Airlines

SAS says tough to hit full-year goal after pilot strike

Key Points
  • Q2 pretax loss 1.2 billion SEK vs year-ago 488 million loss
  • Weaker outlook due to fuel costs, strike & weak crown
  • CEO eyes automation of planning to save more money
  • Stock down 6% to lowest level since January 2017

SAS CEO: We had a tough quarter due to pilot strike, rising fuel price
VIDEO2:0402:04
SAS CEO: We had a tough quarter due to pilot strike, rising fuel price

Scandinavian airline SAS warned it would struggle to meet its full-year results forecast after posting a sharp rise in second-quarter pretax losses on Tuesday, as it counted the cost of a recent strike by pilots.

The carrier, which is still partly owned by Sweden and Denmark while Norway has sold its entire stake, had previously guided for a positive full-year result before tax and non-recurring costs.

Struggling with high fuel prices and cut-price competition from the likes of Norwegian Air and Ryanair, SAS is renewing its aging fleet and has been restructuring for years to slash costs.

It cancelled around 4,000 flights between April 26 and May 3 as pilots demanding better pay and working conditions went on strike, disrupting the travel plans of 370,000 customers.

The company on Tuesday estimated the cost of the strike at 650 million Swedish crowns ($68 million), with 430 million of that related to the last five days of the second quarter. 

SAS shares were down 6% at 0843 GMT, taking year-to-date losses to 34 percent.

CEO Rickard Gustafson said he was now looking into more restructuring for 2020 and 2021, to follow an ongoing programme.  

"It will be about having to think in new ways about how we use digital solutions to automate many more tasks that we today handle manually," he told Reuters.

"Operating an airline requires an extreme amount of complex planning - of maintenance, of networks, of staffing. This machinery is of course well suited for optimising with modern technology. There is still a lot to do here," he said. 

A man paints new lines behind the tails of two of Scandinavian airline (SAS) Boeing 737 aircrafts parked at Terminal 4 at Arlanda Airport in Stockholm, Sweden.
JOHAN NILSSON | AFP | Getty Images

The company said its pretax loss increased to 1.2 billion crowns in February-April from 488 million a year earlier due mainly to the strike and higher fuel prices, but also a weaker crown.

"Those three things combined make it more challenging to reach the full-year forecast," Gustafson said in an interview.

The mean forecast in a Reuters survey of three analysts had been for an 808 million crown quarterly loss.

Wage increases eventually agreed with pilots will in total increase net pilot costs across Scandinavia by 5.4% over the coming three years, SAS said.Â