SAS cautious on 2019 after posting best results

STOCKHOLM (Reuters) – Cost cutting and restructuring efforts at Scandinavian airline SAS led the carrier to its best annual results in several years, but higher fuel costs and tough competition were expected to weigh on profits going forward, it said.

SAS has been cutting costs for the best part of a decade and is renewing its elderly and fuel-intensive fleet in the face of cut-price competition from budget carriers such as Norwegian Air Shuttle and Ryanair. "In fiscal year 2018, SAS delivered its strongest result in many years. However, in the fourth quarter we started to feel the effect of higher fuel prices and we expect this to continue in 2019," the company said. For its fiscal 2019 year, SAS said it expected a positive result before tax and nonrecurring items, but CEO Rickard Gustafson told Reuters a number of uncertainties meant SAS would only specify the outlook later on. "Certain factors that affect the result substantially are very volatile, the oil price is one such factor," he said in an interview.

"The Swedish crown has fluctuated a lot against the dollar and the Norwegian crown. We also see a geopolitical situation with many large question marks, not the least the Brexit issue."

A hard Brexit would have enormous consequences for the airline industry in Europe, he said.

Pretax profit before restructuring costs and other non-recurring items in SAS' August to October period rose more than expected to 842 million Swedish crowns ($90.1 million) from 1.05 billion a year ago and versus a forecast 775 million in a Reuters poll of analysts.

The company's shares were down 4.1 percent at 0848 GMT, leaving them almost flat year-to-date.

Full-year profit before non-recurring items was in line with guidance given in August for around 2 billion crowns.

SAS said efficiency measures would shave 900 million crowns off profits in the 2019 fiscal year, and it expected gross investments to total around 7 billion.