SAS struggling out of the ash

The Scandinavian carrier SAS announced its results for the first quarter on Wednesday as the fallout from the eruption of an Icelandic volcano was still affecting air travel across Europe.  The airline warned that revenues were still not stable and that it could not predict when this would happen.

SAS said that signs had been seen of the situation improving in the industry with traffic figures rising in March.  However, the impact of airspace closures due to volcanic ash remains to be seen.

There had been fears that some airlines would struggle to survive the crisis as flights were canceled for six days.  SAS had been one of the airlines talked about as a possible victim especially if the cancellations continued for over a week.

The airline has had to ask Swedish share holder for a $697 million (5 billion Swedish crown) injection of cash to secure its future.  SAS has been struggling to implement cost cutting strategies since the beginning of the economic downturn and this latest problem seems to have come at the worst time.

SAS' pretax first quarter loss was 967 million crown, which was in line with the companies predictions.  However, this figure does not include the impact of the volcano.  Up till last Monday the airline was seeing a loss of earning in the region of 220 to 280 million crown, but on Wednesday this had risen to 460 million crown.

The airline claims to not be struggling with cash flow at present, but is in the process, with other European carriers, of looking at what aid it can receive for the financial loss caused by the volcano.  The airlines are considering going to the European Union as they seek some form of compensation.

Source: Reuters