SAS cuts 1,000 jobs as fuel, competition to hamper earnings

SAS plans to cut 1,000 administrative jobs and double its cost-savings target as the Nordic airline prepares for rising fuel prices and intensifying competition that’s lowering fares and hampering earnings growth. The stock rose the most in three months. Profit in the fiscal Q1 that started Nov. 1 will fall from a year earlier following “more demanding” trading conditions in the autumn, SAS said Tuesday. The airline will try to reduce spending on operations by 1.5b kronor ($164m) from 2017 to 2019, versus an earlier target of 800m kronor, with the job cuts amounting to about 9.3% of its workforce. It’s also considering setting up operations outside its home markets of Sweden, Norway and Denmark, where SAS estimates labor costs are as much as 72% higher than the EU average. CEO Rickard Gustafson said that SAS will decide by H2 2017 whether to create “a few bases across Europe” to complement business in the Nordic region, which will remain the carrier’s focus. “Potentially moving bases to outside of Scandinavia is a move investors might appreciate,” said Jacob Pedersen, an analyst at Sydbank A/S. “Restructuring has become their way of life; the company is fighting for survival.” Setting up operations abroad “will not be an easy task, given the involvement of the unions, but if the company wants to survive, they have to look at all options.”<br/>