STOCKHOLM (Reuters) - The ailing and partly-state owned airline SAS (SAS.ST) is extending cost cuts and considering establishing operations outside its Scandinavian home market to cap spending in the face of cut-price competition across Europe.
Chief Executive Rickard Gustafson said the plans come on the back of expectations of growing leisure travel in Europe.
“Customers’ perception is that a flight in Europe should cost a few hundred crowns and we need to ensure we can meet that,” he told Reuters. “We need to have a cost structure that is entirely competitive regardless if the competitor’s name is Easyjet, Ryanair, KLM, Air France or whichever.”
Gustafson said basing aircraft and employing pilots and cabin staff at leisure destinations in Europe, such as London and the Mediterranean, would lower labour costs. SAS would give more details on the plans in the second half of 2017, he said.
“This will perhaps be a complement to what we do in order to secure what we have up here, but the growth may come outside Scandinavia,” he said.
SAS, which has suffered for years under intense competition from budget carriers, said that due to tougher market conditions it now planned to save 1.5 billion Swedish crowns (129.36 million pounds) in 2017–2019, up from previously planned 0.8 billion.
The company reported on Tuesday a profit before tax and extraordinary items in the August-October period, its fiscal fourth quarter, of 941 million crowns, down from a year-ago 1.3 billion and above a Reuters poll forecast of 745 million.
It warned that first-quarter profit would be significantly below last year’s due to higher fuel costs and a lower yield.
Reporting by Anna Ringstrom; Editing by Alistair Scrutton