68

Business

SAS passenger numbers up, but company remains shaky investment

admin
June 10th, 2014


This article is more than 10 years old.

Dramatic price cuts offsetting increase in flyers

Numbers released by SAS yesterday showed that the company had 185,000 more passengers last month then during May 2013. The increase in flyers was due primarily to plummeting ticket prices.

“The worst thing for SAS right now is that prices are falling so strongly,” Jacob Pedersen, a senior analyst at Sydbank told Jyllands-Posten newspaper.

Despite intense pressure, SAS tried earlier this year to stick to a strategy focusing on higher fares, but competition has forced SAS to cut prices by nearly 18 percent from April 2013 to April of this year.

"The decline is compounded by the fact that Easter fell in April this year and holiday travel costs less than business travel,” said Petersen. “If the decline continues at this level, it will be a disaster for SAS, no airline can afford to lower their costs at this pace.”

A bad investment
Pedersen said that current conditions should cause investors to pause before they consider purchasing SAS stock.

“I doubt that SAS in its interim financial statements can provide something that can convince me that SAS is a stock that one should have in the short term,” said Petersen. "They will have a hard time providing evidence that SAS can be turned into a profitable business.”

READ MORE: SAS lowers bar as profits descend

Even though SAS has managed to lure customers with lower fares, the numbers are still less than expected.

“SAS will soon cut prices to historic lows, and they will get more people on board the aircraft, but that will also drive profits down,” said Petersen.  

Pedersen said that SAS will most likely relaunch its EuroBonus loyalty program in a effort to increase revenue.


Share

Most popular

Subscribe to our newsletter

Sign up to receive The Daily Post

















Latest Podcast

A survey carried out by Megafon for TV2 has found that 71 percent of parents have handed over children to daycare in spite of them being sick.

Moreover, 21 percent of those surveyed admitted to medicating their kids with paracetamol, such as Panodil, before sending them to school.

The FOLA parents’ organisation is shocked by the findings.

“I think it is absolutely crazy. It simply cannot be that a child goes to school sick and plays with lots of other children. Then we are faced with the fact that they will infect the whole institution,” said FOLA chair Signe Nielsen.

Pill pushers
At the Børnehuset daycare institution in Silkeborg a meeting was called where parents were implored not to bring their sick children to school.

At Børnehuset there are fears that parents prefer to pack their kids off with a pill without informing teachers.

“We occasionally have children who that they have had a pill for breakfast,” said headteacher Susanne Bødker. “You might think that it is a Panodil more than a vitamin pill, if it is a child who has just been sick, for example.”

Parents sick and tired
Parents, when confronted, often cite pressure at work as a reason for not being able to stay at home with their children.

Many declare that they simply cannot take another day off, as they are afraid of being fired.

Allan Randrup Thomsen, a professor of virology at KU, has heavily criticised the parents’ actions, describing the current situation as a “vicious circle”.

“It promotes the spread of viruses, and it adds momentum to a cycle where parents are pressured by high levels of sick-leave. If they then choose to send the children to daycare while they are still recovering, they keep the epidemic going in daycares, and this in turn puts a greater burden on the parents.”