SAS HAS BECOME the latest of the northern European carriers to suffer a slump in operating profits, largely blamed on the rise of the US dollar.
The Scandinavian carrier ended the first half of the year with operating profits down by nearly 40% at SKr930 million ($142 million) following similar gloomy reports from KLM and Lufthansa. SAS blames the drop on currency fluctuations, which turned what should have been a 7.5% rise in revenues into a fall of nearly 2%. The airline also argues that a 5% dip in yields translates into an underlying increase of 1.5% if the currency effects are stripped out. Underlying unit costs rose by 5% during the half of which, 1% came from the rise in fuel prices.
Growth in first-half passenger traffic of 7% included a 5% increase in European business-class cabins, and SAS suggests that the recovery in higher-yielding traffic picked up during the second quarter.
The currency gains had a positive effect on the airline's financial costs, leaving it with a largely unchanged pre-tax profit of SKr941 million. The group, including the hotel business, similarly held pre-tax profits steady at SKr1 billion. SAS warns that underlying profits are also likely to be weaker for the full year.
Source: Flight International
