Source: Reuters Author: Anna Ringstrom, Katarina Gustafsson 08/07/2009
Subject Concerned: Opinion Airlines
Scandinavian airline SAS said on Aug. 7 that its passenger traffic fell 13.6 percent in July from the same month a year earlier and said the market remained unpredictable, sending its shares down.
That was the 11th consecutive month that the loss-making firm, half of which is owned by Sweden, Norway and Denmark, reported a year-on-year drop in traffic.
Finnish rival Finnair earlier on Aug. 7 announced a second-quarter loss caused by weak demand and falling ticket prices, and the resignation of its chief executive.
Budget airline Norwegian Air Shuttle, however, said it carried 16 percent more passengers in July than a year earlier.
SAS, whose shares fell 4 percent to 3.67 Swedish crowns at 09:45GMT, said there was still considerable uncertainty as to when the market would recover.
"The higher jet fuel prices in combination with the weak demand adds further challenges to the industry and requires actions in order to mitigate the negative earnings' impact," it said.
It said it was looking at further measures to cut costs and improve efficiency.
SAS said in June a restructuring programme would cost much more this year than it had previously thought.
Restructuring costs in the second quarter will amount to around 1 billion crowns, SAS said. It will give an estimate for the full-year structuring costs in its second-quarter earnings report, due on Aug. 12.
But the firm's passenger load factor -- a measure of how full its planes fly -- rose in July, by 3.6 percentage points to 83.8 percent.
Karsten Sloth, analyst at Jyske Bank said the decline in traffic was expected, while the rise in load factor was a positive surprise.
"It (the load factor) came in at a very good level, especially looking at the market environment," he said. "But the problem is that the yields are going down. That was also a tendency the month before."
"They have been successful with their capacity reductions but unfortunately the passengers are paying a too low price."
The airline said its yield in June -- the most recent month for which data is available -- was down 7.6 percent. It said it expected a slightly smaller drop in July.