SAS will be a very rare example of a European legacy airline with bases outside its home market, more than 20 years after market liberalisation presented the opportunity.
Europe summer 2017 airline capacity outlook: fifth successive summer of above trend seat growth
Airline seat growth from Europe in summer 2017 is set to stay at almost 6% for the third successive summer, according to data from OAG. This rate had not previously been reached since 2010, although this will be the fifth straight summer of growth ahead of its 10 year average rate. The summer 2017 season started on 26-Mar-2017 and, although always subject to further change, the data give a fairly clear picture.
Seat capacity on routes from Europe to Africa will grow the fastest, as the region recovers from a terrorism related drop in demand in North Africa. There will also be above trend growth in almost every other region from Europe (including intra Europe). The only exception is Europe-Middle East, where the newly cautious Gulf airlines' growth is slowing this summer.
On the North Atlantic, always important for the profitability of Europe's leading legacy airlines, growth will be faster than its 10 year trend, but it will at least be a little slower than in the past summer. The loss of market share from the immunised North Atlantic JVs to newer and smaller competitors, including LCCs, is set to continue. As ever, the OAG capacity data provide a window into the changing structure of the airline markets from Europe.