Airlines fight it out in the skies

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Scandinavian Airlines (SAS) and Norwegian Air carried on their intense battle for passengers and profits this week, with Norwegian announcing a big new charter deal on Thursday and SAS reporting its first annual profit in years. SAS also threatened, though, to launch a formal complaint against its arch rival while Norwegian responded by claiming SAS has had operating advantages for years and that SAS’ management nearly took the carrier into bankruptcy.

SAS, shown here between two Norwegian flights at Oslo's main airport at Gardermoen, is working its way back to profitability, while all the airlines face tough competition. PHOTO: Oslo Lufthavn Gardermoen

SAS, shown here between two Norwegian flights at Oslo’s main airport at Gardermoen, is working its way back to profitability, while all the airlines face tough competition. PHOTO: Oslo Lufthavn Gardermoen

SAS officials were undaunted, even after their airline’s share price fell 6 percent on Thursday after they’d announced pre-tax profits of SEK 442 million for the fourth quarter. The result compares to a loss of SEK 561 million in the same quarter last year, and the airline also reported its first profitable year since 2007, logging pre-tax profits of SEK 179 million, compared to a loss of SEK 3 billion last year.

Investors nonetheless drove SAS’ share price down, after analysts had expected profits of as much as SEK 650 million or more. “Have we disappointed folks with these numbers?” exclaimed SAS director Eivind Roald with his rhetorical question, after the website for newspaper Dagens Næringsliv (DN) had reported that investors were disappointed. “I complete disagree.”

Roald believes he and his colleagues have all reason to be proud of a turnaround at SAS. “No one had faith in us just a year ago,” Roald told DN.no. “They thought we’d go bankrupt, but now they see they were wrong. We said we’d deliver a positive result and we managed that.” Roald claims the results should build credibility and, not least, confidence in the airline.

He admitted that competition remains extremely tough, with lower-cost carriers like Norwegian and Ryanair keen to grab market share. Roald claimed that SAS hasn’t yet felt ill effects from Norwegian’s new long-distance routes to Bangkok and the US, which Norwegian has been operating with Asian crews who are paid much less than Scandinavian crews on board SAS. That’s allowed through Norwegian’s special permission, recently extended, to keep using its Norwegian Air Operator Certificate (AOC) for its new Irish-registered long-haul aircraft. Roald blasted the extension earlier this week, but Norwegian responded that SAS has had privileges of its own through its use of a Scandinavian license that Norwegian was denied.

More Dreamliners and new charter deal
Norwegian, meanwhile, celebrated its 10th year on the Oslo Stock Exchange this week and is ordering new, bigger Boeing Dreamliner aircraft to put into long-distance service in 2016. They will bring Norwegian’s Dreamliner fleet, which has been hit by a variety of start-up problems this year, up to 10.

On Thursday, Norwegian announced a new charter contract with TUI Nordic and TUI UK, to serve the summer holiday market from the Nordic countries and the UK to Spain, Greece, Turkey, Bulgaria, Italy and Cyprus. That means Norwegian passengers traveling with, for example, Star Tour and Fritidsresor will be likely to fly on Norwegian aircraft starting next summer.

The deal is worth around NOK 450 million, reported dn.no, and will increase Norwegian’s charter traffic by 43 percent. SAS also serves the charter market, with many passengers traveling with Apollo, for example, flying on SAS aircraft.

newsinenglish.no/Nina Berglund