Nordic airline forecasts financial difficulties amidst surging leisure travel

Friday, March 8, 2024

Nordic airline SAS’s Chief Executive Officer, Anko van der Werff, shared insights, revealing that while the airline anticipates sustained interest in leisure travel into 2024, it continues to face financial challenges, particularly due to high jet fuel costs. This sentiment reflects the broader challenges within the aviation sector. The airline, currently navigating its way out of bankruptcy protection, reported a reduced pretax loss for its fiscal first quarter, indicating a slight improvement in its financial health.

Van der Werff’s comments came on the heels of SAS’s announcement of its ongoing struggle with high operational costs, exacerbated by the pandemic-induced drop in demand. With the airline poised to exit bankruptcy protection soon, thanks to new ownership including Air France-KLM, the CEO highlighted the enduring obstacles presented by airport fees, fuel prices, and maintenance costs—a concern echoed by competitor Lufthansa.

Despite a decline in jet fuel prices during the November-January quarter, the CEO expressed little optimism, pointing out that the current price level still represents a significant financial burden for SAS, especially when considering the weak kronor. This situation underscores the persistent pressure fuel prices exert on the airline’s expenses.

In January, SAS projected its adjusted earnings before tax for the 2024 fiscal year to range between zero and 1.0 billion Swedish crowns, with anticipated revenues surpassing 48 billion crowns. This forecast came after the airline posted a pretax loss of 1.07 billion Swedish crowns for the first quarter, an improvement from the 2.45 billion loss reported in the previous year.

Meanwhile, Norwegian Air, another Nordic competitor, optimistically predicted a record profit in 2024, marking a significant turnaround from its own financial restructuring efforts. In contrast, SAS’s shares have experienced a nearly 22% decline, with plans to delist the company following the completion of its bankruptcy proceedings, rendering its shares worthless.

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