SAS is on schedule to achieve its targeted savings of SEK14bn (1.5bn) under its Turnaround 2005 plan, despite losses on its Swedish and Danish operations and rising fuel prices.
Jorgen Lindegaard, president and ceo of the SAS Group, told a European press briefing in Copenhagen “the underlying trends in the group are all pointing in the right direction.”
He said the figures for the second quarter of this year, showing an operating result of SEK698m (74.7m) were “okay”, but the figure for the third quarter, due out in early November, would be the real indicator.
Already the national carrier has taken SEK 12.8bn (1.4bn) out of its cost since its Turnaround plan was launched in 2002.
But Scandinavian Airlines Sweden, Scandinavian Airlines Denmark and “to a certain extent” Scandinavian Airlines International were making losses.
These were all “rapidly on their way back to profitability” and would not have losses in 2006.
The Group was also faced with rise of SEK1.5bn (160.5m) in fuel costs compared with 2004 but Mr Lindegaard said the airline could “compensate for most of that.”
Mr Lindegaard said to improve the carrier's efficiency and performance it would be concentrating more on point to point traffic and less on a hub and spoke operation.
He said its main international hub, Copenhagen would not be “de-mounted” but it would also not be growing. SAS would concentrate more on the north European market.
It would also be taking some aircraft out of use to re-dress over-capacity.
More crucially, he said, the airline was “accepting a falling yield” in return for a higher load factor.
He said load factors had dropped until January, 2005 but were now rising again and in the 70s. “I don't care if prices come down as long as we get a high load. If we get a higher load, we can accept yields which are lower,” he said.
* See BTE Analysis for a fuller look at SAS's plans for the future